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Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape

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  • Maksym Polyakov
  • David J. Pannell
  • Ram Pandit
  • Sorada Tapsuwan
  • Geoff Park
Abstract
In many parts of the world, natural vegetation has been cleared to allow agricultural production. To ensure a long-term flow of ecosystem services without compromising agricultural activities, restoring the environment requires a balance between public and private benefits and costs. Information about private benefits generated by environmental assets can be utilized to identify conservation opportunities on private lands, evaluate environmental projects, and design effective policy instruments. We use a spatio-temporal hedonic model to estimate the private benefits of native vegetation on rural properties in the state of Victoria, Australia. Specifically, we estimate the marginal value of native vegetation on private land and examine how it varies with the extent of vegetation on a property and across a range of property types and sizes. Private benefits of native vegetation are greater per unit area on small and medium-sized properties and smaller on large production-oriented farms. Native vegetation exhibits diminishing marginal benefits as its proportion of a property increases. The current extent of native vegetation cover is lower than the extent that would maximize the amenity value to many landowners. There is scope for improved targeting of investment in the study region by incorporating private benefits of environmental projects into environmental planning processes. Landowners with high marginal private benefits from revegetation would be more willing to participate in a revegetation program. Targeting these landowners would likely provide higher value for money because such projects could be implemented at lower public cost.

Suggested Citation

  • Maksym Polyakov & David J. Pannell & Ram Pandit & Sorada Tapsuwan & Geoff Park, 2015. "Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 299-314.
    • Handle: RePEc:oup:ajagec:v:97:y:2015:i:1:p:299-314.
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    File URL: http://hdl.handle.net/10.1093/ajae/aau053
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    Blog mentions

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    1. 287 – Farmers like trees
      by David Pannell in Pannell Discussions on 2015-11-16 21:00:23
    2. 289 – Interpreting evidence through an ideological lens
      by David Pannell in Pannell Discussions on 2016-03-07 21:00:51

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    Cited by:

    1. Ritter, Matthias & Hüttel, Silke & Odening, Martin & Seifert, Stefan, 2020. "Revisiting the relationship between land price and parcel size in agriculture," Land Use Policy, Elsevier, vol. 97(C).
    2. Juliane Haensch & Sarah Ann Wheeler & Alec Zuo, 2021. "Explaining permanent and temporary water market trade patterns within local areas in the southern Murray–Darling Basin," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(2), pages 318-348, April.
    3. Haslem, Angie & Bennett, Andrew F. & Radford, James Q., 2024. "Importance of (semi)natural vegetation on farms for achieving multiple objectives: A conceptual model based on temperate southern Australia," Agricultural Systems, Elsevier, vol. 213(C).
    4. Clayton, Helena & Hingee, Kassel L. & Chancellor, Will & Lindenmayer, David & van Dijk, Albert & Vardon, Michael & Boult, Chris, 2024. "Private benefits of natural capital on farms across an endangered ecoregion," Ecological Economics, Elsevier, vol. 218(C).
    5. Abbie A. Rogers & Fiona L. Dempster & Jacob I. Hawkins & Robert J. Johnston & Peter C. Boxall & John Rolfe & Marit E. Kragt & Michael P. Burton & David J. Pannell, 2019. "Valuing non-market economic impacts from natural hazards," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 99(2), pages 1131-1161, November.
    6. Roberto Evangelio & Simon Hone & Moses Lee & David Prentice, 2019. "What Makes a Locality Attractive? Estimates of the Amenity Value of Parks for Victoria," Economic Papers, The Economic Society of Australia, vol. 38(3), pages 182-192, September.
    7. Xin Yang & Michael Burton & Yinying Cai & Anlu Zhang, 2015. "Exploring Heterogeneous Preference for Farmland Non-market Values in Wuhan, Central China," Sustainability, MDPI, vol. 8(1), pages 1-13, December.
    8. Tapsuwan, Sorada & Polyakov, Maksym & Bark, Rosalind & Nolan, Martin, 2015. "Valuing the Barmah–Millewa Forest and in stream river flows: A spatial heteroskedasticity and autocorrelation consistent (SHAC) approach," Ecological Economics, Elsevier, vol. 110(C), pages 98-105.
    9. Polyakov, Maksym & Dempster, Fiona & Park, Geoff & Pannell, David J., 2023. "Joining the dots versus growing the blobs: Evaluating spatial targeting strategies for ecological restoration," Ecological Economics, Elsevier, vol. 204(PA).
    10. Marques, Felipe César & Telles, Tiago Santos, 2023. "Spatial effects are determinants of agricultural land prices in Brazil," Revista de Economia e Sociologia Rural (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 61(3), January.
    11. Thomas McGregor & Samuel Wills, 2016. "Surfing A Wave Of Economic Growth," OxCarre Working Papers 170, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    12. McGregor, Thomas & Wills, Samuel, 2016. "Natural Assets: Surfing a Wave of Economic Growth," Working Papers 2016-06, University of Sydney, School of Economics.
    13. Akbari, Saloomeh & Polyakov, Maksym & Iftekhar, Md Sayed, 2023. "Capitalised nonmarket benefits of multifunctional water-sensitive urban infrastructure: A case of living streams," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 67(04), August.
    14. Petra Tschakert & Jon Barnett & Neville Ellis & Carmen Lawrence & Nancy Tuana & Mark New & Carmen Elrick‐Barr & Ram Pandit & David Pannell, 2017. "Climate change and loss, as if people mattered: values, places, and experiences," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 8(5), September.
    15. Marcos-Martinez, Raymundo & Bryan, Brett A. & Schwabe, Kurt A. & Connor, Jeffery D. & Law, Elizabeth A., 2018. "Forest transition in developed agricultural regions needs efficient regulatory policy," Forest Policy and Economics, Elsevier, vol. 86(C), pages 67-75.
    16. Lee, Juhee & Hendricks, Nathan P., 2022. "Crop Choice Decisions in Response to Soil Salinization on Irrigated Land in California," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322602, Agricultural and Applied Economics Association.
    17. Polyakov, Maksym & Pannell, David J., 2014. "Accounting for private benefits in ecological restoration planning," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169823, Agricultural and Applied Economics Association.
    18. Bing Yang Tan, 2022. "Save a Tree and Save a Life: Estimating the Health Benefits of Urban Forests," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 82(3), pages 657-680, July.

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