The implicit price of ownership status in Colorado rangeland values
This dissertation presents the results of an empirical study testing the influence of ownership status on land value, using a model of Colorado rangeland prices. The main purpose is to test the hypothesis that the disutility of public land management is negatively capitalized into rangeland property values. The study illustrates the versatility of the hedonic price approach, as defined by Sherwin Rosen (1974), by applying the methodology to a rangeland valuation problem. To estimate the implicit price of prior government ownership it was necessary to isolate, inventory and measure the important determinants of rangeland resources. The data base consists of 70 meets and bounds, arms length sales transactions (19 public and 51 private) occurring from January 1983 to August 1989 and a spate of parcel-specific characteristics. The sales were drawn from the Fourmile/High Park region of central Colorado. The final models explained approximately 70 per cent of the variation in the price of rangeland. The results offer evidence that prior private ownership increased the value of rangeland on the average, by 40 percent--or approximately $350 per acre over that of public properties, ceteris paribus. Since the role played by sparse water rights and mineral values is ignored in the equation, a claim cannot be made that the ownership estimate reflects a precise measure of the undervaluation of government land. However, the coefficients of all other tested attributes compare favorably with those of previous rural land studies. Although definitive conclusions on the causality of the ownership/value relationship cannot be made using the single-equation methodology, several possible explanations are offered. Explanations of the differential from the supply perspective include: a lackluster sales process, the possibility of preference sales, and program compliance effects. Differences in expected future profitability and transactions costs are suggested on the demand side. These results demonstrate the discount associated with public ownership in the rural land market of central Colorado. Based on independently gathered data, the research provides an important test of the public/private dichotomy and a first step in the full valuation of federal rangeland resources.