Incentives for Local Authorities to Supply Environmental Benefits through Afforestation

In 1989 the Danish Parliament announced it an official goal of the forest policy to double the Danish forest area in 60-100 years. One of the goals of this policy was to improve the recreational possibilities for the urban population. Therefore focus has been on furthering public afforestation projects close to cities with little forestry nearby. We know from previous research that mature urban forests possess significant amenity values for urban areas; the question is whether the same holds for afforestation projects? Thus the aim of this analysis is to examine the inhabitants' willingness to pay for proximity to urban afforestation projects. We use a hedonic pricing approach to estimate the willingness too pay for the environmental benefits related to the proximity for two afforestation projects Bakkely Forest and True Forest. The model used enables us to calculate the WTP for each house depending on the distance from th eforest and the total WTP for the two areas. The study also examines the impact of the observed raise in house prices on the property taxes that the inhabitants pay. As the property tax depends on the value of the house, higher prices. This increase in the tax burden has to be included in the total WTP measure to avoid a serious under-estimation of the total WTP. We show that the present value of the extra property tax may lie between 20 and 100% of the increase in property value