Hedonic pricing model for the economic valuation of conservation land in Mexico City

Abstract

Urban sprawl is a worldwide tendency that affects agricultural production land, forests, and areas of environmental value in peri-urban areas. A hedonic pricing model, specified with GIS measures, was applied for a sample of plots for sale in the conservation land (CL) of Mexico City. It was used for determining the value of the urban fringe land and for estimating the impact of both infrastructure and amenities on price per square meter. Physical and locational characteristics of rural land were considered, such as price per square meter of land, supply of public services (water, electricity, sewage), distance to infrastructure and distance to a natural area. Results indicate that the specification performed well across two functional forms (semi-log and log-log). The model showed that proximity to a natural area has positive influence, nevertheless the sewage system is the main feature that determines a higher price. Analyses of land prices in the rural-urban fringe can help in decision-making and policies regarding environmental conservation.