USING SPATIAL ECONOMETRICS TO ASSESS THE IMPACT OF SWINE PRODUCTION ON RESIDENTIAL PROPERTY VALUES

A spatial hedonic model is developed to assess monetary harm of confined animal feeding operations (CAFOs) on property values, taking explicitly spatial dependence in property values into account. Spatial autocorrelation was found in the form of spatial lag dependence, not spatial error dependence. When spatial lag dependence is explicitly taken into account, on average the impact is reduced by 18%. The magnitude of the spatial autoregressive parameter was about 0.2 for the 1-mile distance band, meaning one-fifth of the house value could be explained by the values of the neighboring houses.