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The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices

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  • Cross, Robin

    (Oregon State University)

  • Plantinga, Andrew J.

    (Oregon State University)

  • Stavins, Robert N.

    (Harvard University)

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 & Plantinga, Andrew J. & Stavins, Robert N., 2011. "The Value of Terroir: Hedonic Estimation of Vineyard Sale Prices," Working Paper Series rwp11-009, Harvard University, John F. Kennedy School of Government.
    • Handle: RePEc:ecl:harjfk:rwp11-009
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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. 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.
    3. 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.
    4. 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.
    5. 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.
    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. 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.
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    10. 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).
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    14. 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.
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    More about this item

    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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