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Open space may provide a variety of environmental services, such as flood control, prevention of soil erosion, storage and recycling of wastes, and scenic views, which do not have traditional market values. This study assesses the value of these amenities in Dakota County, Minnesota, by estimating the marginal price of open space proximity to housing, with the hedonic property price method. Utilizing residential housing and open space data, a property's structural, neighborhood, regional, and environmental characteristics are related to its sale price. Key environmental characteristics are distances between a property and particular types of natural areas and farmland. The marginal price of proximity to open space was estimated with three models that illustrate the relationship between open space proximity and property price. The estimation results suggest that Dakota County homeowners pay, ceteris paribus, a higher property price ($115) to live 100 feet closer to any type of open space. Upon categorization of open space into natural areas and farmland, an interesting distinction was discovered: homebuyers paid more ($111) to live 100 feet closer to natural areas and less (-$53) to live the same distance closer to farmland. Further classification of open space into public lands, forests, prairies, wetlands, and water bodies, yielded varying marginal prices for proximity to these features. Proximity to public lands and forests had a positive relationship with property price ($80 and $70 respectively), while the marginal price for proximity to farmland remained negative (-$66). Living marginally closer to prairies also had a negative association with property price (-$48), while nearness to wetlands and water did not have a statistically significant effect. These last three marginal prices are unreliable due to the presence of multicollinearity. Finally, splitting the observations into urban and rural-urban fringe zones showed regional distinctions in the relationship of open space proximity to property price. In urban areas, proximity to publicly owned natural spaces and forests yielded a positive marginal price ($127 and $62 respectively). In the rural-urban fringe, proximity to forests and water features yielded positive marginal prices ($91 and $66 respectively). While proximity to farmland, prairies and wetlands was considered undesirable in the urban zone (with marginal prices -$102, -$55, -$63), nearness to these same features in the rural-urban fringe has a statistically insignificant relationship to property price. |
