The amenity value of woodland in Great Britain: A comparison of economic estimates

Forests produce benefits over and above the revenue yielded from timber and other wood based products. Most important among these may be the recreational benefits for visitors, which have been examined in several studies. Total benefits for residents are perhaps more accurately captured in property values since, ceteris paribus, the price of a house reflects willingness to pay to live near an environmental amenity such as a forest to gain access to it, and also the amenity (non-use) value of the forest in so far as it creates a pleasant landscape. However, the total non-priced value of forestry is not the sum of HPM and ITCM benefit estimates. Recreational benefits will typically be less, and will be subsumed in the HPM estimates, since the hedonic price is partly induced by the value of recreational access.     

Using spatial microsimulation to account for demographic and spatial factors in environmental benefit transfer

This paper presents a simulation-based modelling approach for estimating total visitor numbers and amenity values for prospective non-priced open-access outdoor recreation sites. To begin, the geographic extent of the market for recreation at a policy site is estimated using data from a similar study site. The population residing within this geographic area is simulated using a spatial microsimulation model and GIS techniques and an individual-level ‘visitor arrival function’ is then transferred across this simulated population. This allows the latent demand for visits to the policy site by each simulated individual to be predicted and summed, providing an estimate of the total potential demand for recreation at the site. Combining this with an economic value measure of a visit provides an estimate of the potential amenity value of the policy site. The approach is applied to Moyode Wood, a small-scale forest in the West of Ireland, and estimates the potential total economic value of recreation at €0.4 million for the site. The research represents the first time that spatial microsimulation has been used in environmental benefit transfer and shows how it can be used to control for differences in demographic and spatial factors between study and policy sites. It also demonstrates how individual-level single-site travel cost models estimated using on-site survey data can be used to predict demand at alternative policy sites.     

Expert opinion versus actual transaction evidence in the valuation of non-market amenities

Actual property values are overwhelmingly employed as a dependent variable in hedonic pricing models. Yet, assessed property values are generally more readily available than actual sales values and have, in some studies, been used in lieu of market prices. In this study, we compare estimates of different non-market amenity values based on actual transactions and assessed values. We estimate a Seemingly Unrelated Regression (SUR) model with two hedonic price equations, one with actual market values as the dependent variable and the other with assessed property values, and compare the resulting estimates of shadow prices for open space amenities. We also take into account spatial autocorrelation and combine Method of Moment estimates of the spatial parameters in both equations to create our test statistic. The results indicate that we cannot accept the hypothesis that the impacts of open space on property values are the same for actual sales and assessed values. Moreover, we do observe some differences between the distributions of assessed versus sales values, although the difference between the sizes of open space effects measured within the two equations is rather limited. Thus, while this one study is insufficient to enable one to draw definitive conclusions, there remains the possibility that policy makers cannot reliably base decisions on amenity values obtained from a hedonic model using assessed values.     

A Spatial Microsimulation Approach to Estimating the Total Number and Economic Value of Site Visits in Travel Cost Modelling

This paper presents a simulation-based modelling approach for simultaneously estimating the total number and aggregate value of recreation-related visits to a small-scale community forest in the West of Ireland. Spatially-referenced simulated individuals from a spatial microsimulation model for Ireland (SMILE) who reside within the geographic extent of the market for recreation at the forest are identified using GIS techniques. A travel cost model, adjusted for truncation and endogenous stratification, is estimated for a sample of visitors to the site and transferred across each individual in the simulated population. The SMILE model and GIS-based network analysis are used to derive the appropriate values for the explanatory variables in the transfer. Each simulated individual’s latent demand for visits to the site is predicted and summed, in order to derive aggregate visits and amenity value estimates. The paper makes two principal contributions. First, it sets out a new approach for modelling the geographic extent of the market for recreation using survey data on reported travel distances and GIS techniques. Second, it develops a new simulation-based modelling approach for predicting total site visits at non-priced open-access recreation sites.     

Does an economically active population matter in housing prices?

This article examines the link between the population structure and housing prices. We use a panel of 23 countries from 1976 to 2013 in our empirical analysis. We find statistically significant impacts of the proportion of the economically active population aged 15–64 to the total population on housing-price growth. Our study supports a policy for stable population growth to moderate housing-price growth and economic cycles.     

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.     

Comparing Fuzzy and Probabilistic Approaches to Preference Uncertainty in Non-Market Valuation

In seeking to value environmental amenities and public goods, individuals often have trouble trading off the (vague) good or amenity against a monetary measure. Valuation in these circumstances can best be described as fuzzy in terms of the amenity being valued, perceptions of property rights, and the numbers chosen to reflect values. In this paper, we apply fuzzy logic to contingent valuation, employing a fuzzy clustering approach for incorporating preference uncertainty obtained from a follow-up certainty confidence question. We develop a fuzzy random utility maximization (FRUM) framework where the perceived utility of each individual is fuzzy in the sense that an individual’s utility belongs to each cluster to some degree. The model is then applied to a Swedish survey that elicited residents’ willingness to pay for enhanced forest conservation and to a Canadian survey of agricultural landowners that elicited their willingness to accept compensation for a tree planting program. Both the WTP and WTA measures we obtain using the fuzzy approach are well below those obtained using standard probability methods. Based on goodness of fit measures and Monte Carlo experimentation, a case can be made for using a fuzzy preference approach for modeling preference uncertainty as opposed to incorporating respondent uncertainty within the random utility maximization framework.      

Optimal Design of Forest Taxation with Multiple-Use Characteristics of Forest Stands

The paper studies optimal forest taxation under uncertainty about future timber price when private forest owners value amenity services of forest stands and forest stands have public goods characteristics. It is assumed that preferences of forest owners can be described by a quasi-linear, intertemporal utility function which reflects risk aversion in terms of consumption and constant marginal utility in terms of amenity services. The comparative statics of current and future harvesting in terms of timber price risk, site productivity tax and yield tax are first developed. It is shown that, given the optimal site productivity tax, which is independent of the timber harvested and thus non-distortionary, it is desirable to introduce the yield tax at the margin; it both corrects externality due to the public goods characteristic of forest stands and serves as a social insurance device. The optimal yield tax is less than 100% and depends on the social value of forest stands, timber price risk and properties of compensated timber supply. In the general case the 'inverse elasticity rule – according to which the optimal yield tax is negatively related to the size of the substitution effects – may not hold. Under certainty, the desirability of the yield tax, given the optimal site productivity tax, depends only on the existence of public goods characteristic and is thus a pure Pigouvian tax.     

Hedonic Analysis in a Spatial Context: Theoretical Problems in Valuing Location-Specific Amenities*

Hedonic analysis is frequently implemented to generate implicit prices for location-specific amenities within single markets, either in cross-city wage differentials or in intra-city rent gradients. Amenities are shown to be generally priced in both land and labour markets, with single-market valuations tending to understate true amenity values. Establishing a correct multi-market amenity valuation model is seen to depend on the resolution of a host of additional issues.     

THE PROPERTY VALUE PREMIUM OF A PLACE OF WORSHIP

Using a unique data set of residential housing values, we improve on previous hedonic pricing and event studies literature to estimate the amenity effects of a new religious structure on local property values. We improve on previous research by extending our analysis with a pre‐ and post‐treatment model. Using a pre‐ and post‐treatment model, we do not find that the religious structure that we examined influenced the value of surrounding properties in the period after its completion. The results suggest that previous research using only post‐completion data may mischaracterize the amenity effects of religious structures. (JEL R3)     

Spatial Heterogeneity of Willingness to Pay for Forest Management

The paper investigates the spatial heterogeneity of public’s preferences for the implementation of a new country-wide forest management and protection program in Poland. Spatial econometric methods and high resolution geographical information system data related to forest characteristics are used to explain the variation in individual-specific willingness to pay (WTP) values, derived from a discrete choice experiment study. We find that respondents’ WTP is higher the closer they live to their nearest forest, and the scarcer forests are in the area where they live. Interestingly, the higher the ecological value of forests in respondents’ area, the more people prefer extending areas of national forest protection. We also investigate spatial patterns in individual-specific WTP scores and in latent class membership probabilities, finding that preferences are indeed spatially clustered. We argue that this clustering should be taken into account in forest management and policy-making.     

Valuing Local Environmental Amenity with Discrete Choice Experiments: Spatial Scope Sensitivity and Heterogeneous Marginal Utility of Income

Using discrete choice experiments we examine preferences for the spatial provision of local environmental improvements in the context of regeneration policies. Amenities we consider are: improvements to areas of open space, recreation facilities and other public spaces; street cleanliness; restoration of derelict properties; and the provision of paths dedicated to cycling and walking. We include the spatial scope of the policy as an attribute, making the trade-off between environmental amenity and its spatial provision explicit. We employ a novel estimator for average willingness to pay (WTP) for mixed logit models with a random cost coefficient, which is robust to the presence of price insensitive respondents and performs well relative to mixed logit estimation in WTP space. We find that the spatial scope of the policy affects both the intensity and heterogeneity of preferences, and that these effects are of statistical and economic significance.     

A discrete-space urban model with environmental amenities

This paper analyzes the effects of providing environmental amenities associated with open space in a discrete-space urban model and characterizes optimal provision of open space across a metropolitan area. The discrete-space model assumes distinct neighborhoods in which developable land is homogeneous within a neighborhood but heterogeneous across neighborhoods. Open space provides environmental amenities within the neighborhood it is located and may provide amenities in other neighborhoods (amenity spillover). We solve for equilibrium under various assumptions about amenity spillover effects and transportation costs in both open-city (with in- and out-migration) and closed-city (fixed population) versions of the model. Increasing open space tends to increase equilibrium housing density and price within a neighborhood. In an open-city model, open space provision also increases housing density and price in other neighborhoods if there is an amenity spillover effect. In a closed-city model, housing density and prices in other neighborhoods can decrease if the pull of the local amenity value is stronger than the push from reduced availability of developable land. We use numerical simulation to solve for the optimal pattern of open space in two examples: a simple symmetric case and a simulation based on the Twin Cities Metropolitan Area, Minnesota, USA. With no amenity spillover, it is optimal to provide the same amount of open space in all neighborhoods regardless of transportation cost. With amenity spillover effects and relatively high transportation cost, it is optimal to provide open space in a greenbelt at the edge of the city. With low transportation cost, open space is provided throughout the city with the exception of neighborhoods on the periphery of the city, where the majority of the population lives. A greenbelt still occurs but its location is inside the city.     

Forest management: Are double or mixed rotations preferable to clear cutting?

We study a particular uneven-aged forest stand management pattern, variations of which are often advocated in practice to mitigate the adverse effects of clear cutting. The forest stand under consideration is similar to a Faustmann stand, with the following difference: rather than being single aged, the forest tract contains trees of two age classes so that it is submitted to a form of selective cutting. Each harvest involves all of the older trees and only a fraction of the younger ones; hence the name mixed rotation. Trees left standing at harvest help stimulate natural regeneration and improve various environmental and amenity characteristics of the forest. We model this effect by using a cost function that varies with respect to the harvest rate of younger trees. We derive the properties that this cost function must exhibit in order some form of mixed rotation to be superior to the conventional single rotation à la Faustmann; we also characterize the mixed rotation in terms of duration and the harvest rate of younger trees, and we compare its properties with Faustmann’s rule.     

A review of the spatial economics of non-timber forest product extraction: Implications for policy

Patterns of forest cover and forest degradation determine the size and types of ecosystem services forests provide. Particularly in low-income countries, nontimber forest product (NTFP) extraction by rural people, which provides important resources and income to the rural poor, contributes to the level and pattern of forest degradation. Although recent policy, particularly in Africa, emphasizes forest degradation, relatively little research describes the spatial aspects of NTFP collection that lead to spatial degradation patterns. This paper reviews both the spatial empirical work on NTFP extraction and related forest degradation patterns, and spatial models of behavior of rural people who extract NTFPs from forest. Despite the impact of rural people's behavior on resulting quantities and patterns of forest resources, spatial–temporal models/patterns rarely inform park siting and sizing decisions, econometric assessments of park effectiveness, development projects to support conservation, or REDD protocols. Using the literature review as a lens, we discuss the models' implications for these policies with particular emphasis on effective conservation spending and leakage.     

Amenity driven price effects and conservation reserve site selection: A dynamic linear integer programming approach

Most conservation reserve design models presented in the literature are static and ignore the dynamic economic aspects of site selection. Typically conservation programs operate under time-related (e.g. annual) budgets and purchase land over time in a sequential manner. The uncertainty of land development has been incorporated in a few dynamic reserve selection formulations using stochastic dynamic programming. However, the existing formulations do not explicitly deal with inter-temporal price and location linkages. We address this issue here and present a two-period linear integer programming model for conservation reserve design that incorporates amenity driven price feedback effects inherent in the reserve development problem. In addition, the model includes spatial and ecological criteria. We then use this model to answer the question “How suboptimal is ignoring amenity driven price effects in reserve design models?” We apply the model to artificially generated data sets and compare the results with the results of an iterated static model that considers only one period at a time. We find that the dynamic model with price feedback effects selects sites at a lower per-site cost. The policy implication of this finding is that conservation programs should avoid purchasing land in the same neighborhood over multiple time periods.     

Valuing scenic amenity using life satisfaction data

The life satisfaction approach has recently emerged as a new technique in the suite of options available to non-market valuation practitioners. Employing data from the Household, Income and Labour Dynamics in Australia (HILDA) survey and Geographic Information Systems (GIS), this paper examines the influence of scenic amenity on the life satisfaction of residents of South East Queensland (SEQ), Australia. Measuring scenic amenity on a 10-point scale, it is found that, on average, a respondent is willing-to-pay approximately AUD$14,000 in household income per annum to obtain a one-unit improvement in scenic amenity. However, on closer inspection, we find that the relationship between willingness-to-pay and the level of scenic amenity is not linear. To our knowledge, this is the first paper to value scenic amenity using the life satisfaction approach and is the first paper to use this approach to value any type of environmental good or service in SEQ. As such, this paper represents a genuine contribution to a small, yet growing, body of literature.     

Relating International Trade to the Housing Market

Studies of tariffs have tended to ignore their impact on housing markets. This paper builds a simple dynamic general-equilibrium model to bridge the gap. The model is consistent with empirical findings that housing prices in several small open economies, and the price of nontradeables relative to tradeables, have increased over time. The model also allows closed-form solutions of the elasticity of the economic growth rate, the housing-stock growth rate, and the housing-price growth rate, with respect to the tariff rate. Other testable implications are generated.     

The Dynamic Response of Housing Values to a Forest Invasive Disease: Evidence from a Sudden Oak Death Infestation

“Sudden Oak Death” (Phytophthora ramorum) is a non-indigenous forest pathogen which causes substantial mortality of coast live oak (Quercus agrifolia) and several other oak tree species on the Pacific Coast of the United States. We estimated the time path of residential property values subject to oak mortality using a dataset that spans more than two decades—including a decade of transactions before-and-after the invasion. The findings suggest moderate, persistent property value discounts (3–6%) for homes located near infested oak woodlands subject to continuous post-invasion declines in forest health. The most severe discounts (8–15%) occurred where dying oaks were distributed both within residential neighborhoods and in nearby woodlands. Various hedonic modeling specifications were tested and compared to assess their ability to control for bias associated with unobserved spatial effects.     

A GIS-based approach for mapping direct use value of ecosystem services at a county scale: Management implications

A GIS-based approach was designed to spatially estimate direct use value of ecosystem services and to map results for a case study at county scale. The approach highlights the use of GIS to collect data, perform spatial analysis, and map economic values of ecosystem services. Three key steps of spatial valuation for agricultural products, forest products, and tourism services were illustrated in the GIS-based technical framework. We applied this approach to the Tiantai County (1423.8 km²) in Zhejiang province of southeast China. Selected components of natural products and tourism services in the case area were mapped as data layers in GIS, with each layer containing monetary values for every 25 m cell. The total direct use value of ecosystem services was estimated in RMB to be approximately 538 million Yuan in 2005 (Chinese currency, 8.2 Yuan = US$1), of which agricultural products, forest products and tourism services accounted for 65%, 30% and 5%, respectively. The critical areas for management purpose were identified depending on the heterogeneity of direct use services learned from the case study. The spatially explicit measures provide a mechanism for incorporating spatial context into ecosystem services evaluation. Based on the present GIS-based approach and case study, the suggestions and implications for local resources protection and eco-environmental management were extensively discussed. The work was expected to highlight research avenues to advance the ecosystem services framework as an operational basis for regional ecosystem-based management.