The effects of open space on residential property values

The marginal values of different open space attributes are tested using a hedonic pricing model with residential sales data from central Maryland. The identification problems that arise due to endogenous land use spillovers and unobserved spatial correlation are addressed using instrumental variables estimation with a randomly drawn subset of the data that omits nearest neighbors. Results show a premium associated with permanently, preserved open space relative to developable agricultural and forested lands and support the hypothesis that open space is most valued for providing an absence of development, rather than for providing a particular bundle of open space amenities.