The implicit market price of soil erosion: An estimation using a hedonic model with spatial spillovers
Journal
Agricultural Economics
ISSN
0169-5150
1574-0862
Date Issued
2024
Author(s)
Marcelo Caffera
Manuel Barrientos
Daniel Rodríguez Anza
Leonidas Carrasco‐Letelier
Type
journal-article
Abstract
<jats:title>Abstract</jats:title><jats:p>We estimate the implicit market price of soil erosion using quarterly data of 2824 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. On average, an additional loss of 1% of the original topsoil due to erosion is associated with a direct (own) decrease of .24% in the per‐hectare price of agricultural land (<jats:italic>P</jats:italic>‐value: .012, 95% CI: −.0042, −.0005). In 2023 dollars, this is equivalent to a decrease of USD 8.7 in the average price per hectare, or USD 1130 in the price of the average farm. In terms of tons of soil, the average value is $.24 a ton. Finally, considering the 50 km radius of our spatial model, the value of losing 1% of topsoil is $15.8 million. The value of our estimates is sensitive to our measure of erosion and our specification of the spatial‐temporal weighting matrix, but the statistical association is robust.</jats:p>
Cite this document
Caffera, M., Lavín, F. V., Barrientos, M., Anza, D. R., & Carrasco‐Letelier, L. (2024). The implicit market price of soil erosion: An estimation using a hedonic model with spatial spillovers. Agricultural Economics, 55(6), 963-984. https://doi.org/10.1111/agec.12857
Subjects
farmland values
;
soil erosion
;
spatial spillovers
;
spatio-temporal hedonic model
;
uruguay