Land markets and the value of water: Hedonic analysis using repeat sales of farmland

Steven Buck, Maximilian Auffhammer, David Sunding

Research output: Contribution to journalArticlepeer-review

46 Scopus citations

Abstract

The lack of robust water markets makes it difficult to value irrigation water. Because water rights are appurtenant to land, it is possible to infer the value of water from observed differences in the market price of land. We use panel data on repeat farmland sales in California's San Joaquin Valley to estimate a hedonic regression equation with parcel fixed effects. This controls for sources of omitted variables bias and allows us to recover the value of irrigation water to landowners in our sample. We show that a more traditional cross-sectional regression results in an artificially low value of irrigation water.

Original languageEnglish
Pages (from-to)953-969
Number of pages17
JournalAmerican Journal of Agricultural Economics
Volume96
Issue number4
DOIs
StatePublished - Jul 2014

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics

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