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Influence of remnant native vegetation on rural land values: a hedonic pricing application

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  • Walpole, Sandra C.
  • Lockwood, Michael
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    Abstract

    Much of Australia’s native vegetation has been cleared or altered as a result of agricultural development. The native vegetation that remains on private land is highly fragmented and continues to be degraded and modified due to various land use and environmental pressures. One of the major concerns of landholders in retaining and managing remnant native vegetation (RNV) in the agricultural landscape is the lack of information and understanding about the potential benefits and costs associated with conservation of these areas. The contribution of RNV to changes in rural property values needs to be examined when considering future policy and management strategies to encourage private landholders to retain and conserve RNV within the agricultural landscape. The northeast Victorian catchment and the Murray catchment of NSW were chosen to examine the effect of RNV on rural property values using hedonic price analysis. The hedonic price approach explores the relationship that exists between the price of a good and the bundle of characteristics (or attributes) which the good possesses, to explain variations in the prices of the differentiated goods under consideration. Land sales records for the past ten years were obtained for properties greater than two hectares within the catchment areas, and those containing areas of RNV were identified. The purchasers of these properties were interviewed to determine the characteristics that influenced their purchase decision. Using this information, multivariate regression models have been estimated to quantify the contribution to property values of different attributes including the presence and nature of RNV. Based on the results of this hedonic analysis, the property market does not appear to be a good measure of the economic value of RNV.

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    Bibliographic Info

    Paper provided by Australian Agricultural and Resource Economics Society in its series 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand with number 125032.

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    Date of creation: 1999
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    Handle: RePEc:ags:aare99:125032

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    Postal: AARES Central Office Manager, Crawford School of Public Policy, ANU, Canberra ACT 0200
    Phone: 0409 032 338
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    Related research

    Keywords: Demand and Price Analysis; Environmental Economics and Policy; Land Economics/Use;

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    1. Coelli, Tim J. & Lloyd-Smith, J. & Morrison, D. & Thomas, J., 1991. "Hedonic Pricing For A Cost Benefit Analysis Of A Public Water Supply Scheme," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(01), April.
    2. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
    3. David A. King & J. A. Sinden, 1988. "Influence of Soil Conservation on Farm Land Values," Land Economics, University of Wisconsin Press, vol. 64(3), pages 242-255.
    4. Linneman, Peter, 1980. "Some empirical results on the nature of the hedonic price function for the urban housing market," Journal of Urban Economics, Elsevier, vol. 8(1), pages 47-68, July.
    5. Williams, Christine H. & Rolfe, John & Longworth, John W., 1993. "Does Muscle Matter? An Economic Evaluation of Live Cattle Characteristics," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(02), August.
    6. Phil Graves & James C. Murdoch & Mark A. Thayer & Don Waldman, 1988. "The Robustness of Hedonic Price Estimation: Urban Air Quality," Land Economics, University of Wisconsin Press, vol. 64(3), pages 220-233.
    7. Guy Garrod & Ken Willis, 1992. "The amenity value of woodland in Great Britain: A comparison of economic estimates," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 2(4), pages 415-434, July.
    8. Geoghegan, Jacqueline & Wainger, Lisa A. & Bockstael, Nancy E., 1997. "Spatial landscape indices in a hedonic framework: an ecological economics analysis using GIS," Ecological Economics, Elsevier, vol. 23(3), pages 251-264, December.
    9. J. Walter Milon & Jonathan Gressel & David Mulkey, 1984. "Hedonic Amenity Valuation and Functional Form Specification," Land Economics, University of Wisconsin Press, vol. 60(4), pages 378-387.
    10. Miranowski, John & Hammes, B., 1984. "Implicit Prices of Soil Characteristics for Farmland in Iowa," Staff General Research Papers 10706, Iowa State University, Department of Economics.
    11. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    12. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
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