Public purchases and private preferences: A hedonic model of open space acquisitions

Erik Edward Nordman, Grand Valley State University
John Wagner, SUNY College of Environmental Science and Forestry

Abstract

The traditional hedonic model uses market purchases to estimate implicit prices. Hedonic models composed of only public land purchases violate key assumptions of hedonic model theory. The resulting implicit prices cannot be interpreted as the purchasing agency’s maximum willingness to pay. The problems are illustrated using a hedonic model of public land purchases. The model reveals negative implicit prices for attributes for which the agency has stated positive preferences. The results confirm that implicit prices derived from open space hedonic models should be interpreted in the context of the broader market for land, not as the agency’s willingness to pay.