The Effect of Environmental Amenities on Home Values in the Upper Santa Cruz Basin: A Hedonic Analysis Using Census Data
For this study, hedonic pricing method is used to measure the effects of natural amenities on home prices in the U.S-side of the Santa Cruz Watershed. Further, multivariate spatial regression techniques are utilized to estimate different factors that affect median home values in 613 census block groups of the 2000 Census, accounting for spatial auto correlation, spatial lags and spatial heterogeneity in the data. Diagnostic tests suggest that failure to account for spatial effects would bias inferences made from the statistical analysis. The explanatory factors for the hedonic model can be classified as (1) physical attributes of the housing stock, (2) neighborhood characteristics, and (3) environmental attributes. Census data merged with GIS (land-sat) data is used for vegetation and land cover, land administration, measures of species richness and open space, and proximity to amenities and disamenities. IV 2SLS – robust Spatial lag models were estimated to control for heteroskedasticity and variable endogeneity. Results suggest that policies to maintain rich biodiversity provide economic benefits to homeowners, reflected in higher home values. Marginal effects of these explanatory variables are calculated which are interpreted as a continuous rate of change in the home values, given a marginal change in the continuous explanatory variable or a discrete change in the dummy variables from 0 to 1. The land cover variables seem to dominate in terms of the ‘localized or direct’ marginal effects while public lands, in terms of ‘spillover or indirect’ marginal effects. Further, estimated marginal effects of the discrete variables reveal that there is a definite discount in home values when on the border (<5 miles), near Tucson International Airport & Davis Monthan Airbase, whereas there lies a high premium for being in the Catalina Foothills and Tanque Verde School Districts.
Author(s)
Arora, GuaravPublication Date
2012