The Problem of Identifying Land Use Spillovers: Measuring the Effects of Open Space on Residential Property Values

Abstract

development, such as traffic congestion and air pollution. Several willingness-to-pay studies have demonstrated the positive amenity value of open space (Halstead; Beasley, Workman, and Williams), but evidence of the value of open space from revealed preference methods--namely, from hedonic models--is limited and mixed. In this article, we consider the issue of estimating open space spillovers using a hedonic pricing model with residential property sales and offer an explanation for why the positive amenity value of open space effects, even if it exists, may not always be empirically detected. The estimation problems that we consider are ones of identification, which arise in a hedonic residential price model when the open space land is privately held and developable.1 Under these circumstances, land parcels counted as open space are part of the market for residential land and therefore subject to the same economic forces that determine a location's residential value.