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The Economic Value Of Protecting Inventoried Roadless Areas: A Spatial Hedonic Price Study In New Mexico

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  • GERMÁN M. IZÃN
  • MICHAEL S. HAND
  • MATIAS FONTENLA
  • ROBERT P. BERRENS

Abstract

"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) Copyright (c) 2010 Western Economic Association International.

Suggested Citation

  • Germán M. Izãn & Michael S. Hand & Matias Fontenla & Robert P. Berrens, 2010. "The Economic Value Of Protecting Inventoried Roadless Areas: A Spatial Hedonic Price Study In New Mexico," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 537-553, October.
  • Handle: RePEc:bla:coecpo:v:28:y:2010:i:4:p:537-553
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    References listed on IDEAS

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    Cited by:

    1. Prasad Neelawala & Clevo Wilson & Wasantha Athukorala, 2013. "The impact of mining and smelting activities on property values: a study of Mount Isa city, Queensland, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(1), pages 60-78, January.
    2. Mani Nepal, "undated". "Where gathering firewood matters: Proximity and forest management effects in hedonic pricing models for rural Nepal," Working papers 113, The South Asian Network for Development and Environmental Economics.
    3. vom Hofe, Rainer & Mihaescu, Oana & Boorn, Mary Lynne, 2017. "Do urban parks really benefit homeowners economically? Evidence from a spatial hedonic study of the Cincinnati park system," HUI Working Papers 122, HUI Research.

    More about this item

    JEL classification:

    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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