Use Permits: A Hedonistic Approach Applied to Farmland in the Southeastern US

In the State of Georgia, any agricultural producer who wishes to pump more than 100,000 gallons of water a day for crop irrigation is required to have an irrigation permit. The permit stays with the land and in the event of sale the permit is transferred with the property. Until recently, permits were essentially granted freely to all applicants in the Flint River water basin, without limit. In 1999, however, with increasing demand for water from growing urban Atlanta and several years of drought in the Southeast, the state of Georgia placed a moratorium on the issuance of agricultural water permits in the Flint River basin. This research exploits this policy change within a hedonic pricing framework to estimate the value of irrigation rights in the Southeast US. While the value of irrigation rights has been studied extensively in the western US, differences in property rights and legal regimes, as well as a lack of established water-rights markets in the East, leave us with little information regarding the value of irrigation rights in this setting. Working Paper 06-4

Water, Water Somewhere: The Value of Water in a Drought-Prone Farming Region

Water is critical for agriculture, yet surprisingly few studies internationally have analysed the value placed on water in specific farming contexts. We do so using a rich longitudinal dataset for the Mackenzie District (Canterbury, New Zealand) over nineteen years, enabling us to extract the value placed by farmers on long-term access to irrigated water. New Zealand has a system of water consents under the Resource Management Act (RMA) that enables farmers with consents to extract specified quantities of water for agricultural purposes. Some water is extracted through large-scale irrigation infrastructure and other flows by more localised means; the RMA and the water consents themselves are a critical legal infrastructure underpinning farming. Using panel methods, we estimate property sale price and assessed value as a function of the size of the farm's water right (if it has one), farm characteristics, and the water right interacted with farm characteristics to determine how the value of a water consent varies according to local conditions. We find that flatter areas and areas with poorly draining soils benefit most from irrigation, possibly because the water is retained for longer on these properties. Drier areas appear to benefit more from irrigation than do areas with higher rainfall. Farms that are situated close to towns derive especially strong benefits from irrigation since these properties are most likely to have potential water-intensive land uses such as dairying and cropping that require access to processing facilities and/or an urban labour pool.irrigation, hedonics, water supply, New Zealand

Modeling water resources management at the basin level: review and future directions

Water quality / Water resources development / Agricultural production / River basin development / Mathematical models / Simulation models / Water allocation / Policy / Economic aspects / Hydrology / Reservoir operation / Groundwater management / Drainage / Conjunctive use / Surface water / GIS / Decision support systems / Optimization methods / Water supply

Do Homebuyers Care about the 'Quality' of Natural Habitats?

We study if homebuyers in Tucson, Arizona care about the condition of natural habitats and if they have preferences between natural and manmade habitats. Using field work data we examine whether homebuyers willingness to pay is influenced by the biological condition of the neighboring riparian habitat and how homebuyers value alternative manmade green areas, specifically golf courses. We also explore the relationship between the field data and remote sensing vegetation indices. The results of a hedonic analysis of houses that sold within 0.2 miles of 51 stratified-random selected riparian survey sites in Tucson, Arizona reveals that homebuyers significantly value habitat quality and negatively value manmade park-like features. Homebuyers are willing to pay twenty percent more to live near a riparian corridor that is densely vegetated and contains more shrub and tree species, particularly species that are dependent on perennial water flow. These environmental premiums are significant, outweighing structural factors such as an additional garage or swimming pool. Likewise, proximity to a riparian habitat with low biological quality or to a golf course lowers property values.Land Economics/Use,

Incorporating Local Water Quality in Welfare Measures of Agri-environmental Policy: A Choice Modelling Approach Employing GIS

The spatial distribution of agro-environmental policy benefits has important implications for the efficient allocation of management effort. The practical convenience of relying on sample mean values of individual benefits for aggregation can come at the cost of biased aggregate estimates. The main objective of this paper is to test spatial hypotheses regarding respondents’ local water quality and quantity, and their willingness-to-pay for improvements in water quality attributes. This paper combines choice experiment and spatially related water quality data via a Geographical Information System (GIS) to develop a method that evaluates the influence of respondents’ local water quality on willingness-to-pay for river and stream conservation programs in Canterbury, New Zealand. Results show that those respondents who live in the vicinity of low quality waterway are willing to pay more for improvements relative to those who live near to high quality waterways.Water Quality, Choice Experiment, Geographical Information System, Environmental Economics and Policy, Resource /Energy Economics and Policy, Q51, Q25, Q58,

Reconfiguring an Irrigation Landscape to Improve Provision of Ecosystem Services

Over-allocation of fresh water resources to consumptive uses, coupled with recurring drought and the prospect of climate change, is compromising the stocks of natural capital in the world’s basins and reducing their ability to provide ecosystem services. To combat this, governments world wide are making significant investment in efforts to improve sharing of water between consumptive uses and the environment, with many investments centred on modernisation of inefficient irrigation delivery systems, and the purchase of water by government for environmental flows. In this study, spatial targeting was applied within a cost-benefit framework to reconfigure agricultural land use in an irrigation district to achieve a 20% reduction in agricultural water use to increase environmental flows and improve the provision of other ecosystem services. We demonstrate using spatial planning and optimisation models that a targeted land use reconfiguration policy approach could potentially increase the net present value of ecosystem services by up to AUS$463.7m. This provides a threshold level of investment that would be justified on the basis of benefits that the investment produces. The increase in ecosystem services include recovering 61 GL of water for environmental flows, the sequestration of 10.6m tonnes of CO2-e/yr, a 13 EC (?S/cm) reduction in river salinity, and an overall 24$68.7m in economic returns to agriculture which may be only marginally offset by the increased value of ecosystem services resulting from the return of 61 GL of water to the environment.landscape planning, geographic information systems, cost-benefit analysis, irrigation, climate change, water management, spatial targeting, environmental valuation

Nonmarket Valuation and Land Use: Two Essays

The research presented here consists of two essays that describe applications of non-market valuation techniques to current land use issues. The individual studies were designed to address important methodological and policy issues, respectively. In the first essay, Geographic Information System (GIs) data are used to develop variables representing the physical extent and visibility of surrounding land use/cover features in a hedonic model of a rural/suburban housing market. Three equations are estimated to determine if views affect property prices, and, further, if omission of visibility variables leads to omitted variable bias. Results indicate that the visibility measures are important determinants of prices and that their exclusion may lead to incorrect conclusions regarding the significance and signs of other environmental variables. The second essay represents a synthesis of findings from focus groups conducted in five states. The focus groups were the first step in a study designed to identify the types of attributes of farmland and agricultural systems that are important to the public and should be preserved as open space. Modeling of responses to a variety of choice exercises provides several insights. Overall, the results suggest that open space protection through preservation of agricultural lands is an important issue to the public. Preferences for farmland preservation vary depending on the region of the country and the attributes of the land. The physical location of the farm, the type of farm and the farming practices used are important to people, all of which are directly and indirectly influenced by state and federal agricultural policies

Ecosystem Good and Service Co-Effects of Terrestrial Carbon Sequestration: Implications for the U.S. Geological Survey’s LandCarbon Methodology

This paper describes specific ways in which the analysis of ecosystem goods and services can be included in terrestrial carbon sequestration assessments and planning. It specifically reviews the U.S. Geological Survey’s LandCarbon assessment methodology for ecosystem services. The report assumes that the biophysical analysis of co-effects should be designed to facilitate social evaluation. Accordingly, emphasis is placed on natural science strategies and outputs that complement subsequent economic and distributional analysis.ecosystem services, carbon sequestration, land use planning

Valuing Urban Wetlands of the Gnangara Mound: A Hedonic Property Price Approach in Western Australia

Up to 60% of potable water supplied to Perth in Western Australia is extracted from the Gnangara mound. Many of the urban wetlands above the Mound are groundwater-dependent. Excessive groundwater extraction and climate change have resulted in a decline in water levels in the wetlands. This study estimates the value of urban wetlands in three local government districts in the Perth metropolitan region using the hedonic property price approach. Preliminary results found that proximity to wetlands influences the sales prices of properties. The marginal implicit price of reducing the distance to the nearest wetland by 1 metre, evaluated at the mean sales value, is AU$463. If there is more than one wetland within 1.5 kilometres of a property, the second wetland will help increase the property price by AU$6,081. For a 50 ha wetland, we estimate the total premium of on sales due to wetland proximity is AU$220 million, based on average property characteristics and medium house density. These results will help inform policy makers and land developers on the value of conserving existing urban wetlands, creating new wetland areas and urbanising rural wetlands.groundwater, housing development, aquifer, marginal implicit price, Land Economics/Use,

Valuing Private and Public Greenspace Using Remotely Sensed Vegetation Indices

In a typical metropolitan area, greenspace varies substantially in its quality and extent. Remotely sensed vegetation index data is used to characterize the heterogeneity in private and public greenspace (riparian corridors) in metropolitan Tucson, Arizona. This data set enables the researcher to test if: (1) greenness is a significant determinant of house price variation in this desert city; and (2) whether there is an interaction between public and private greenspace. Private greenspace amenities can be endogenously improved by homeowners as a complement or substitute for the greenspace that is publicly provided, whereas public greenspace might be exogenous or endogenous depending on households ability to pressure the local government to protect or restore public greenspace. The results of a Hausman test indicate that endogeneity is a problem in the dataset and therefore an instrumental variable two stage least squares estimation is used. The results of this analysis indicate that homebuyers in the study area have preferences for both greener lots and greener riparian corridors and that private and public greenspace appear to be substitutes. Results are robust across multiple identification strategies designed to address potential endogeneity. The study results could have fundamental implications for the efficient use of limited water supplies in this semi-arid metropolitan area.Resource /Energy Economics and Policy,