Analyzing the impact of soil contamination on farmland values Eloi Schreurs Sebastien Lizin Steven...
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Transcript of Analyzing the impact of soil contamination on farmland values Eloi Schreurs Sebastien Lizin Steven...
Analyzing the impact of soil contamination on farmland values
Eloi SchreursSebastien LizinSteven Van PasselTheo Thewys
Summer school ‘Choice experiments in agricultural and food economics’ – Leuven (BE) – 3rd July 2013
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Master in economicsPhD in environmental economicsHasselt University
Eloi Schreurs
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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PhD topic
Environmental pollutionExternal cost
Case studyCampine region
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Contamination of farmland
Food safety?Health risks?
Uncertainty?
Soil remediation?Land use restrictions?
“Impact soil pollution on farmland values?”
Problem statement
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Cd
Zn As
Cu
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Problem statement
Hedonic pricing analysis (HP)
Y: Farmland values X: Soil Cd concentrations
ResultNo effectRobust
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Y = α + β1x1 + β2x2 + … + ε
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Problem statement
Why?
Stated Preference (DCE) Objective
Circumvent weaknesses HPProvide explanations
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Design
Simulate land purchase decision
Select attribute(s) (levels)
Expert knowledge Contact information Co-operation
Complementarity to HP
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Design
Attribute levels
Little variabilityExtra consequences limited
Based on HP dataset
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Attribute Level 1 Level 2 Level 3 Level 4Price (€/ha) 15000 25000 35000 45000Lot size (ha) 0,5 1,5 2,5 3,5Soil productivity Low Rather low Rather high HighDriving time to home (min) 5 10 15 20Distance to other farmland (m) 0 750 1500 2250
Land use restrictionsNo restrictions
No arable crops and vegetables due to soil contamination
25% less usage of fertilizers
Permanent pasture
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Design
Experimental designD-efficient design3 options + opt-out2 blocks of 8 choice sets
Choice set
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Option A Option B Option C Option DLot size 0,5 ha 1,5 ha 2,5 ha Price per ha 25000 €/ha 15000 €/ha 35000 €/ha Productivity Rather high High Rather low I choose nor A,Distance to other farmland 1500 m 750 m 2250 m nor B,Driving time to home 15 min 5 min 20 min nor C
Land use restrictions No restrictions Permanent pasture 25% less usage of fertilizers
Choice O O O O
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Data
Survey In-person interview 26 municipalities Simple random sampling
Data (n = 200)
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Socio-economic characteristics
SexMale 95,5%
Female 4,5%
Age
<35 6,5%
35-44 18%
45-54 58%
55-64 14%
>65 3,5%
Farm-level characteristics
ProfessionalFull time 98%
Part time 2%
Farming type
Specialist milk 56,5%
Mixed farm 20,5%
Specialist pig 10%
Other specialist 13%
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Coefficient Std. Error
Price -0.071** 0.029
Lot size 0.118*** 0.027
Low productivity -0.533*** 0.075
Rather low productivity -0.484*** 0.083
Rather high productivity -0.073 0.084
Distance to other farmland -7.640E-05** 3.440E-05
Driving time to home -0.011** 0.005
Soil contamination -0.328*** 0.087
Fertilizing restriction -0.550*** 0.104
Permanent pasture -0.371*** 0.099
ASC -1.333*** 0.197
N 6400
Pseudo R² 0.050
Results
Multinomial logit model
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Coefficient Std. Error
Price -0.071** 0.029
Lot size 0.118*** 0.027
Low productivity -0.533*** 0.075
Rather low productivity -0.484*** 0.083
Rather high productivity -0.073 0.084
Distance to other farmland -7.640E-05** 3.440E-05
Driving time to home -0.011** 0.005
Soil contamination -0.328*** 0.087
Fertilizing restriction -0.550*** 0.104
Permanent pasture -0.371*** 0.099
ASC -1.333*** 0.197
N 6400
Pseudo R² 0.050
Results
Other results
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Results
Willingness to pay
Overestimation?
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Attribute WTP (€/ha)
Lot size (ha) 16,619.72
Low productivity -75,070.42
Rather low productivity -68,169.01
Rather high productivity -10,281.69
Distance to other farmland (min) -10,760.56
Driving time to home (1000m) -1549.30
Soil contamination -46,197.18
Fertilizing restriction -77,464.79
Permanent pasture -52,253.52
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Results
Heterogeneity
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
Coefficient Std. ErrorPrice -0.242** 0.102Lot size 0.166*** 0.031Low productivity -0.538*** 0.075Rather low productivity -0.492*** 0.083Rather high productivity -0.083 0.084Distance to other farmland -8.550E-05** 4.350E-05Driving time to home -0.011** 0.005Soil contamination -0.555*** 0.136Fertilizing restriction -0.801*** 0.151Permanent pasture -0.367*** 0.099ASC4 -1.388*** 0.200Interaction effects Price - price estimation 7.040E-06** 3.050E-06Price - risk takers -0.095** 0.048Lot size - food producers -0.137* 0.079Lot size – pig and poultry farms -0.221*** 0.072Distance to other farmland – food producers -2.520E-04*** 9.780E-05Distance to other farmland – expansive farms 1.755E-04** 8.230E-05Soil contamination - specialist dairy farms 0.376*** 0.144Fertilizing restriction - agricultural education 0.410** 0.166N 6400 Pseudo R² 0.067
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Conclusion
Soil contamination =important in farmer’s land perception
Confirm explanations Lack of awareness Lack of compliance Specialist dairy farmers
Other possibilities Non-farmers in HP Farmland scarcity
Summer school Choice experiments - Leuven (BE) – 3rd July 2013
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Conclusion
Farmer’s preferencesProductivityLot sizeLand use restrictions
Further researchExternal validityValuation purposes?Private good – nonmarket/public good
Summer school Choice experiments - Leuven (BE) – 3rd July 2013