ABSTRACT.- We estimate the implicit market price of soil erosion using quarterly data of 2824 agricultural farms traded in Uruguay between 2000 and 2014.Aunique feature of our estimation is that we allow for possible spatial spillovers. We find evidence of a negative and statistically significant association between erosion and land values. On average, an additional loss of 1% of the original topsoil due to erosion is associated with a direct (own) decrease of .24% in the per-hectare price of agricultural land (P-value: .012, 95% CI: -.0042, -.0005). In 2023 dollars, this is equivalent to a decrease of USD 8.7 in the average price per hectare, or USD 1130 in the price of the average farm. In terms of tons of soil, the average value is
$.24 a ton. Finally, considering the 50 km radius of our spatial model, the value of losing 1% of topsoil is $15.8 million. The value of our estimates is sensitive to our measure of erosion and our specification of the spatial-temporal weighting matrix, but the statistical association is robust.
© 2024 International Association of Agricultural Economists.