Valuing Private and Public Greenspace Using Remotely Sensed Vegetation Indices

In a typical metropolitan area, greenspace varies substantially in its quality and extent. Remotely sensed vegetation index data is used to characterize the heterogeneity in private and public greenspace (riparian corridors) in metropolitan Tucson, Arizona. This data set enables the researcher to test if: (1) greenness is a significant determinant of house price variation in this desert city; and (2) whether there is an interaction between public and private greenspace. Private greenspace amenities can be endogenously improved by homeowners as a complement or substitute for the greenspace that is publicly provided, whereas public greenspace might be exogenous or endogenous depending on households ability to pressure the local government to protect or restore public greenspace. The results of a Hausman test indicate that endogeneity is a problem in the dataset and therefore an instrumental variable two stage least squares estimation is used. The results of this analysis indicate that homebuyers in the study area have preferences for both greener lots and greener riparian corridors and that private and public greenspace appear to be substitutes. Results are robust across multiple identification strategies designed to address potential endogeneity. The study results could have fundamental implications for the efficient use of limited water supplies in this semi-arid metropolitan area.