The value of native bush to landholders

Private benefits of native vegetation can help achieve better biodiversity outcomes

Maksym (on the left) with landowners discussing how they value native vegetation on their land. (Photo: Geoff Park)

Maksym (on the left) with landowners discussing how they value native vegetation on their land. (Photo: Geoff Park)

A third of Australian woodland has been cleared since European settlement. This has resulted in the loss of important ecosystem services, including biodiversity. Just over three quarters of Australian land is managed by private landholders, therefore conserving biodiversity on private land is an important part of our national conservation strategy. However, conserving biodiversity on private land can be challenging because the benefits of biodiversity are enjoyed by everyone while the costs of conservation are incurred by the landholders.

In attempting to deal with this challenge, it’s important to appreciate that environmental assets that support biodiversity on private land (such as native vegetation) may also provide benefits that are enjoyed and valued by the landholders. This insight is valuable for natural resource managers because private landholders who enjoy having native vegetation on their land would more likely participate in conservation programs. It also helps in the selection of delivery mechanisms for projects, as shown in the private-public benefits framework developed by David Pannell (see Pannell 2008).

Preferences for native veg

Sensing a possible win-win situation, our team set out to better understand the preferences held by landholders for native vegetation on their land. Why do they like to have bush on their property? Is it because, for example, it creates nice views, attracts birds, protects creek, or gives shade for their animals? Or do they prefer cleared land, viewing native vegetation as a hindrance to growing crops and running livestock? Or maybe the preferences depend on the area of bush currently on the property and the goals and interests of a particular landholder?

How can we determine the landholders’ preferences? One way is to conduct a survey and ask landholders whether they like having bush on their land and how would they behave in certain situations (for example, how much would they need to be paid to be willing to revegetate 10 ha of his or her land with native trees).

Another way is to learn about landholders’ preferences by observing their behaviour, for example the amount they actually pay for soemthing on the market. Unfortunately, there is no market for native vegetation, bush or environmental amenities. Luckily, there is a market for rural properties, which come in all shapes and sizes: from small ‘lifestyle’ properties to large production farms, from covered by bush to completely cleared, and everything in between.

Having information about the prices landholders paid for the properties as well as the property’s characteristics, we can use a statistical technique called the hedonic pricing method to tease out the value of specific characteristics of the properties, including presence and extent of native vegetation.

Figure 1: Effect of the proportion of native vegetation on land value by property size over time. (From Polyakov et al, 2015)

Figure 1: Effect of the proportion of native vegetation on land value by property size over time. (From Polyakov et al, 2015)

Diminishing returns

We analysed data from around 7,500 rural properties in North- Central Victoria that were sold between 1990 and 2011 (Polyakov et al, 2015). The area had a good mix of property sizes, which we assumed to reflect landholder types, ranging from lifestyler to hobby farmer through to major agricultural producer. We used GIS to calculate the amount of native woody vegetation for each property, soil quality, and other characteristics important to a rural property owner.

They value their first hectare of native vegetation a lot, but the tenth hectare might have no value at all and the twentieth hectare might have negative value by decreasing the value of the property.

We found that rural landholders generally value native vegetation on their land. The value diminishes as the amount of native vegetation on a property increases, and as the property size increases. For example, they may value their first hectare of native vegetation highly, but the tenth hectare might have no value at all and the twentieth hectare might have negative value. The first hectare of native vegetation on a lifestyle property is much more valuable than first hectare on a production-oriented farm. These relationships are demonstrated in Figure 1, where the predicted increase of the value of a cleared property (Y axis) is plotted against the proportion of native vegetation responsible for such an increase (X axis) for typical properties of 1 ha, 10 ha, 100 ha, and 1000 ha.

Native vegetation is indeed more valuable to the owners of lifestyle (small) properties than to the owners of large production-oriented farms. The optimal proportions of native woody vegetation for a 1 ha, 10 ha, 100 ha, and 1000 ha property come out at 45%, 37%, 29% and 20% respectively (Fig 1).

These proportions would increase property values by 25%, 16%, 9% and 5% relative to the value of similar properties with no native vegetation. The study reveals that the current extent of native vegetation is lower than the extent that would maximise its amenity value to landholders and that restoring some native vegetation on cleared lands may enhance the welfare of people living in this area.

Figure 2: Additional proportion of native vegetation required to achieve predicted maximum property values. (From Polyakov et al, 2015)

Figure 2: Additional proportion of native vegetation required to achieve predicted maximum property
values. (From Polyakov et al, 2015)

Targeting ecological restoration on private lands

Armed with the results of this study, we can predict how much landholders value additional native vegetation. This is useful information for those responsible for prioritising investments in conservation. Investments in landholders who benefit the most from an additional hectare of native vegetation would be more likely to provide high value for money, because they are likely to be willing to participate in a revegetation program at lower public cost (although other factors, such as public environmental benefits, will also need to be considered).

Figure 2 presents the map of increase in the proportion of native vegetation that would maximise property value, therefore maximising benefit to property owners. It could be used by extension professionals and natural resource managers as a decision support tool for targeting ecological restoration on private lands.


The value of a nearby freshwater ecosystem?

Just as property prices can provide us with information on the value of native vegetation to landholders, it can also be used to determine the value of other environmental assets, and the assets don’t even have to be on the land of the landholder. It might be something nearby.

We analysed prices of houses sold during the period 2000–2011 to estimate the value of stream flows in Murray River and proximity to an iconic freshwater ecosystem, the Barmah– Millewa Forest in Australia’s Murray–Darling Basin (Tapsuwan et al, 2015). We found that proximity to the Barmah–Millewa Forest has positive impact on nearby house prices in Victoria and New South Wales. For example, for an average property worth $199,000 that is 10 km away from the Barmah–Millewa Forest, moving 1km closer will increase sale price by $2000. We also found a non-linear relationship between in-stream flow and sales price which is suggestive of homebuyer preferences for flow that is neither low (ie, drought flows) nor high (ie, flood flows).

The results provide estimates of the benefits of in-stream flow that could be used to inform freshwater ecosystem restoration policy in the Basin and are suggestive of regional benefits that accrue to homeowners who live near key freshwater-dependent ecosystems in the basin.

Reference

Tapsuwan S, M Polyakov, R Bark & M Nolan (2015). Valuing the Barmah–Millewa Forest and in stream river flows: A spatial heteroskedasticity and autocorrelation consistent (SHAC) approach. Ecological Economics 110: 98-105. http://dx.doi.org/10.1016/j.ecolecon.2014.12.008.


More info: Maksym Polyakov Maksym.polyakov@uwa.edu.au

References

Pannell DJ (2008). Public benefits, private benefits, and policy mechanism choice for land-use change for environmental benefits. Land Economics 84: 225-240.

Polyakov M, DJ Pannell, R Pandit, S Tapsuwan & G Park (2015). Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape. American Journal of Agricultural Economics 97: 299-314. http://dx.doi.org/10.1093/ajae/aau053

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