Land Pricing Model: Price Re-evaluation Due to the Erosion and Climate Change Effects

Abstract

The aim of this study is to derive and apply the hedonic approach for determining and updating official land prices with respect to e.g. the impact of climate change that has occurred in the conditions of the Czech Republic in recent years. Pricing using the hedonic method is based on capturing individual factors separately. The evaluated soil ecological unit code consists of a 5-digit numerical code, which expresses the affiliation to the climate region (0-9, see table 1), the main soil unit (0-78), the slope of the land and the orientation to the point of the compass (0-9) and also the depth of the soil profile and skeletality (0-9). The derived hedonic pricing model is estimated using heteroscedasticity corrected estimator. The fitted model shows considerably high explanatory power and together with high parameter significance for majority of dummy variables (soil characteristics) as well as with theoretical and logical consistency represent a tool for new official land price settings in the process of land reevaluation due to the erosion and climate change effects.