THE ECONOMIC VALUE OF PROTECTING INVENTORIED ROADLESS AREAS: A SPATIAL HEDONIC PRICE STUDY IN NEW MEXICO

The objective of this paper is to examine the off‐site benefits, as capitalized into housing values, of protecting 1.6 million acres of Inventoried Roadless Areas (IRAs) in the state of New Mexico, United States. In light of petitions filed by various U.S. states to maintain the status of IRAs as roadless lands, spatial hedonic price models are estimated and used to calculate the implicit value of IRAs in New Mexico. Findings show that a two‐stage least squares (2‐SLS), robust spatial‐lag model is the most appropriate econometric representation of the hedonic price function, and that IRA lands are a significant and positive determinant of house value. After controlling for the presence of Wilderness Areas (WAs) and other characteristics, results indicate that, on average, there is a 5.6% gain in the property value of a house from being located in, or adjacent to, a Census tract with IRAs. In the aggregate, this gain represents 3.5% of the value of all owner‐occupied units in New Mexico ($1.9 billion in capitalized value, or an annualized value in perpetuity of $95 million, assuming a 5% interest rate). (JEL R22, H40, Q51, C21)     

The external cost of asbestos in the housing market

This study uses a Generalized Method of Moments spatial error hedonic model to estimate the potential impact of asbestos on residential property prices. The analysis examines a large sample of 32,403 housing sales occurring between 2008 and 2015 in a fast-growing Coastal Alabama region. Results indicate the presence of asbestos depreciates house values by 13.44%, translating into an external cost of approximately $25,300 per property.     

Errors in variables and spatial effects in hedonic house price models of ambient air quality

In the valuation of the effect of improved air quality through the estimation of hedonic models of house prices, the potential “errors in variables” aspect of the interpolated air pollution measures is often ignored. In this paper, we assess the extent to which this may affect the resulting empirical estimates for marginal willingness to pay (MWTP), using an extensive sample of over 100,000 individual house sales for 1999 in the South Coast Air Quality Management District of Southern California. We take an explicit spatial econometric perspective and account for spatial dependence and endogeneity using recently developed Spatial 2SLS estimation methods. We also account for both spatial autocorrelation and heteroskedasticity in the error terms, using the Kelejian–Prucha HAC estimator. Our results are consistent across different spatial weights matrices and different kernel functions and suggest that the bias from ignoring the endogeneity in interpolated values may be substantial. This paper is part of a joint research effort with James Murdoch (University of Texas, Dallas) and Mark Thayer (San Diego State University). Their valuable input is gratefully acknowledged. The research was supported in part by NSF Grant BCS-9978058 to the Center for Spatially Integrated Social Science (CSISS), and by NSF/EPA Grant SES-0084213. Earlier versions were presented at the 5th International Workshop on Spatial Econometrics and Statistics, Rome, Italy, May 2006, the 53th North American Meetings of the Regional Science Association International, Toronto, ON, Nov. 2006, the 2007 Meetings of the Allied Social Science Assocations, Chicago, IL, Jan 2007, and at departmental seminars at the University of Illinois. Comments by discussants and participants are greatly appreciated. A special thanks to Harry Kelejian for his detailed and patient clarification of the HAC estimator. The usual disclaimer holds.     

Amenity values of proximity to National Wildlife Refuges: An analysis of urban residential property values

This research quantifies the property value benefits of National Wildlife Refuges near urban areas on the eastern coast of the U.S.A. Our approach is made possible through access to confidential U.S. Census data identifying property values surrounding all refuges with high geographic resolution. Results from hedonic property value models suggest that the amenity values of refuges located near urbanized areas are capitalized into the value of homes in very close proximity, averaging $11 million per refuge. These capitalized values add directly to the local tax base and are considerable complements to the annual economic value created by the refuge system.     

Applying tradable permits to biodiversity conservation: Effects of space-dependent conservation benefits and cost heterogeneity on habitat allocation

This paper is concerned with the cost-effective allocation of habitat for species under spatio-temporally heterogeneous economic development. To address the dynamic dimension of the problem we consider tradable development rights as the instrument of choice. A particular challenge in applying tradable development rights is that the conservation benefit of an individual habitat patch depends on its spatial relationship with other habitat patches and thus is an emergent rather than a fixed property. We analyse with a conceptual model the spatial and temporal dynamics of habitats in a region under a tradable development rights market that takes spatial interaction of habitats explicitly into account. In our analysis two different outcomes may emerge depending on the levels of spatial interaction and cost heterogeneity: an “ordered” structure where habitat patches are clustered in space and are stable over time, and a “disordered” structure where habitat patches are scattered in space and subject to high turnover of destruction and recreation. A high level of spatial interaction or a low level of cost heterogeneity favours an ordered structure while a low level of spatial interaction or a high level of cost heterogeneity favours a disordered structure.     

Economic impact of ocean fish populations in the global fishery

Our goal in this paper is to estimate the total output in an economy that is currently dependent (at least partially) on current fisheries output. We therefore applied the Leontief technological coefficients at current production and then estimate total output supported throughout the economy at the current level of production. Estimates of gross revenue from capture fisheries suggest that the direct value of output for this sector is US $80–85 billion annually (Sumaila et al., Journal of Bioeconomics 9(1):39–51, 2007; Willmann et al., The Sunken Billions, World Bank, FAO, Washington DC, Rome, 2009). However, as a primary or a potential economic base industry, there are a vast number of secondary economic activities—from boat building to international transport—that are supported by world fisheries, yet these related activities are rarely considered when evaluating the economic impact of fisheries. This study applies an input–output methodology to estimate the total direct, indirect, and induced impact of marine capture fisheries on the world economy. While results suggest that there is a great deal of variation in fishing output multipliers between regions and countries, when we apply the output multipliers to the capture fisheries sector at the global level, we find that significant indirect and induced effects place the impact of this sector to world output nearly three times larger than the value of landings at first sale, at between US $80–85 billion annually (Sumaila et al., Journal of Bioeconomics 9(1):39–51, 2007; Willmann et al., The Sunken Billions, World Bank, FAO, Washington DC, Rome, 2009). However, as a primary or a potential economic base industry, there are a vast number of secondary economic activities—from boat building to international transport—that are supported by world fisheries, yet these related activities are rarely considered when evaluating the economic impact of fisheries. This study applies an input–output methodology to estimate the total direct, indirect, and induced impact of marine capture fisheries on the world economy. While results suggest that there is a great deal of variation in fishing output multipliers between regions and countries, when we apply the output multipliers to the capture fisheries sector at the global level, we find that significant indirect and induced effects place the impact of this sector to world output nearly three times larger than the value of landings at first sale, at between US 225 and 240 billion per year.     

The future of farming: The value of ecosystem services in conventional and organic arable land. An experimental approach

In the current work, a novel, experimental ‘bottom-up’ approach is used to quantify the economic value of ecosystem services (ES) associated with highly modified arable landscapes in Canterbury, New Zealand. First, the role of land management practices in the maintenance and enhancement of ES in agricultural land was investigated by quantifying the economic value of ES at the field level under organic and conventional arable systems. This quantification was based on an experimental approach in contrast with earlier value transfer methods. Total economic value of ES in organic fields ranged from US $1610 to US $19,420 ha^− 1 yr^− 1 and that of conventional fields from US $1270 to US $14,570 ha^− 1 yr^− 1. The non-market value of ES in organic fields ranged from US $460 to US $5240 ha^− 1 yr^− 1. The range of non-market values of ES in conventional fields was US $50 — 1240 ha^− 1 yr^− 1. There were significant differences between organic and conventional fields for the economic values of some ES. Next, this economic information was used to extrapolate and to calculate the total and non-market value of ES in Canterbury arable land. The total annual economic and non-market values of ES for the conventional arable area in Canterbury (125,000 ha) were US $332 million and US $71 million, respectively. If half the arable area under conventional farming shifted to organic practices, the total economic value of ES would be US $192 million and US $166 million annually for organic and conventional arable area, respectively. In this case, the non-market value of ES for the organic area was US $65 million and that of conventional area was US $35 million annually. This study demonstrated that arable farming provides a range of ES which can be measured using field experiments based on ecological principles by incorporating a ‘bottom-up’ approach. The work also showed that conventional New Zealand arable farming practices can severely reduce the financial contribution of some of these services in agriculture whereas organic agricultural practices enhance their economic value.     

You can take it with you: Proposition 13 tax benefits,residential mobility,and willingness to pay for housing amenities

The endogeneity of prices has long been recognized as the main identification problem in the estimation of marginal willingness to pay (MWTP) for the characteristics of a given product. This issue is particularly important in the housing market, since a number of housing and neighborhood features are unobserved by the econometrician. This paper proposes the use of a well defined type of transaction costs–moving costs generated by property tax laws–to deal with this type of omitted variable bias. California's Proposition 13 property tax law is the source of variation in transaction costs used in the empirical analysis. Beyond its fiscal consequences, Proposition 13 created a lock-in effect on housing choice because of the implicit tax break enjoyed by homeowners living in the same house for a long time. Its importance to homeowners is estimated from a natural experiment created by two amendments that allow households headed by an individual over the age of 55 to transfer the implicit tax benefit to a new home. Indeed, 55-year old homeowners have 25% higher moving rates than those of comparable 54 year olds. These transaction costs from the property tax laws are then incorporated into a household sorting model. The key insight is that because of the property tax laws, different potential buyers may have different user costs for the same house. The exogenous property tax component of this user cost is then used as an instrumental variable. I find that MWTP estimates for housing characteristics are approximately 100% upward biased when the choice model does not account for the price endogeneity.     

A spatially filtered mixture of <Emphasis Type="Italic">β</Emphasis>-convergence regressions for EU regions, 1980–2002

Assessing regional growth and convergence across Europe is a matter of primary relevance. Empirical models that do not account for structural heterogeneities and spatial effects may face serious misspecification problems. In this work, a mixture regression approach is applied to the β-convergence model, in order to produce an endogenous selection of regional growth patterns. A priori choices, such as North–South or centre-periphery divisions, are avoided. In addition to this, we deal with the spatial dependence existing in the data, applying a local filter to the data. The results indicate that spatial effects matter, and either absolute, conditional, or club convergence, if extended to the whole sample, might be restrictive assumptions. Excluding a small number of regions that behave as outliers, only a few regions show an appreciable rate of convergence. The majority of data show slow convergence, or no convergence at all. Furthermore, a dualistic phenomenon seems to be present inside some States, reinforcing the “diverging-convergence” paradox. An erratum to this article can be found at     

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.     

Monetary valuation of aircraft noise: A hedonic analysis around Amsterdam airport

In densely-populated countries and in particular in large metropolitan areas, the presence of so much human activity causes all sorts of negative externalities, for example traffic noise disturbance. These externalities call for corrective measures by the government. Economists have developed a number of procedures that provide reasonable estimates on the monetary value of some amenities and externalities. In this paper we develop a spatially-explicit hedonic pricing model for house prices in order to quantify the social cost of aircraft noise disturbance in monetary terms. While focusing on aircraft noise around Amsterdam airport in the urban fringe of the Amsterdam region, a key point in our analysis is that we account for background noise. We do this by taking multiple sources of traffic noise (i.e. road, railway and aircraft noise) into account simultaneously and by setting threshold values for all three sources of noise above which sound is generally experienced as nuisance. Based on our regression results we conclude that a higher noise level means ceteris paribus a lower house price. Air traffic has the largest price impact, followed by railway traffic and road traffic. These model outcomes can subsequently be used to estimate the marginal and total benefits of aircraft noise reduction in the studied area around Amsterdam airport. We find a marginal benefit of 1 dB noise reduction of 1459 Euro per house, leading to a total benefit of 1 dB noise reduction of 574 million Euros.     

Convergence and spillover of house prices in Chinese cities

The issue of house price convergence in 34 Chinese cities is investigated. We augmented the convergence model with contemporaneous spatial dependence in house prices and found that price convergence and positive spatial spillover are both present. We explicitly addressed the endogeneity problem by introducing a Bayesian instrumental variable setup, which was estimated with particle filtering techniques. From a growth poles perspective, the empirical evidence indicates that the spread effect in regional house prices outweighs the backwash effect. The identified positive spatial spillover has two effects on the growth of house prices in Chinese cities. First, the spillover elevates the trajectories of the steady-state growth paths of house prices. Second, the spillover narrows the gaps between the growth paths of house prices in neighbouring cities. Shocks to the socio-economic variables of a city generate their own effects on domestic house prices that dominate the effects arising from cross-city price feedbacks, thus mitigating the prospect of level convergence. Our findings also suggest a collaborating role between time and spatial dependence parameters. The identification of inter-city spillover, which is a conditioning factor for regional house price convergence, offers implications to policies that are most likely to be effective in reducing regional disparity.     

Real exchange rate shocks on tradables,nontradables, and the current account: Mexico, 1980–2000.

Effects of external and income shocks on consumption and on the current account in Mexico from 1980 to 2000 are investigated. An intertemporal model captures the extent into which non-traded goods consumption affects traded-goods consumption, clarifying the roles of intratemporal or intertemporal substitution. Vector autoregressions (VARs) show that the 1% shock to non-traded goods consumption affects traded-goods consumption by −2% immediately, reverting to zero only after one year, supporting the intratemporal channel. Real exchange rate (RER) shocks exert considerable macroeconomic fluctuations. The 1% shock to RER affects traded goods consumption by −2% immediately, reaching −5% one year later. At the expense of income shocks, RER shocks grow in explanatory power over time: from 20%–25% at 1 quarter to 65%–69% of the variance of traded goods consumption 3 years later. Figures for the current account range from 14% to 68%, while income shocks appear less important. In contrast, for non-traded goods, RER shocks roughly match the quantitative importance of income shocks, reinforcing the theoretical analysis. First version received: June 2001/Final version received: July 2002 RID="*" ID="*"  Previous versions of this paper were presented at the conferences: “Economic and Financial Cycles and NAFTA: Micro and Macro Issues and Analysis” in Mexico City and at the “35^th Annual Meeting of the Canadian Economics Association” in Montréal. I wish to thank two anonymous referees of this journal for very helpful comments, Steven Ambler, Vincent Dropsy, Jo?o Faria, Michel Normandin, Yoshi Otani, Tsunemasa Shiba and Gerardo Villoslado for comments and encouragement. I remain solely responsible for the shortcomings of this paper. Financial support from the Japanese Ministry of Education and Culture in early parts of this project is gratefully acknowledged.     

The determinants of local employment dynamics in Western Germany

This article studies the impact of the local industrial structure on employment dynamics in Western Germany. Following the approach of Combes et al. (J Urban Econ 56:217–243, 2004) for France, local employment growth is decomposed into internal growth resulting from employment changes in existing plants and into external growth determined by employment decisions of newly established plants. The dynamics of both components are estimated simultaneously, taking explicitly into account the timing of the impact of specialization, diversity, and competition in a region. The analysis is conducted for 24 sectors in the West German labor market regions from 1993 to 2002. Estimation results emphasize the positive influence of diversity on both the internal and external employment growth, whereas there is no clear result on specialization. A high degree of competition fosters external employment, but is detrimental to internal employment. Dynamic panel regressions show that static externalities dominate. Importantly, the impact of the local industrial structure on employment dynamics does not differ between small and larger plants, nor are there fundamental differences between Western Germany and France.     

The social value of carbon sequestered in Great Britain's woodlands

The economic value of carbon storage associated with British woodland is calculated. Models were developed to estimate C flux associated with live trees, forest floor litter, soils, wood products, harvest, fossil fuel used in manufacturing and C displacement from biofuels and products for representative British plantation species: Sitka spruce (Picea sitchensis) and beech (Fagus sylvatica). Map databases of publicly and privately owned woodlands were compiled for Great Britain. Carbon flux was determined for individual woodland sites, and monetised using candidate parameters for the social discount rate (1, 3, 3.5 or 5%) and social value of carbon (US$109.5, $1, $10 or $17.10/t). A conventional discount function was applied. Final results are expressed as Net Present Values, for the base year 2001, with discounting commencing in 2002. The minimum suggested NPV (discount rate = 3% and social value of carbon = $1) of GB woodlands already existing in 2001 is $82 million, with a further $72 million that might be added by future afforestation. These figures rise dramatically if a discount rate of 1% and social value of sequestered carbon = $109.5/t are assumed. The calculated total value of C stored in British woodland depends significantly on parameter assumptions, especially about appropriate discount rate and social value of sequestered carbon.     

文化差异、地理距离与主要投资国在我国的FDI空间分布格局

构建了考虑空间滞后因子的引力模型,采用2001—2010年我国各省份国别FDI数据对文化差异及地理距离对我国FDI空间格局的影响进行了实证检验。研究发现:各国在我国范围内的实际直接投资存在较为明显的"路径依赖"和集聚效应,文化差异与FDI的关系日益表现为明显的"S型"关系,并且其对我国FDI的空间分布格局的影响日益凸显;而地理距离对各国在我国各省的FDI的影响表现出较为明显的减弱趋势,但临海省份吸收各国的FDI所具备的优势却在增强。     

Economic Benefits of Management Reform in the Gulf of Mexico Grouper Fishery: A Semi-parametric Analysis

This paper uses a semi-parametric empirical model to estimate the economic benefits of adopting a property rights-based management program in the Gulf of Mexico grouper fishery. The analysis predicts that a rights-based fleet will be comprised of fewer, more cost efficient boats than under the current controlled access management program. Results indicate that in the year of our data, 1993, the smaller, more productive fleet could harvest the allowable reef fish catch at a cost saving of $2.92–$7.07  million, 12–30% less than under controlled access management. Recent tightening of controlled access regulations suggest that the benefits from management reform could be even larger in the current day fishery.      

A spatial econometric analysis of the regional growth and volatility in Europe

Based on a sample of 1,084 European regions (EU15) from 1995 to 2004, we estimate the relationship between the average growth rate of GDP per capita and the volatility of the growth rate allowing for spatial effects. The spatial lag and spatial error models show that the regional per capita growth rate and volatility are significantly positively related on average. However, the inclusion of country interaction terms reveals that the volatility impact is not uniform across countries. In particular, the relationship between growth and volatility is significantly positive for the majority of countries but significantly negative for three countries (namely Finland, Italy, and Ireland).

Housing Market Fluctuations and the Implicit Price of Water Quality: Empirical Evidence from a South Florida Housing Market

In this study we utilize a hedonic property price analysis to examine changes in the implicit price of water quality given housing market fluctuations over time. We analyze Martin County, Florida waterfront home sales from 2001 to 2010 accounting for the associated significant real estate fluctuations in this area through flexible econometric controls in space and time. We apply a segmented regression methodology to identify housing market price instability over time, interact water quality with these identified market segmentations, and embed these interactions within a spatial fixed effect model to further account for any spatial heterogeneity in the waterfront market. Results indicate that water quality improvement is associated with higher property values. We find no evidence that the economic downturn crowded out concern for the water quality in this area. We further impute an implicit prices of $2614, evaluated at the sample mean, for 1 % point increase in the water quality grade.     

Winners, Losers, and the Nuclear-Waste Dilemma

This paper explores how property-right assignment affects social efficiency when a public program has both “public good” and “public bad” components. We show that when willingness to accept a public bad exceeds the willingness to pay, the net benefit is unambiguously lower when the property right supports the status quo institutional structure. Thus, Kaldor–Hicks efficiency tests tend to favor public programs and mitigation over the status quo even when mitigation negatively affects another group. To illustrate the result, we develop social-cost estimates for moving nuclear waste from current temporary-storage facilities to a permanent central repository at Yucca Mountain, NV, USA. For a representative city with a population of 226,195, the present value of the external cost of shipping waste is $1.42 billion when those living near temporary nuclear-waste storage facilities are assigned the property right to “health and safety.” That number swells to $5.95 billion when those living near the transport route are assigned the property right. Thus, property-right assignment affects the efficient level of nuclear-waste, and thus nuclear energy, produced.