Spatial Spillovers in the Implicit Market Price of Soil Erosion: An Estimation using a Spatio-temporal Hedonic Model

Marcelo Caffera, Felipe Vásquez Lavín, Daniel Rodríguez Anza, Leonidas Carrasco-Letelier, Jose Ignacio Hernández and Mariela Buonomo

MPRA Paper from University Library of Munich, Germany

Abstract: Abstract: We estimate the implicit market price of soil erosion, fitting a spatio-temporal hedonic price model using quarterly data of 3,563 agricultural farms traded in Uruguay between 2000 and 2014. A unique feature of our estimation is that we allow for possible spatial spillovers. We find evidence of a negative and statistically significant association between erosion and land values. A 1% increase in own topsoil loss due to own erosion is associated with a decrease of 0.22% in the per-hectare price of agricultural land (p-value: 0.013, 95% CI: -0.0039, -0.0005). This is equivalent to a decrease of 7.7 USD in the average price per hectare and USD 1,040 in the price of the average farm (134 hectares). This value increases to USD 1,277 when we add the average cross marginal effect of erosion in nearby farms. Our estimates are sensitive to our measure of erosion and our specification of the spatio-temporal weighting matrix. We also find evidence consistent with our hypothesis that farms entering a governmental erosion control plan sent a valuable signal to the market regarding soil management. An indicator of whether the farm has at least one parcel under the government erosion control plans is associated with a 29% increase in the farm´s per-hectare price (p-value: 0.000, 95% CI: 16.26%, 41.53%) higher than those with no parcel under these plans. The average total marginal effect (own plus cross effects) of the erosion control plans is 35.37% (p-value: 0.000, 95% CI: 20.33%, 50.40%).

Keywords: spatial spillovers; spatio-temporal hedonic model; soil erosion; farmland values; Uruguay (search for similar items in EconPapers)
JEL-codes: Q1 Q12 Q15 (search for similar items in EconPapers)
Date: 2019-04-30
New Economics Papers: this item is included in nep-agr, nep-dev, nep-env and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Spatial Spillovers in the Implicit Market Price of Soil Erosion: An Estimation using a Spatio-temporal Hedonic Model (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:93589

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