Amenity Value and Home Prices: An Examination of the Effects of the Ridge, Slope, and Hillside Protection Taskforce in Knox County, Tennessee

This thesis concerns two topics related to policy effects of hillside and ridgeline development in Knox County, TN and attempts to quantify the values of different aspects of forest land in the area, particularly how the amenity values of forest land affect the prices of surrounding houses. The first essay conducts a cost-benefit analysis to determine the willingness of individual landowners for reforestation given explicitly stated costs and benefits of reforestation. A sequence of hedonic models was used to estimate differences in non-use values attributable to deforested and to forested areas, allowing the establishment of an overall price-distance relationship between the amenity values attributable to both areas and their proximities to housing locations. The results showed that the benefits from reforestation were greater than the opportunity costs of barren/grassland replaced and the houses with the greatest gains from reforestation were within one mile of the target site. Amenity value benefits for reforestation vary between sites but the sites with the greatest gains were those with the largest area, the lowest land cost, and the most houses within one mile. The second essay examined the effects of forest views on house prices and also the effect that the economy had on consumers’ value of those views. This study applied a sales hedonic model to two time periods with markedly different economic climates, the housing boom of 2002-2006 and the recession of 2008. Amenity value gains from forest views were then mapped out for the county for both periods to find those areas that had the highest gains in both periods. The results showed that while the views of forest land increase house values in both periods, the average marginal implicit price gain decreased over 13 percent from the boom period to the recession. Maps of the value gains highlighted the south-western, eastern and northern parts of the county, which contain high income suburban communities, with consistent value gains in excess of $70 per acre.