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