Principles of Environmental and Resource Economics Review Report

This report provides a comprehensive review of the article "Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural Landscape" by Polyakov et al. (2014), published in the American Journal of Agricultural Economics. The review focuses on the authors' use of a spatio-temporal hedonic model to estimate the marginal private benefits of native vegetation in rural Victoria, Australia. The article explores how native vegetation can be preserved without impacting agricultural production by balancing public and private benefits. The review highlights the article's key findings, including the higher per-unit area profits on medium and small-sized private lands, and suggests the integration of cost analysis models with the hedonic pricing method for more comprehensive analysis. The report also assesses the article's contributions to environmental conservation and economic scholarship, while noting its limitations in accessibility for a general audience and the reliance on data from the Valuer General’s Office. The review emphasizes the importance of the information for policy makers and its potential to improve investments in environmental conservation.

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PRINCIPLES OF ENVIRONMENTAL AND RESOURCE ECONOMICS
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A review of (Capitalized Amenity Value of Native Vegetation in a Multifunctional Rural
Landscape) by (Maksym Polyakov David J. Pannell Ram Pandit Sorada Tapsuwan Geoff
Park) in (American Journal of Agricultural economics Volume 97, Issue 1, 1 January
2015, Pages 299–314)
Introduction
“Even though vegetation is a very key factor in our environment, in many parts of the
world, natural vegetation has been cleared to allow agricultural production (Maksym et.al
2015).” Over the recent past various scholars have discussed the essence of natural vegetation to
mankind survival but inadequate change have yet been witnessed. The article by (Maksym et.al
2015) focusses on various important factors which can have a great impact on the destruction of
natural vegetation for agricultural production. The article by (Maksym et.al 2015) which form
part of the main issues in the American agricultural economics journal, discusses how long term
flow of ecosystem services can be created without interfering with agricultural production
activities by balancing the requirements of the public and private benefit costs (Polyakov et.al
2014). The article by (Maksym et.al 2015) also provides key information on how benefits
accrued publicly and privately can be used to identify environmental conservation opportunities
on non-public lands. The article further explains how environmental projects can be best
evaluated as well as creation of an effective policy instruments. Even though the paper discusses
more relevant issues to the literature some of the content proves not to be important.
A synoptic overview of the article by (Maksym et.al 2015)
The authors of the article (Maksym et.al 2015) set out various key hypothesis and
methodologies in contribution to the natural vegetation preservation. The author utilized a spatio-
temporal hedonic model as a method to estimate the margin of private benefits of natural or

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native vegetation on the rural properties within Victoria one of the Australian states (Polyakov
et.al 2014). According to the authors, they directly estimated the marginal value of the native
vegetation on non-public lands and examined its variance with the extent of vegetation within
each property and across range of a given property sizes and types (Riordan 2014). The authors
of the article in the American journal on agricultural economics came up with an understanding
that the private profits of native vegetation are quite higher per unit area on medium and small
sized private lands which are production oriented. Moreover, with the hedonic pricing method
utilized by the authors within the study, it is evident that native vegetation indicates a reducing
margin of profits as its fraction should have of the property increases. Even though the authors
have adequately utilized spatio-temporal hedonic model, they should utilized the hedonic pricing
method together with cost analysis model (Iftekhar et.al 2017).
The standard methodology model used in real estate matches model methodology of price
indexing thereby making it crucial for the next study to impute prices and consideration of
standards of leaving index. This suggested method is based on interesting decomposition of
spatial models and temporal effects as well as cost analysis. This combined ,methodology can
enable a researcher to use hedonic pricing together with the cost analysis models to come up with
land pricing data and estimate the costs and profits associated with environmental conservation,
such pollution, growth control as well as tax policies in relation to time parameters (Polyakov
et.al 2014). This combined method will also allow the use of other techniques while coming up
with the natural vegetation conservation strategies. For the combined method to work best it
must also work simultaneously with policies and a standard time series analysis techniques
(Iftekhar et.al 2017).

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The hedonic pricing method together with the cost analysis method should be used
together in a way that should not be related to market valuation methods but should allow an
individual to estimate the implicit utility prices of different commodities within the market
(Polyakov et.al 2014). The application of the method just as the one used by the authors of the
article should have assumption in order to come up with a perfect way of benefits determination
for example “the price of a rural property is determined by its production and consumption
characteristics” (Maksym et.al 2015). The combine method should have stages or processes and
should also be utilized with a perfectly selected weight matrix with the consideration of its
influence on the final results from the model (Iftekhar et.al 2017).
An assessment for the contributions of article by (Maksym et.al 2015)
The content of the paper article by (Maksym et.al 2015) meets a lot the requirements
and objective of the American Journal for agricultural economics which aims at creation of a
sustainable environment and at the same time not interfering with the agricultural production.
The content of the article also utilizers various hypotheses and methodologies which is crucial
for policy makers and economists (Polyakov et.al 2014). Native as reveled by the authors is a
key environmental asset in various heavily cleared parts of the world such as cleared agricultural
landscapes of Australia. The content of the article by (Maksym et.al 2015) explains the benefits
of native vegetation to both private and public landowners and states “Such vegetation provides a
variety of benefits or ecosystem services to both private landowners and the public (Maksym
et.al 2015).”
Through provision of such information by the article to the entrepreneurs and members of
the public, the authors of the article contributes a lot to the sustainable preservation of natural
vegetation. The article further explains the benefits of natural vegetation to various private

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landowners who owns 77% of Australian land area by approximation. The content of the paper
in this perspective meets the objectives of the American journal for agricultural economics by
contributing to the creation of economic scholars with advance knowledge as well as
contributing to the sustainable environmental conservation (Polyakov et.al 2014).
The article by (Maksym et.al 2015) even though utilizers other studies within the
literature review part, it is new work basically containing fresh ideas. The majority of the studies
in relation to this literature have mainly focused on the estimation of the value of environmental
assets on a very particular types of property which is contrary to the focus of this article. The
main objective of the article by (Maksym et.al 2015) is the estimation of the value of profits to
the private landowners generated by environmental assets such as natural vegetation in a
multifunctional non-urban landscapes. Moreover, various studies conducted in the past have not
showed any indication of testing structural shifts within the parameters of the hedonic model due
to the varied types and sizes of property and none so far have discussed the quantity of the
decreasing value margin of environmental assets on the rural properties.
The content of review article by (Maksym et.al 2015) contributes a lot to environmental
conservation and to creation of scholar economist through discussing the above gap in the
literature review. The authors of the article have also contributed to the existing hedonic
modelling methodologically through simultaneous control of spatio-temporal lag, spatial error
dependencies witnessed within the data as well as spatial exogenous lag. The information
provided within the article by (Maksym et.al 2015) is crucial to policy makers as the information
concerning private profits to the landowners from environmental assets in rural landscapes can
be used as part of contemporary conservation policies (Polyakov et.al 2014). The information

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can be used as policies as a result of its contribution to the betterment of investments which has
over the years formed part of policy discussions.
The study has discussed above seems to be more useful to the environmental preservation
and creation of economic scholars as well as important to the policy makers, the content of the
paper however can only be understood by high level scholars but not a lay person (Groth et.al
2017). The hedonic methodology and the hypotheses behind the study is quite technical for a lay
person to understand. This therefore limits the study only to literate group of individuals leading
to insufficient provision of information to the lay people who may be contributing massively to
the destruction of natural vegetation for agricultural production (Polyakov et.al 2014). The data
provide and obtained by the others of the article is quite important and can be used in other parts
of the as the study area was extensive and supplemented, however, the data obtained on the sales
data by the study from the Valuer General’s Office of Victoria State cannot be fully regarded as
true and the searchers should have come up with their private data (Pender, Weber and Brown
2014).
Conclusion
In conclusion, (Maksym et.al 2015) set out to estimate the value of profits to the private
landowners generated by environmental assets such as natural vegetation in a multifunctional
non-urban landscapes. Generally the content of the article is well related to the topic and to the
objectives of the American journal of agricultural economics and makes a non-trivial
contribution to policy making and debates in agricultural economics and environmental
conservation field. Nonetheless, the content of the paper shows some limitation by not being
readable to a layperson through application of complicated hedonic pricing method and use of
data from the Valuer General’s Office of Victoria State which cannot be fully regarded as true.

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References
Groth, T.M., Curtis, A., Mendham, E. and Toman, E., 2017. Examining the agricultural producer
identity: utilising the collective occupational identity construct to create a typology and profile of
rural landholders in Victoria, Australia. Journal of Environmental Planning and Management,
60(4), pp.628-646.
Iftekhar, M.S., Polyakov, M., Ansell, D., Gibson, F. and Kay, G.M., 2017. How economics can
further the success of ecological restoration. Conservation Biology, 31(2), pp.261-268.
O'Riordan, T. ed., 2014. Environmental science for environmental management. Routledge.
Ovando, P., Caparrós, A., Diaz-Balteiro, L., Pasalodos, M., Beguería, S., Oviedo, J.L., Montero,
G. and Campos, P., 2017. Spatial Valuation of forests’ environmental assets: an application to
andalusian silvopastoral farms. Land Economics, 93(1), pp.87-108.
Pender, J.L., Weber, J.G. and Brown, J.P., 2014. Sustainable rural development and wealth
creation: five observations based on emerging energy opportunities. Economic Development
Quarterly, 28(1), pp.73-86.
Polyakov, M., Pannell, D.J., Pandit, R., Tapsuwan, S. and Park, G., 2014. Capitalized amenity
value of native vegetation in a multifunctional rural landscape. American Journal of Agricultural
Economics, 97(1), pp.299-314.