Measuring the economic impact of forests on neighboring properties

Graduation date: 1999This thesis investigated the contribution of the forest to neighboring property\ud prices and explored the possible impacts from different neighboring forest characteristics\ud with the hedonic property price model.\ud The quadratic Box-Cox model was applied to choose the proper functional form.\ud The square root model was chosen to be the interpretable functional form that best\ud explained the data. To check the strength of the regression estimation, the linear model\ud and a weighted regression were also applied.\ud The distance from the forest has a significant negative relationship with property\ud prices in all of the estimations. The implicit price of proximity to the forest increases as\ud distance decreases and this relationship is stronger for closer houses in the estimated\ud square root model. For example, the property price change is $6.13 per foot for a house\ud 100 ft away, while it is $1.94 per foot for a house 1000 ft away. In the linear model, for\ud each one foot closer to the forest, the house price is worth about $2.87 more at any\ud distance.\ud After accounting for the contribution of proximity to McDonald-Dunn Forest, the\ud variables for the neighboring forest characteristics were applied to the hedonic price\ud model. Being close to even-aged forests results in a negative contribution to the property\ud price, while being close to shelterwood stands with taller trees has positive impacts.\ud When the property is close to agricultural pasture rather than to forestland, property\ud prices tend to be much lower. Neighboring pure conifer stands have higher contribution\ud to the property price than hardwood or mixed stands.\ud The visibility of clearcut sites in the forest was analyzed by using GIS and the\ud elevation of the area. If all other characteristics of a property are identical, the sales price\ud is lower for the property where clearcut sites are visible at the time of purchase.\ud This study applied the hedonic price model to the near urban forest area and\ud expanded the possibility of GIS application in measuring locational amenities. Results of\ud this study could be used to negotiate arguments between forest owners and neighboring\ud homeowners to produce forest characteristics that are acceptable to neighbors, while\ud providing compensation to the forest owners