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Estimation of external effects from the quarrying sector using the hedonic pricing method

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  • Lavee, Doron
  • Bahar, Sefi

Abstract

The quarrying sector is characterized by external effects, which are not commonly reflected in mineral prices. The aim of this study is to estimate the external effects from aggregate quarries which are in close proximity to population centers, by using the hedonic pricing method. The study was conducted on three quarries adjacent to population centers, with different characteristics in terms of quarrying, topography and type of population. By applying an econometric estimation of the shadow price on properties adjacent to the quarries, the results indicate that proximity to quarries lead to a negative impact on property values. According to the study’s results, increasing the distance from the quarry by 10%, correlates with an increase of about 1% in the property’s value. Despite substantial differences between the various quarries, the resulting effect is nearly identical, suggesting that the perceived damage is similar among the different populations. The external effects from the quarries cause a decrease of roughly 8.6% in property prices. These findings have several evidence based policy implications regarding the allocation of quarry franchises and on setting a levy on the activity of quarries in close proximity to population centers.

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  • Lavee, Doron & Bahar, Sefi, 2017. "Estimation of external effects from the quarrying sector using the hedonic pricing method," Land Use Policy, Elsevier, vol. 69(C), pages 541-549.
    • Handle: RePEc:eee:lauspo:v:69:y:2017:i:c:p:541-549
    DOI: 10.1016/j.landusepol.2017.10.005
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