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Bayesian Model Averaging in the Context of Spatial Hedonic Pricing: An Application to Farmland Values

Author

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  • Geerte Cotteleer
  • Tracy Stobbe
  • G. Cornelis van Kooten

Abstract

Since 1973, British Columbia created an Agricultural Land Reserve to protect farmland from development. In this study, we employ GIS-based hedonic pricing models of farmland values to examine factors that affect farmland prices. We take spatial lag and error dependence into explicit account. However, the use of spatial econometric techniques in hedonic pricing models is problematic because there is uncertainty with respect to the choice of the explanatory variables and the spatial weighting matrix. Bayesian model averaging techniques in combination with Markov Chain Monte Carlo Model Composition are used to allow for both types of model uncertainty.

Suggested Citation

  • Geerte Cotteleer & Tracy Stobbe & G. Cornelis van Kooten, 2007. "Bayesian Model Averaging in the Context of Spatial Hedonic Pricing: An Application to Farmland Values," Working Papers 2007-07, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
  • Handle: RePEc:rep:wpaper:2007-07
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    File URL: https://web.uvic.ca/~repa/publications/REPA%20working%20papers/WorkingPaper2007-07.pdf
    File Function: Final version, 2007
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    References listed on IDEAS

    as
    1. James Lesage & Manfred Fischer, 2008. "Spatial Growth Regressions: Model Specification, Estimation and Interpretation," Spatial Economic Analysis, Taylor & Francis Journals, vol. 3(3), pages 275-304.
    2. Olivier Parent & James Lesage, 2005. "Bayesian Model Averaging for Spatial Econometric Models," Post-Print hal-00375489, HAL.
    3. Fernandez, Carmen & Ley, Eduardo & Steel, Mark F. J., 2001. "Benchmark priors for Bayesian model averaging," Journal of Econometrics, Elsevier, vol. 100(2), pages 381-427, February.
    4. Pace, R Kelley & Barry, Ronald & Clapp, John M. & Rodriquez, Mauricio, 1998. "Spatiotemporal Autoregressive Models of Neighborhood Effects," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 15-33, July.
    5. Colwell, Peter F & Munneke, Henry J, 1999. "Land Prices and Land Assembly in the CBD," The Journal of Real Estate Finance and Economics, Springer, vol. 18(2), pages 163-180, March.
    6. Jean CavailhËs & Pierre Wavresky, 2003. "Urban influences on periurban farmland prices," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 30(3), pages 333-357, September.
    7. Colwell, Peter F. & Munneke, Henry J., 1997. "The Structure of Urban Land Prices," Journal of Urban Economics, Elsevier, vol. 41(3), pages 321-336, May.
    8. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
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    Citations

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    Cited by:

    1. Qin Fan & J. Andrew Hansz & Xiaoming Yang, 2016. "The Pricing Effects of Open Space Amenities," The Journal of Real Estate Finance and Economics, Springer, vol. 52(3), pages 244-271, April.
    2. Zhen Xu & G. Cornelis van Kooten, 2012. "Estimation of Forest Fire-fighting Budgets Using Climate Indexes," Working Papers 2012-03, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    3. Geerte Cotteleer & Tracy Stobbe & G. Cornelis van Kooten, 2008. "Expert Opinion versus Transaction Evidence: Using the Reilly Index to Measure Open Space premiums in the Urban-Rural Fringe," Working Papers 2008-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.
    4. Seya, Hajime & Yamagata, Yoshiki & Tsutsumi, Morito, 2013. "Automatic selection of a spatial weight matrix in spatial econometrics: Application to a spatial hedonic approach," Regional Science and Urban Economics, Elsevier, vol. 43(3), pages 429-444.
    5. Geerte Cotteleer & Tracy Stobbe & G. Cornelis van Kooten, 2008. "Expert Opinion versus Transaction Evidence: Using the Reilly Index to Measure Open Space premiums in the Urban-Rural Fringe," Working Papers 2008-06, University of Victoria, Department of Economics, Resource Economics and Policy Analysis Research Group.

    More about this item

    Keywords

    Bayesian model averaging; Markov Chain Monte Carlo Model Composition; spatial econometrics; hedonic pricing; GIS; urban-rural fringe; farmland fragmentation;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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