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The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices

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  • Cross, Robin M.
  • Plantinga, Andrew J.
  • Stavins, Robert N.

Abstract

We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir – as proxied for by locational attributes – is not significant.

Suggested Citation

  • Cross, Robin M. & Plantinga, Andrew J. & Stavins, Robert N., 2011. "The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices," Sustainable Development Papers 101289, Fondazione Eni Enrico Mattei (FEEM).
    • Handle: RePEc:ags:feemdp:101289
    DOI: 10.22004/ag.econ.101289
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    1. Orley Ashenfelter & Karl Storchmann, 2010. "Using Hedonic Models of Solar Radiation and Weather to Assess the Economic Effect of Climate Change: The Case of Mosel Valley Vineyards," The Review of Economics and Statistics, MIT Press, vol. 92(2), pages 333-349, May.
    2. Gergaud, Olivier & Ginsburgh, Victor, 2010. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Journal of Wine Economics, Cambridge University Press, vol. 5(1), pages 3-21, April.
    3. Goldstein, Robin & Almenberg, Johan & Dreber, Anna & Emerson, John W. & Herschkowitsch, Alexis & Katz, Jacob, 2008. "Do More Expensive Wines Taste Better? Evidence from a Large Sample of Blind Tastings," Journal of Wine Economics, Cambridge University Press, vol. 3(1), pages 1-9, April.
    4. Veale, Roberta & Quester, Pascale, 2008. "Consumer Sensory Evaluations of Wine Quality: The Respective Influence of Price and Country of Origin," Journal of Wine Economics, Cambridge University Press, vol. 3(1), pages 10-29, April.
    5. Robin Cross & Andrew J. Plantinga & Robert N. Stavins, 2011. "What Is the Value of Terroir?," American Economic Review, American Economic Association, vol. 101(3), pages 152-156, May.
    6. Gergaud, Olivier & Ginsburgh, Victor, 2010. "Natural Endowments, Production Technologies and the Quality of Wines in Bordeaux. Does Terroir Matter?," Journal of Wine Economics, Cambridge University Press, vol. 5(01), pages 3-21, March.
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    Cited by:

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    3. Pecchioli, Bruno & Moroz, David, 2023. "Do geographical appellations provide useful quality signals? The case of Scotch single malt whiskies," Economic Modelling, Elsevier, vol. 124(C).
    4. Gokcekus, Omer & Finnegan, Clare M., 2014. "Classification and Re-Classification: Oregon’s Willamette Valley AVA and its New Sub-AVAs," Working Papers 164642, American Association of Wine Economists.
    5. Jeremy Galbreath, 2019. "Drivers of Green Innovations: The Impact of Export Intensity, Women Leaders, and Absorptive Capacity," Journal of Business Ethics, Springer, vol. 158(1), pages 47-61, August.
    6. GINSBURGH, Victor & MONZAK, M., 1992. "Red wines of Médoc: What is wine testing worth ?," LIDAM Discussion Papers CORE 1992027, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    7. Jeremy Galbreath & David Charles & Des Klass, 2014. "Knowledge and the Climate Change Issue: An Exploratory Study of Cluster and Extra-Cluster Effects," Journal of Business Ethics, Springer, vol. 125(1), pages 11-25, November.
    8. Robert N. Stavins, 2017. "The Evolution Of Environmental Economics: A View From The Inside," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 251-274, June.
    9. Aaron J. Staples & Trey Malone & J. Robert Sirrine, 2021. "Hopping on the localness craze: What brewers want from state‐grown hops," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 463-473, March.
    10. Kym Anderson, 2019. "Is Georgia the Next “New” Wine-Exporting Country?," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 13, pages 311-345, World Scientific Publishing Co. Pte. Ltd..
    11. Dachary-Bernard, Jeanne & Rambonilaza, Tina & Lemarié-Boutry, Marie, 2014. "The response of land markets to flood protection and flood experience: a hedonic price modeling on the Gironde estuary (France)," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 169761, Agricultural Economics Society.
    12. Giraud, Georges, 2014. "The Effect of Terroir on Wine Business Model in Burgundy: To Make Wine or to Sell Harvest?," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199067, International European Forum on System Dynamics and Innovation in Food Networks.
    13. Kym Anderson, 2012. "Rural Development in Georgia: What Role for Wine Export Growth?," Wine Economics Research Centre Working Papers 2012-01, University of Adelaide, Wine Economics Research Centre.
    14. Svetlana Ignjatijević & Jelena Vapa Tankosić & Nemanja Lekić & Duško Petrović & Sandra Brkanlić & Bojan Vapa & Vladimir Tomašević & Nikola Puvača & Radivoj Prodanović & Irena Milojević, 2022. "Agro-Environmental Practices and Business Performance in the Wine Sector," Agriculture, MDPI, vol. 12(2), pages 1-21, February.
    15. Fedoseeva, Svetlana, 2020. "(Dynamic) willingness to pay and e-commerce: Insights from sparkling wine sector in Russia," Journal of Retailing and Consumer Services, Elsevier, vol. 57(C).

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    More about this item

    Keywords

    Agricultural and Food Policy;

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices

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