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Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape


  • Maksym Polyakov
  • David J. Pannell
  • Ram Pandit
  • Sorada Tapsuwan
  • Geoff Park


In many parts of the world, natural vegetation has been cleared to allow agricultural production. To ensure a long-term flow of ecosystem services without compromising agricultural activities, restoring the environment requires a balance between public and private benefits and costs. Information about private benefits generated by environmental assets can be utilized to identify conservation opportunities on private lands, evaluate environmental projects, and design effective policy instruments. We use a spatio-temporal hedonic model to estimate the private benefits of native vegetation on rural properties in the state of Victoria, Australia. Specifically, we estimate the marginal value of native vegetation on private land and examine how it varies with the extent of vegetation on a property and across a range of property types and sizes. Private benefits of native vegetation are greater per unit area on small and medium-sized properties and smaller on large production-oriented farms. Native vegetation exhibits diminishing marginal benefits as its proportion of a property increases. The current extent of native vegetation cover is lower than the extent that would maximize the amenity value to many landowners. There is scope for improved targeting of investment in the study region by incorporating private benefits of environmental projects into environmental planning processes. Landowners with high marginal private benefits from revegetation would be more willing to participate in a revegetation program. Targeting these landowners would likely provide higher value for money because such projects could be implemented at lower public cost.

Suggested Citation

  • Maksym Polyakov & David J. Pannell & Ram Pandit & Sorada Tapsuwan & Geoff Park, 2015. "Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 299-314.
  • Handle: RePEc:oup:ajagec:v:97:y:2015:i:1:p:299-314.

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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. 287 – Farmers like trees
      by David Pannell in Pannell Discussions on 2015-11-16 21:00:23
    2. 289 – Interpreting evidence through an ideological lens
      by David Pannell in Pannell Discussions on 2016-03-07 21:00:51


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    Cited by:

    1. Abbie A. Rogers & Fiona L. Dempster & Jacob I. Hawkins & Robert J. Johnston & Peter C. Boxall & John Rolfe & Marit E. Kragt & Michael P. Burton & David J. Pannell, 2019. "Valuing non-market economic impacts from natural hazards," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(2), pages 1131-1161, November.
    2. Roberto Evangelio & Simon Hone & Moses Lee & David Prentice, 2019. "What Makes a Locality Attractive? Estimates of the Amenity Value of Parks for Victoria," Economic Papers, The Economic Society of Australia, vol. 38(3), pages 182-192, September.
    3. Xin Yang & Michael Burton & Yinying Cai & Anlu Zhang, 2015. "Exploring Heterogeneous Preference for Farmland Non-market Values in Wuhan, Central China," Sustainability, MDPI, Open Access Journal, vol. 8(1), pages 1-13, December.
    4. Tapsuwan, Sorada & Polyakov, Maksym & Bark, Rosalind & Nolan, Martin, 2015. "Valuing the Barmah–Millewa Forest and in stream river flows: A spatial heteroskedasticity and autocorrelation consistent (SHAC) approach," Ecological Economics, Elsevier, vol. 110(C), pages 98-105.
    5. Thomas McGregor & Samuel Wills, 2016. "Natural Assets: Surfing a wave of economic growth," OxCarre Working Papers 170, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    6. Marcos-Martinez, Raymundo & Bryan, Brett A. & Schwabe, Kurt A. & Connor, Jeffery D. & Law, Elizabeth A., 2018. "Forest transition in developed agricultural regions needs efficient regulatory policy," Forest Policy and Economics, Elsevier, vol. 86(C), pages 67-75.
    7. Polyakov, Maksym & Pannell, David J., 2014. "Accounting for private benefits in ecological restoration planning," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169823, Agricultural and Applied Economics Association.

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