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Heterogeneous Impact of Soil Contamination on Farmland Prices in the Belgian Campine Region: Evidence from Unconditional Quantile Regressions

Author

Listed:
  • Ludo Peeters

    () (Hasselt University)

  • Eloi Schreurs

    () (Hasselt University)

  • Steven Passel

    () (Hasselt University
    University of Antwerp)

Abstract

Abstract We estimate a hedonic-pricing model using geo-coded farmland-transaction data from the Campine region, situated in the north-east of Belgium. Unlike previous hedonic studies, we use the method of unconditional quantile regression (Firpo et al., in Econometrica 77(3):953–973, 2009). An important advantage of this new method over the traditional conditional quantile regression (Koenker and Bassett, in Econometrica 46(1):33–50, 1978) is that it allows for the estimation of potentially heterogeneous effects of cadmium pollution along the entire (unconditional) distribution of farmland prices. Using a threshold specification of the hedonic-pricing model, we find evidence of a U-shaped valuation pattern, where cadmium pollution of the soil has a negative and significant impact on prices only in the middle range of the distribution, insofar as cadmium concentrations are above the regulatory standard of 2 parts per million for agricultural land. Results obtained from a probit model to classify land plots into different price segments further suggest that the heterogeneous impact of soil pollution on price can be directly related to the variety of amenities that farmland provides.

Suggested Citation

  • Ludo Peeters & Eloi Schreurs & Steven Passel, 2017. "Heterogeneous Impact of Soil Contamination on Farmland Prices in the Belgian Campine Region: Evidence from Unconditional Quantile Regressions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(1), pages 135-168, January.
  • Handle: RePEc:kap:enreec:v:66:y:2017:i:1:d:10.1007_s10640-015-9945-6
    DOI: 10.1007/s10640-015-9945-6
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