IDEAS home Printed from https://ideas.repec.org/a/uwp/landec/v77y2001i4p494-512.html
   My bibliography  Save this article

A Dynamic Approach to Estimating Hedonic Prices for Environmental Goods: An Application to Open Space Purchase

Author

Listed:
  • Mary Riddel

Abstract

If housing markets exhibit slow adjustment to system shocks, then hedonic estimates of the price impact from environmental amenity trends may be time variant. This paper suggests an alternative to the cross-sectional model for estimating hedonic prices using an error correction approach that allows for endogenous environmental quality. The model is applied to data concerning an open space purchase program in Boulder, Colorado, and shows that the economic impact of an open space purchase takes several years to be fully realized. This observation questions using cross-sectional, hedonic models for evaluating willingness to pay for time-trended environmental amenities.

Suggested Citation

  • Mary Riddel, 2001. "A Dynamic Approach to Estimating Hedonic Prices for Environmental Goods: An Application to Open Space Purchase," Land Economics, University of Wisconsin Press, vol. 77(4), pages 494-512.
    • Handle: RePEc:uwp:landec:v:77:y:2001:i:4:p:494-512
    as

    Download full text from publisher

    File URL: http://le.uwpress.org/cgi/reprint/77/4/494
    Download Restriction: A subscripton is required to access pdf files. Pay per article is available.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. James M. Poterba, 1991. "House Price Dynamics: The Role of Tax Policy," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 22(2), pages 143-204.
    2. Robert J. Anderson JR & Thomas D. Crocker, 1971. "Air Pollution and Residential Property Values," Urban Studies, Urban Studies Journal Limited, vol. 8(3), pages 171-180, October.
    3. Graves, Philip E., 1979. "A life-cycle empirical analysis of migration and climate, by race," Journal of Urban Economics, Elsevier, vol. 6(2), pages 135-147, April.
    4. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    5. Banerjee, Anindya & Dolado, Juan J. & Galbraith, John W. & Hendry, David, 1993. "Co-integration, Error Correction, and the Econometric Analysis of Non-Stationary Data," OUP Catalogue, Oxford University Press, number 9780198288107.
    6. Rigoberto A. Lopez & Farhed A. Shah & Marilyn A. Altobello, 1994. "Amenity Benefits and the Optimal Allocation of Land," Land Economics, University of Wisconsin Press, vol. 70(1), pages 53-62.
    7. Meese Richard & Wallace Nancy, 1994. "Testing the Present Value Relation for Housing Prices: Should I Leave My House in San Francisco?," Journal of Urban Economics, Elsevier, vol. 35(3), pages 245-266, May.
    8. Phil Graves & James C. Murdoch & Mark A. Thayer & Don Waldman, 1988. "The Robustness of Hedonic Price Estimation: Urban Air Quality," Land Economics, University of Wisconsin Press, vol. 64(3), pages 220-233.
    9. Graves, Philip E. & Linneman, Peter D., 1979. "Household migration: Theoretical and empirical results," Journal of Urban Economics, Elsevier, vol. 6(3), pages 383-404, July.
    10. Miranowski, John & Hammes, B., 1984. "Implicit Prices of Soil Characteristics for Farmland in Iowa," Staff General Research Papers Archive 10706, Iowa State University, Department of Economics.
    11. Mark R. Correll & Jane H. Lillydahl & Larry D. Singell, 1978. "The Effects of Greenbelts on Residential Property Values: Some Findings on the Political Economy of Open Space," Land Economics, University of Wisconsin Press, vol. 54(2), pages 207-217.
    12. Peter C. B. Phillips & Bruce E. Hansen, 1990. "Statistical Inference in Instrumental Variables Regression with I(1) Processes," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(1), pages 99-125.
    13. DiPasquale Denise & Wheaton William C., 1994. "Housing Market Dynamics and the Future of Housing Prices," Journal of Urban Economics, Elsevier, vol. 35(1), pages 1-27, January.
    14. Granger, C. W. J., 1981. "Some properties of time series data and their use in econometric model specification," Journal of Econometrics, Elsevier, vol. 16(1), pages 121-130, May.
    15. Mankiw, N. Gregory & Weil, David N., 1989. "The baby boom, the baby bust, and the housing market," Regional Science and Urban Economics, Elsevier, vol. 19(2), pages 235-258, May.
    16. Johansen, Søren & Juselius, Katarina, 1992. "Testing structural hypotheses in a multivariate cointegration analysis of the PPP and the UIP for UK," Journal of Econometrics, Elsevier, vol. 53(1-3), pages 211-244.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zhao, Xiaobing & Fletcher, Jerald J., 2004. "An Optimal Control Approach To Water Quality Trading: Cost-Effective Point/Nonpoint Management In A Watershed Framework," 2004 Annual meeting, August 1-4, Denver, CO 20195, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Langpap, Christian & Hascic, Ivan & Wu, JunJie, 2006. "Predicting Watershed Ecosystems Through Targeted Local Land Use Policies," 2006 Annual meeting, July 23-26, Long Beach, CA 21262, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Seong-Hoon Cho & Christopher D. Clark & William M. Park & Seung Gyu Kim, 2009. "Spatial and Temporal Variation in the Housing Market Values of Lot Size and Open Space," Land Economics, University of Wisconsin Press, vol. 85(1), pages 51-73.
    4. Boarnet, Marlon G & Bostic, Raphael & Williams, Danielle & Santiago-Bartolomei, Raul & Rodnyansky, Seva & Eisenlohr, Andy, 2017. "Affordable Housing in Transit-Oriented Developments: Impacts on Driving and Policy Approaches," Institute of Transportation Studies, Working Paper Series qt487994z4, Institute of Transportation Studies, UC Davis.
    5. Tianzheng Zhang & Yingxiang Zeng & Yingjie Zhang & Yan Song & Hongxun Li, 2020. "The Heterogenous Demand for Urban Parks between Home Buyers and Renters: Evidence from Beijing," Sustainability, MDPI, vol. 12(21), pages 1-16, October.
    6. Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 773-789, November.
    7. Wu, JunJie, 2006. "Environmental amenities, urban sprawl, and community characteristics," Journal of Environmental Economics and Management, Elsevier, vol. 52(2), pages 527-547, September.
    8. Oerlemans, Leon A.G. & Chan, Kai-Ying & Volschenk, Jako, 2016. "Willingness to pay for green electricity: A review of the contingent valuation literature and its sources of error," Renewable and Sustainable Energy Reviews, Elsevier, vol. 66(C), pages 875-885.
    9. Okmyung Bin & Jeffrey Czajkowski & Jingyuan Li & Gabriele Villarini, 2017. "Housing Market Fluctuations and the Implicit Price of Water Quality: Empirical Evidence from a South Florida Housing Market," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 68(2), pages 319-341, October.
    10. Martin D. Heintzelman, 2010. "Measuring the Property-Value Effects of Local Land Use and Preservation Referenda," Land Economics, University of Wisconsin Press, vol. 86(1), pages 22-47.
    11. Zhao, Xiaobing & Fletcher, Jerald J., 2011. "A spatial–temporal optimization approach to watershed management: Acid mine drainage treatment in the Cheat River watershed, WV, USA," Ecological Modelling, Elsevier, vol. 222(9), pages 1580-1591.
    12. Fabian Waltert & Felix Schlaepfer, 2007. "The role of landscape amenities in regional development: a survey of migration, regional economic and hedonic pricing studies," SOI - Working Papers 0710, Socioeconomic Institute - University of Zurich.
    13. Edmund M. Balsdon, 2012. "Property Value Capitalization and Municipal Open Space Referenda," Land Economics, University of Wisconsin Press, vol. 88(2), pages 201-232.
    14. Kono, Tatsuhito & Sega, Kousuke & Seya, Hajime, 2020. "Estimating the willingness to pay for urban esthetic projects using an inter-temporal equilibrium: a difference-in-differences hedonic approach," MPRA Paper 102064, University Library of Munich, Germany.
    15. Aaron Strong & Randall P. Walsh, 2008. "Communities, Competition, Spillovers, and Open Space," Land Economics, University of Wisconsin Press, vol. 84(2), pages 169-187.
    16. Matthew Chadourne & Seong-Hoon Cho & Roland Roberts, 2013. "Identifying priority target areas for the Knoxville–Knox County hillside and ridgetop protection plan: using the value of visual amenity during the real estate boom of 2002–2007 and the recession of 2," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 911-934, June.
    17. Craig E. Landry & Dylan Turner & Tom Allen, 2022. "Hedonic property prices and coastal beach width," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 44(3), pages 1373-1392, September.
    18. Christian Langpap & JunJie Wu, 2008. "Predicting the Effect of Land‐Use Policies on Wildlife Habitat Abundance," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(2), pages 195-217, June.
    19. Fernandez, Linda & Mukherjee, Monobina & Scott, Thomas, 2018. "The effect of conservation policy and varied open space on residential property values: A dynamic hedonic analysis," Land Use Policy, Elsevier, vol. 73(C), pages 480-487.
    20. Munroe, Darla K. & Parker, Dawn Cassandra & Campbell, Harrison S., Jr., 2004. "The Varied Impact Of Greenways On Residential Property Values In A Metropolitan, Micropolitan, And Rural Area: The Case Of The Catawba Regional Trail," 2004 Annual meeting, August 1-4, Denver, CO 19915, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    21. Waltert, Fabian & Schläpfer, Felix, 2010. "Landscape amenities and local development: A review of migration, regional economic and hedonic pricing studies," Ecological Economics, Elsevier, vol. 70(2), pages 141-152, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Charles G. Renfro, 2009. "The Practice of Econometric Theory," Advanced Studies in Theoretical and Applied Econometrics, Springer, number 978-3-540-75571-5, February.
    2. Alexander Schätz, 2010. "Macroeconomic Effects on Emerging Market Sector Indices," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 9(2), pages 131-169, August.
    3. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 459-485.
    4. Lütkepohl, Helmut, 1999. "Vector autoregressions," SFB 373 Discussion Papers 1999,4, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    5. Gunther Maier & Shanaka Herath, 2009. "Real Estate Market Efficiency: A Survey of Literature," SRE-Disc sre-disc-2009_07, Institute for Multilevel Governance and Development, Department of Socioeconomics, Vienna University of Economics and Business.
    6. Lütkepohl, Helmut, 1999. "Vector autoregressive analysis," SFB 373 Discussion Papers 1999,31, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
    7. Megumi Kubota, "undated". "Real Exchange Rate Misalignments: Theoretical Modelling and Empirical Evidence," Discussion Papers 09/24, Department of Economics, University of York.
    8. Lyhagen, Johan, 1998. "Maximum likelihood estimation of the multivariate fractional cointegrating model," SSE/EFI Working Paper Series in Economics and Finance 233, Stockholm School of Economics.
    9. Ghysels, Eric & Plazzi, Alberto & Valkanov, Rossen & Torous, Walter, 2013. "Forecasting Real Estate Prices," Handbook of Economic Forecasting, in: G. Elliott & C. Granger & A. Timmermann (ed.), Handbook of Economic Forecasting, edition 1, volume 2, chapter 0, pages 509-580, Elsevier.
    10. Richard Meese & Nancy Wallace, 2003. "House Price Dynamics and Market Fundamentals: The Parisian Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 40(5-6), pages 1027-1045, May.
    11. Paresh Kumar Narayan & Seema Narayan & Biman Chand Prasad, 2008. "Forecasting Fiji's exports and imports, 2003‐2020," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 35(12), pages 1005-1016, October.
    12. Mohamed, Hazik & Masih, Mansur, 2017. "Stock market comovement among the ASEAN-5 : a causality analysis," MPRA Paper 98781, University Library of Munich, Germany.
    13. M. T. Alguacil & V. Orts, 2003. "Inward Foreign Direct Investment and Imports in Spain," International Economic Journal, Taylor & Francis Journals, vol. 17(3), pages 19-38.
    14. Ekaterini Panopoulou, 2005. "A Resolution of the Fisher Effect Puzzle: A Comparison of Estimators," The Institute for International Integration Studies Discussion Paper Series iiisdp067, IIIS.
    15. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.
    16. Norah Al-Ballaa, 2005. "Test for cointegration based on two-stage least squares," Journal of Applied Statistics, Taylor & Francis Journals, vol. 32(7), pages 707-713.
    17. Boswijk, H. Peter & Franses, Philip Hans & van Dijk, Dick, 2010. "Cointegration in a historical perspective," Journal of Econometrics, Elsevier, vol. 158(1), pages 156-159, September.
    18. Esther Stroe-Kunold & Joachim Werner, 2009. "A drunk and her dog: a spurious relation? Cointegration tests as instruments to detect spurious correlations between integrated time series," Quality & Quantity: International Journal of Methodology, Springer, vol. 43(6), pages 913-940, November.
    19. Dennis L. Hoffman & Robert H. Rasche, 1997. "STLS/US-VECM6.1: a vector error-correction forecasting model of the U. S. economy," Working Papers 1997-008, Federal Reserve Bank of St. Louis.
    20. John M. Quigley, 1999. "Real Estate Prices and Economic Cycles," International Real Estate Review, Global Social Science Institute, vol. 2(1), pages 1-20.

    More about this item

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwp:landec:v:77:y:2001:i:4:p:494-512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: http://le.uwpress.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.