Agriculture Reference
In-Depth Information
Revealed Preference Estimates to Value Landscape-Level
Ecosystem Services
The economic value of landscape-level ecosystem services such as wildlife habitat
and recreation can be inferred from existing markets for land and recreational ser-
vices. Revealed preference methods use information on expenditures and market
prices to deduce the implied willingness to pay for environmental benefits. For
example, the value of recreational fishing and hunting services can be inferred from
what people spend to travel to fishing and hunting sites and from the characteris-
tics of the sites they visit. Another revealed preference approach, hedonic valua-
tion, uses price data and product characteristics to infer the component value of
those characteristics by statistical regression methods. Just as real estate analysts
use hedonic valuation to estimate the value that a second bathroom adds to a house,
environmental economists can use the same method to estimate the value that adja-
cent forest adds to a farm field. Both travel cost and hedonic land price analyses
have been used by KBS LTER economists (e.g., Knoche and Lupi 2007, Ma and
Swinton 2011).
Among its many roles, agricultural land provides valuable habitat for wild-
life. Hunting is one major ecosystem service experienced by 12.5 million adult
Americans in 2006 (U.S. Department of the Interior and U.S. Department of
Commerce 2006). Of those, ~750,000 hunted in Michigan. The value of Michigan's
agricultural land as wildlife habitat is captured by a travel cost analysis of deer
hunting in the state. Knoche and Lupi (2007) used data on the cost of hunting
trips to calculate how much hunters are willing to pay for various attributes of the
hunting experience and found that hunters were effectively paying $39 per acre
for access to 10% of the private agricultural land in the southern Lower Peninsula
of Michigan. This represents 7% of the per-acre market value of farm products in
the area in 2004, a significant value (part of which is already captured by farmers
who offer hunting leases for their lands). By providing a varied landscape with
abundant food, agriculture enhances the habitat for deer. Knoche and Lupi (2007)
estimated that in a nonagricultural landscape that supported only half as many deer,
the annual value to hunters would decline by $15 million.
Hedonic valuation of ecosystem services through land prices can capture the
values of a range of services, as compared to the single value from the travel cost of
hunting trips. The price of a land parcel represents a bundle of attributes embodied
in that parcel. Hedonic analysis applies statistical regression of land prices to differ-
ent attributes of the parcel to infer the values of specific property traits (Palmquist
1989, Palmquist and Danielson 1989). In an attempt to measure the value of
land-based ecosystem services in the KBS vicinity, Ma and Swinton (2011) esti-
mated a hedonic model of land prices in four counties surrounding KBS—Allegan,
Barry, Kalamazoo, and Eaton (Fig. 3.1). This work included variables describing
traits of both the natural and built environments and subdivided these into traits
that affect both the production value of the land and its consumption value (e.g.,
residential and recreational attributes). To capture the effect of surrounding ecosys-
tems, the study analyzed spatial data on the proportions of land cover in a 1.5-km
radius around property parcels.
