Value Of Environmental Amenities Research Articles

Integrating the rent gap into the ground rent theory. Measurement and implications for different models of agriculture

The aim of this paper is to establish a conceptual framework for the rent gap theory in agriculture and to identify potential implications of the rent gap for socio-economic processes occurring in agriculture and rural areas. From an empirical perspective an attempt was made to determine the state and dynamics of the rent gap phenomenon in agriculture in Poland, considering the regional division. The authors used income approach and Capital Asset Pricing Model (CAPM) for estimating the capitalization rate. It was found that rent gap is a permanent phenomenon in Polish agriculture, the dynamics of which largely depends on macroeconomic factors. A widening rent gap may result in the withdrawal of land from farming and a decline in total factor productivity in agriculture. Thus, the implications of the rent gap may relate to food security. Measuring the rent gap can be a step towards determining the quasi-market value of environmental amenities of land.

Environmental goods provision and gentrification: Evidence from MillionTreesNYC

Urban trees offer extensive environmental benefits. However, the distribution of trees in urban areas often disproportionately favors higher-income neighborhoods. Implementing tree-planting programs in lower-income neighborhoods may provide environmental amenity values but may also lead to unintended consequences, such as gentrification. This paper focuses on one of the largest tree-planting programs in the U.S., the MillionTreesNYC Program, and estimates the impact of an increased supply of urban street trees on housing values and neighborhood compositions. The results demonstrate that the additional urban street trees did serve as an environmental amenity, resulting in higher housing values and attracting more white, educated, and young households to areas with new trees. However, the gentrification effects of this tree-planting program were relatively small, with minimal change in community composition. These findings suggest that it is possible to provide public goods without significant displacement of the existing population while also reaping the numerous benefits trees offer to urban areas.

The value of environmental (dis)amenities in the urban housing market: Evidence from Khulna, Bangladesh

Pressure of rapid urbanization on abiotic environmental parameters in the residential blocks is one of the major challenges of city corporation authorities in Bangladesh. Environmental degradation often reduces property value in the housing market. However, the studies attempted to assess the value of environmental amenities and dis-amenities in the housing market of Bangladesh are scarce. Hence, this study examines the economic value of environmental (dis)amenities in the housing market of Khulna city, Bangladesh. Hedonic pricing method was used to assess the value of four environmental attributes - ventilation, open space, waterlogging and landfill by waste in the housing market. The study found these environmental attributes explain the variation of house rents significantly. Environmental amenities–a hundred-meter reduction in proximity to open space leads to a 2 percent increase in rent while a one discrete unit increase in a 5-point ventilation improvement scale from very poor to excellent results in 5.4 rent increase–are found as rent booster in the urban housing market. In contrast, waterlogging and landfill by waste reduce house rents by 3.7 and 9.8 percent for one unit increase in the respective 5-point degradation scales. The further analysis showed that the rental price of planned residential areas is more sensitive to ventilation and landfilling while that of unplanned areas is more sensitive to both environmental dis-amenities – water-logging and landfilling. Furthermore, our study computed the implicit price of these environmental (dis)amenities in the housing markets of Khulna city. This study suggests improving environmental quality boosts house rent, which in turn attracts environment-friendly urbanization.

Valuing Environmental Amenities across Space: A Geographically Weighted Regression of Housing Preferences in Greenville County, SC

As global consumption and development rates continue to grow, there will be persistent stress placed on public goods, namely environmental amenities. Urban sprawl and development places pressure on forested areas, as they are often displaced or degraded in the name of economic development. This is problematic because environmental amenities are valued by the public, but traditional market analysis typically obscures the value of these goods and services that are not explicitly traded in a market setting. This research examines the non-market value of environmental amenities in Greenville County, SC, by utilizing a hedonic price model of home sale data in 2011. We overlaid home sale data with 2011 National Land Cover Data to estimate the value of a forest view, proximity to a forest, and proximity to agriculture on the value of homes. We then ran two regression models, an ordinary least squares (OLS) and a geographically weighted regression to compare the impact of space on the hedonic model variables. Results show that citizens in Greenville County are willing to pay for environmental amenities, particularly views of a forest and proximity to forested and agricultural areas. However, the impact and directionality of these variables differ greatly across space. These findings suggest the need for an integration of spatial dynamics into environmental valuation estimates to inform conservation policy and intentional city planning.

A hedonic pricing method to estimate the value of waterfronts in the Gulf of Mexico

Open spaces, including waterfront areas, are publicly-or-privately owned landscapes that provide numerous benefits and services such as opportunities for recreational activities, ecological benefits, and economic development. However, with rapidly growing populations, development pressure on these areas has been increasing, often leading to conflicts between proposed land uses. Information on the monetary value of environmental amenities provided by these spaces would help decision-makers account for their importance to quality of life. This study estimated the monetary value associated with waterfronts using the hedonic pricing method (HPM) and real estate sales data for the coastal cities of Mobile and Daphne in Alabama, USA. The price of houses sold during 2001 to 2015 was used as the dependent variable and house structural and neighborhood attributes and presence of environmental amenities served as independent variables. Results showed that coastal residents considered proximity to waterfronts as one of the most important factors when buying a house and paid higher prices for houses located near most waterfront types. In Mobile, marginal implicit prices of proximity to waterfronts ranged from $2490 to $3530 per km, whereas in Daphne, the price ranged from $9250 to $15,460 per km. Findings can help guide future decisions related to development of coastal areas, land-use planning, urban forestry, and open space preservation by balancing opportunities for urban and commercial development as well as providing public access to open space environmental amenities with close proximity to residential areas.

The changing face of environmental amenities: Heterogeneity across housing submarkets and time

The value of environmental amenities has been studied for decades in the hedonic housing prices literature. Numerous studies have found that amenities such as marine, river and woodland habitats, national and regional reserves, urban parks, or wetlands contribute positively on the formation of housing prices. Work is scarce when considering heterogeneity across submarkets and time. Auckland, New Zealand’s largest city, has a unique landscape with open spaces, waterways, coastal areas and volcanic features. Local housing market is highly segmented and the city has gone through a bust, recovery and boom cycle in the last decade. This paper incorporates heterogeneity across submarkets and time, and examines how they affect the capitalisation of amenities into housing prices. We construct a dataset of about 280 thousand sale transactions between 2000 and 2016 in Auckland and estimate hedonic models based on unconditional quantile regressions. We find diverse capitalisation patterns across housing submarkets. Beaches may add price premiums of 5.1% in houses in the upper-end of the distribution, but also price discounts of 2.1% in houses in the lower-end of the distribution. We use a detailed categorisation of parks and find that volcanic parks may add premiums for houses in the 70% percentile and above of the price distribution, but also imply price discounts values for houses around the median price and below. We argue that the differing effects occur because of trade-offs between regulations to protect amenities and the ecosystem services they provide, conditional to specifics of the location of houses.

Are Some Natural Amenities as Good as Gold? Evidence from Coastal Real Estate and Marshlands

Hedonic property price models are commonly used to assess the value of environmental amenities for housing buyers. The underlying theory presumes equilibrium in the housing market. Housing markets, however, are prone to cyclical and shock dynamics, as evidenced by the recent Great Recession. Building on recent research, we explore capitalization of natural amenities in residential housing markets that are experiencing a significant economic downturn. There are a number of possible economic changes arising from housing market dynamics, providing basis for an empirical exploration. During economic distress, people often shift their portfolios toward safe investments, providing potential for housing market segmentation and amenity-value appreciation. Using a battery of regression models, we find evidence in support of these hypotheses with regard to proximity to saltwater marshlands around Savannah, Georgia. In doing so, we provide guidance on how to analyze hedonic property prices in the presence of market disequilibrium.

Threshold Effects in Meta-Analyses With Application to Benefit Transfer for Coral Reef Valuation

Policymakers and advocates often use benefit transfers to estimate the economic value of environmental amenities when primary valuation studies are infeasible. Benefit transfers based on meta-analyses, which synthesize site and methodological characteristics from valuation studies of similar underlying amenities, generally outperform traditional site-to-site transfers. We build on earlier meta-analyses of willingness-to-pay for tropical coral reef recreation by introducing a meta-regression model with threshold effects, with a goal of increasing transfer reliability. We estimate a threshold in coral reef quality and find that increases in live coral cover have a large impact on individuals' WTP for recreation at degraded coral reefs. Relaxing the assumption of users' constant valuation across the distribution of this characteristic improves the performance of coral reef benefit transfers in some instances: tests of convergent validity reveal that including the threshold effect reduces the mean transfer error and the interquartile range of transfer errors in 5 out of 8 tests.

The value of rural landscape in Aquitania (Colombia): application of spatial hedonic models in real estate analysis

This study addresses the marginal economic value of environmental amenities, structural characteristics, neighborhood facilities, and accessibility on property in Aquitania - Colombia. Based on 400 assessed values of rural land property and on 21 characteristic variables of land amenities and facilities, the study compares three models: Ordinary Least Squares (ols), Spatial Lag Model (slm), and Spatial Error Model (sem). Results show that both slm and sem outperformed ols in identifying the significance of real estate attributes. Results shows that farmers value environmental amenities more than other attributes, being implicit the greater value of cattle over agriculture (onion) in land use. These models may help to support decisions in rural real estate economics.

A review of the hedonic literatures in environmental amenities from open space: a traditional econometric vs. spatial econometric model

ABSTRACTThe purpose of this article is to provide a thorough review of the hedonic studies that investigate environmental amenity values of urban open spaces. Open space amenities have a unique feature than structural characteristics of residential properties; that is, an individual's preference for them may depend on their location relative to a residential property. Twenty-six empirical hedonic studies that estimate values of environmental amenities from open spaces published between 1995 and 2015 were reviewed. We paid special attention to the spatial hedonic literature that used spatial econometric methods to deal with the spatial effects which are common issues in hedonic studies. To our best knowledge, this study is the first study that devoted special attention to the hedonic studies on urban open space using spatial econometric methods.

Valuation of landscape amenities: A hedonic pricing analysis of housing rents in urban, suburban and periurban Switzerland

The hedonic pricing approach has been successfully applied to estimate the economic value of environmental amenities in urban settings, but the results for landscape variables remain relatively inconsistent across studies. Here, we use national-level data and an existing typology of communities to examine how land use and environmental amenities and disamenities affect rental prices across urban, suburban, periurban, and affluent communities in Switzerland. To make the analysis and the results as transparent as possible we examine largely a priori model specifications, and we systematically report and discuss the patterns of correlation among explanatory variables. Two-level models show that about 70 percent of the price variation is found at the apartment level and about 30 percent at the community level. Models for the different community types suggest that, although we include a sophisticated variable for central services, the centrality of location is not fully controlled in our models and thus picked up by correlated peripheral and central amenities such as open space, forest or urban parks. Analysis of these correlations allows us to qualify our results and present a revised set of relatively reliable estimates. Positive effects on rental prices are identified for views, various types of recreational infrastructure and vicinity of lakes, wetlands, undisturbed areas, nationally significant landscapes and cultural sites. Negative effects are found for several disamenities including road noise, railway noise, industries and power lines. We suggest that systematic hypothesis testing and reporting of correlations may contribute to consistent explanatory patterns in hedonic pricing estimates for landscape amenities.

Information Difficulties: The Policy-Maker

This is Chapter 9 of a new book that attempts to make the presentation of environmental economics a cohesive non-rambling narrative. This chapter clarifies how difficult it is for policy-makers to obtain insights about the value of environmental amenities even when both households and firms actually know their respective benefits and costs, unlikely in practice.

Redefining the Poverty Debate – Why a War on Markets is No Substitute for a War on Poverty

In the past intellectual movements promoting free trade in particular and a free economy more generally were regarded as having a pro-poor agenda. The current poverty lobby, however, is focused entirely on government benefits as the solution to poverty and very rarely addresses government interventions that raise living costs. By way of example, when the debate about liberalising planning laws was at its height last year, all seven of the articles in the Child Poverty Action Group newsletter were about government benefits.Some progress was made in reducing poverty through increases in income transfers after 1997. Indeed, at the current time, the UK spends a greater proportion of national income on transfers than many Germanic and Scandinavian countries. Also, the extent of redistribution through state welfare systems is as great as that in Sweden. Furthermore, we have now reached the position where at least 68 per cent of all households with children in Britain are in receipt of one form of major transfer payment other than universal child benefit.Housing costs are a huge problem for the poor. Over the last 50 years, incomes before housing costs for the least well off have doubled. Incomes after housing costs, however, have risen by only 60 per cent. The evidence suggests that high housing costs are largely policy driven. The poverty lobby’s response to this problem is to propose extending housing benefit. It seems oblivious to the huge problems that this policy would cause. Increasing housing benefit would exacerbate the already very serious poverty traps as the benefit is withdrawn and increase housing demand (and therefore prices). It is a myth that our population density justifies the UK’s restrictive approach to land-use planning. Reforming the planning system should be the focus of policy.Liberalisation of the planning system could reduce housing costs by around 40 per cent. However, planning reform needs to run with the grain of the market so that development decisions reflect the value of environmental amenities. This would involve localisation of planning responsibilities and tax-collecting authority.Food prices in the UK are considerably higher than in comparable EU countries. Again, restrictions on building are an important aspect of this as they reduce the productivity of the retail sector and reduce competition. Further reductions in food prices could be achieved by liberalisation of the Common Agricultural Policy. A conservative estimate suggests that policy changes could bring about a reduction in food costs of about 25 per cent. Policy reforms in other sectors could also bring about considerable benefits for the least well off. Specifically, childcare costs are very high in the UK compared with other European countries despite high levels of government subsidy; energy prices are raised by incoherent environmental policies; and many indirect taxes are especially targeted on products disproportionately consumed by the poor. It would be perfectly feasible to pursue the government’s carbon- reduction policies in ways that increased energy bills by much less.Overall, a market-oriented anti-poverty policy could lead families to be up to £750 a month better off. There would also be scope for substantial decreases in taxation on the less well off because of substantial savings in benefits such as housing benefit. The UK is an outlier in terms of the failure of employment and family policy. Nearly 30 per cent of British children live in households with no adult in full-time work. Britain spends more on family benefits than virtually any other country in Europe. Furthermore, Britain is unique in Europe with its combination of high levels of single-parent families and high worklessness among single-parent families. The poverty lobby argues that there are high levels of poverty among those in work. While this is true for households where parents work part-time, poverty rates among families where one or two parents work full-time are low for single-parent families and negligible for two-parent families. These problems require a multi-pronged attack. Employment protection legislation – which tends to entrench long-term unemployment – should be liberalised; a new benefits system should remove penalties against family formation; effective marginal tax rates should be significantly reduced; and specialist assistance to those with weak labour market attachment should be managed and financed at local level. The government’s much-trumpeted ‘universal credit’ will make little, if any, impact.

A combined site proximity and recreation index approach to value natural amenities: An example from a natural resource management region of Murray-Darling Basin

This paper presents a hedonic property price model of rural land in a natural resource management region of the Murray-Darling Basin in Australia. In traditional hedonic models, the marginal value of environmental amenities is estimated using distance to or size of the environmental asset. The approach applied in this study offers the potential for a richer set of information, where environmental assets are described in terms of their 'recreational attractiveness'. The level of recreational attractiveness is represented as latent variables that are based on park facilities and recreational activities offered at each site. For a property in the study area that is 1km away from the River Murray, moving half a kilometre closer will increase the property price by $245,000, holding every other variable constant at the mean. This value is magnified by $27,000 if the house is in an area where there is high river recreational attractiveness and drops by $14,000 if river recreational attractiveness is low. By including recreational quality indices in a typical hedonic framework that is corrected for spatial dependency, the model is able to capture how individuals value environmental amenities around their homes based on the site's natural characteristics as well as recreational services.

The Economic Valuation of Environmental Amenities and Disamenities: Methods and Applications

There have been significant improvements over the past four decades in our ability to estimate the economic value of environmental amenities and disamenities. The development of many new techniques has broadened what can be measured to include climate change impacts, damages from hazardous waste sites and air pollution emissions, and the value of many ecosystem services. We review the major economic valuation techniques, as well as numerous applications of these valuation methods. However, there remain challenges ahead. The interface between economics and the natural and physical sciences must be strengthened. Additional well-controlled “natural experiments” are always needed. The application of valuation methods outside of the United States remains a monumental task. Reliable measures of nonuse values remain elusive.

Do Seller Disclosures Affect Property Values? Buyer Information and the Hedonic Model

The hedonic method is widely used to infer the value of environmental amenities that are bundled with real property. The interpretation of hedonic prices as marginal values requires that households are fully informed. Yet, there is evidence that buyers are often less informed than sellers. A graphical illustration in this study suggests that asymmetric information between buyers and sellers can affect hedonic prices. This intuition is confirmed by a quasi-random experiment that exploits spatial and information discontinuities stemming from a seller disclosure for flood zones. Results suggest a 4% decline in housing prices in flood zones after disclosures commenced.

Discounting and environmental quality: When should dual rates be used?

Triggered by concerns about impacts of long-run climatic change the use of dual-rate discounting to evaluate projects and policies has been suggested. Environmental goods should be discounted at a lower rate than conventional consumption goods. We consider the appropriate use of dual-rate discounting for a class of models where environmental amenity values of a stock of resources are built into the utility function. We argue that dual-rate discounting can only be justified either as a pragmatic device for valuation when future prices for environmental goods are unavailable or when consumption goods and environmental goods are not substitutable and relative prices are not well-defined.

Environmental amenities and agricultural land values: a hedonic model using geographic information systems data

Remote agricultural lands, which include wildlife habitat, angling opportunities and scenic vistas, command higher prices per hectare in Wyoming than those whose landscape is dominated by agricultural production. Geographic information systems (GIS) data are used to measure recreational and scenic amenities associated with rural land. A hedonic price model is specified with GIS measures. It is used to estimate the impact of amenity and agricultural production land characteristics on price per acre for a sample of Wyoming agricultural parcels. Results indicate that the specification performed well across several functional forms. The sampled land prices are explained by the level of both environmental amenities as well as production attributes. Statistically significant amenity variables included scenic view, elk habitat, sport fishery productivity and distance to town. This analysis permits a better estimation of environmental amenity values from hedonic techniques. Improved estimation of amenity values is vital for policies aimed at open space preservation, using agricultural conservation easements and land use conflict resolution.

Nature and the Marketplace: Capturing the Value of Ecosystem Services

Review: Nature and the Marketplace: Capturing the Value of Ecosystem Services By Geoffrey Heal Reviewed by Jack Coburn Isaacs Louisiana Department of Wildlife and Fisheries, USA Geoffrey Heal. Nature and the Marketplace: Capturing the Value of Ecosystem Services. Washington, DC: Island Press, 2000. 203 pp. ISBN 1- 55963-796-X (paper). US$25.00. Recycled, acid-free paper. Economics often suffers a bad reputation among environmentalists for neglecting the natural world. To a degree, this reputation is justified. To a degree, it is a matter of misunderstanding by critics who are unaware of the capacity of economic theory to study the nature and causes of environmental problems and uncover the value of environmental amenities. Fortunately, Geoffrey Heal has come along to set the record straight. Nature and the Marketplace contains ten chapters. The first three chapters cover the fundamentals of economic theory. The basic groundwork of economics is established without reference to supply curves, demand curves, or many of the charts, tables, figures, and formulae that sometimes confound the general reader. These chapters present the importance of property rights and markets, their roles, and their limitations. Heal explains how and why markets work and the causes and consequences of market failure. The next three chapters are applications of the concepts covered in the first three. While these provide examples of the versatility of natural resource economics, they are too brief for the complex issues they evaluate. Some of their market-based solutions may appear, perhaps, a bit too tidy. Chapter 4 competently addresses the capacity for ecotourism to provide positive incentives for environmental preservation but overlooks the possible negative effects of tourism on wildlife habitat. (The negative side effects are only briefly mentioned in the book's conclusion.) Chapter 5 describes the market failures that lie behind the global warming but offers solutions, carbon emissions and sequestration markets, that seem irrelevant after the collapse of the Kyoto Protocol. Heal may have used economic theory to explain why the current forms of international organization make market- based solutions for global warming difficult to develop and implement. In chapter 6 on biological diversity, Heal explains why markets often ignore the value of biodiversity, and the possible costs of doing so. He describes a few successful market-based initiatives to protect species habitat but admits that the scope of the biodiversity is beyond the realm of economics alone. Such

Existence Value of Environmental Amenities, Other Non-market Goods and Services: A Survey and Critique

The purpose of this paper is to review the environmental economics approaches to evaluate environmental amenities, other non-market goods and services. The paper first examines the accuracy and availability of some method of evaluate to environmental goods. Finally, this papers showed that the existence value of environmental quality is defined by compensating variation within the context of simple partial equilibrium model as based on revealed preference model.