Working Paper Series WP#102

Spatial spillovers in the implicit

market price of soil erosion: An
estimation
Marcelo Caffera, Mariela Buonomo,
Leonidas Carrasco-Letelierc, José Ignacio Hernández,
Daniel Rodríguez Anza, Felipe Vásquez

2017

Abstract/Resumen

Abstract: The objective of this research paper is to estimate the implicit market price of soil erosion
and to analyze the role of spatial spillovers in its determination. To do this we fit a hedonic price model
using quarterly data from land transactions in Uruguay for the period 2007-2013. Spatial spillovers in
the land market may be common. We test for spatial correlation within observations in the dataset and
we choose a spatial autoregressive moving average (SARMA) specification for our model. We find
evidence of a negative and significant impact of sheet (layer) erosion on per hectare land values,
whereas the presence of gullies deeper than topsoil does not seem to affect price further. An
additional 1% of topsoil lost due to sheet erosion decreases price per hectare by 0.5% (95% CI [-
0.0094, -0.0013]). The average price per hectare in our sample is USD 1,957.15. It follows that the
impact of 1% of topsoil loss represents a drop of USD 10.57 in the average price. This means that the
average lot in our period of analysis was traded for about USD 282.78 per hectare less than a
hypothetical erosion-free identical lot. Indirect effects (this is, spatial spillovers) account for roughly half
of the total effect of erosion on price.

Keywords: spatial spillovers, hedonic prices, soil erosion, farmland values, Uruguay
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 Spatial spillovers in the implicit market
price of soil erosion: An estimation

Marcelo Caffera, Mariela Buonomo,

Leonidas Carrasco-Letelierc, José Ignacio Hernández,
Daniel Rodríguez Anza, Felipe Vásquez *

December, 2017

* See page ii for authors details

i
Marcelo Caffera
Universidad de Montevideo. Prudencio de Pena 2544, Montevideo, Uruguay

Mariela Buonomo,
Oficina de Programación y Política Agropecuaria. Ministerio de Ganadería, Agricultura y
Pesca. Constituyente 1476, piso 3, Montevideo, Uruguay

Leonidas Carrasco-Letelierc
Instituto Nacional de Investigación Agropecuaria. Andes 1365, piso 12, Montevideo,
Uruguay

José Ignacio Hernández

Universidad del Desarrollo. Ainavillo 456, Concepción, Chile

Daniel Rodríguez Anza

Universidad de Montevideo. Prudencio de Pena 2544, Montevideo, Uruguay

Felipe Vásquez
Universidad del Desarrollo. Ainavillo 456, Concepción, Chile

Acknowledgments

We are especially thankful to Mariana Hill, Eyal Yussim (Directorate of Natural

Resources/Ministry of Stockbreeding, Agriculture and Fisheries – RENARE/MGAP),
Mario Mondelli and Francisco Rosas (formerly Bureau of Agricultural Programming and
Policies – OPYPA/MGAP), who gave us access to MGAP’s databases and cleared the way
for this research to be done. Without them, this piece of work would not have been
possible. We also thank Juan Horacio Molfino and Eduardo Dilandro (soil science experts
formerly working at MGAP) for showing and explaining to us several technical and
methodological details of erosion maps.

Authors gratefully acknowledge financial support provided by funding institutions. This

work was supported by the Latin American and Caribbean Environmental Economics
Program (LACEEP) [Senior Grant, IDEA-018/2017]. Daniel Rodríguez Anza was
financially supported by the National Bureau of Research and Innovation (ANII) [Beca de
Posgrados Nacionales, POS_NAC_2015_1_110233].

This work was carried out with the aid of a grant from the
International Development Research Centre, Ottawa, Canada through
the Project entitled “Using an Environmental Economics Perspective
to Influence Policies in Latin America and the Caribbean,” through
the Latin American and Caribbean Environmental Economics
Program (LACEEP).

ii
1. Introduction

Soil is a fundamental non-renewable natural resource that provides essential ecosystems services
(FAO and ITPS, 2015). Soil erosion may affect the natural composition and combination of the
chemical, physical and biological attributes of soil (Durán and García Prechac, 2007), affecting the
ability of soil to provide these services as well as their quality. Soil erosion is the result of natural
causes (such as wind and rain), but also some forms of soil exploitation. Climate change may
increase soil erosion in the absence of adequate soil management practices for adaptation by, for
example, changing the precipitation patterns (Nearing, Pruski and O’Neal, 2004; Mullan, 2013;
Farell, Abatzoglou and Brooks, 2014). Under a scenario of climate change, adequate soil
management practices become even more important. An important limitation forattaining efficient
soil management practices, from the public and private point of view, is the lack of recent
estimations of the implicit market price of soil erosion in the literature. Without this price the public
sector cannot evaluate the net benefits of a soil conservation policy and private produces cannot
evaluate the net benefits of a private measure taken towards this end. In this paper, we help fill
this gap by estimating the implicit market price for soil erosion. To do it, we use information on
10,717 agricultural land transactions that occurred in Uruguay between 2007 and 2013, along with
information on several physical characteristics of plots and other relevant controls.

The paper contributes to the literature in several ways, the most distinguishable of which is that
none of the previous works have exploited the spatial correlation of land prices. Not controlling for
spatial correlation, nevertheless, could cause bias in estimates (Anselin, 1988; LeSage, 1999;
Anselin, Florax and Rey, 2004; Maddison, 2009). Spatial correlation in land markets is something
to expect because the value of land traded in the recent past in the vicinity of a parcel could be a
source of information for prospective buyers and sellers of that parcel. At the same time, spatial
correlation may be present because of the use of maps with different scales, which might cause
measurement errors. Finally, we could have spatial correlation because of omitted local
characteristics, for example, linked to unobservable attributes of land buyers and sellers, of whom
we have little information.

1
Another contribution is that we are the first to have differentiated measures of sheet and gully
erosion. This is an important distinction. Anecdotal evidence suggests that due to the fact that they
are easy to detect by a prospective buyer, it may be a kink in the implicit market price of erosion
when gullies are present (Mariana Hill, personal conversation, 2016). The distinction between sheet
and gully erosion is possible because we use an erosion measure based on an (official)
anthropogenic erosion map (scale 1:500,000). This is not common in the literature. With the
exception of Gardner and Barrows (1985), the rest of the available studies use different types of
proxies of soil erosion.

An additional issue with past studies is that they use rather small databases, with a number of
observations lower than 400. As we stated above, in this study we use 10,717 observations.
Moreover, ours is also the first paper that uses transactions of agricultural land covering a whole
country and a period of seven years.

Lastly, we are the first to use data on land transactions in an under-developed country. With one
exception, past papers refer to transactions in developed countries (the US, Australia and the UK).
The exception is Donoso and Vicente (2001). Their work estimates the implicit value of erosion in
Tandil, Argentina. Nevertheless, they do not use transactions or actual measurements of soil
erosion. Instead, they use expert assessments in the case of erosion as well as the owner or holder’s
perceptions of land values.

The rest of the paper is organized as follows. In Section 2 we present an overview of the literature
on land valuation and soil erosion, emphasizing the aspects of this paper that represent an
improvement in respect to current knowledge. Section 3 provides the background and policy
context. Section 4 takes a closer look at the hedonic prices approach and to the set of spatial
econometrics tools used to deal with the spatial correlation problem. The dataset and its sources
are presented in Section 5. Section 6 features the empirical analysis and the discussion on the results
of the model. Finally, in Section 7 we offer the main concluding remarks of the research paper.

2
2. An Overview of the Literature

As stated before, the literature does not provide a recent estimation of the economic cost of soil
erosion. Moreover, in most cases it does not use a direct measure of soil erosion. Some authors use
potential or indirect measurements of soil erosion, while others rely on different measurements of
soil quality as a proxy of soil erosion. An example of the latter is King and Sinden (1988), who use
under-investment in erosion control measures with respect to a regulator-recommended level.
Another is Boisvert et al. (1997), who use nitrate leaching and runoff. Finally, other studies use
official taxonomies of soil quality (Xu et al., 1993; Faux and Perry, 1999; Maddison, 2000).
Following are examples of works that use potential erosion measurements: Palmquist and
Danielson (1989) use measures of potential erosion based on the Universal Soil Loss Equation
(USLE); others use measurements of one or more of the components of the USLE, like the K factor
(Mendelsohn, 1994) and the RKLS factors (Miranowski and Hammes, 1984); Mendelsohn,
Nordhaus and Shaw (1994) also fit in this category; in a somewhat different manner, Donoso and
Vicente (2001) rely on the judgement of experts; finally, Gardner and Barrows (1985) classify
erosion in categories as defined by the US Department of Agriculture (USDA). In this sense, this
work is the closest to ours in the literature.

With one exception, all the studies mentioned above are applications of the methodology in the
context of the United States (Boisvert et al., 1997; Xu et al., 1993; Faux and Perry, 1999; Palmquist
and Danielson, 1989; Mendelsohn, 1994; Miranowski and Hammes, 1984; Gardner and Barrows,
1985), the United Kingdom (Maddison, 2000) and Australia (King and Sinden, 1988). The
exception is Donoso and Vicente (2001), who work with data from wheat producers in Tandil,
Argentina.

Finally, Mena, et al. (2014), is the only one specifying spatial models and using a relatively larger
dataset (3,236 observations). Nevertheless, it does not include any measurement of soil erosion.

3
3. Policy Background

The increase in the prices of agricultural commodities during 2006-2013, combined with export
restrictions in Argentina, led to a never-before-seen increase in agricultural production in Uruguay.
As an example, the total number of hectares devoted to soybean cultivation rose from 19,000 in
2000 to 1.32 million in September 2014 (DIEA, 2014; DIEA, 2015). Similar to what happened in
Argentina (see Choumert and Phélinas, 2015), this transformation of the agricultural landscape in
Uruguay brought other changes. One of them was that record profits led to a change in the cropping
patterns. Permanent soybean cultivation substituted conventional rotation schemes (Pauletti, Terra
and Perranchon, 2016). In addition, the number of hectares under exploitation by tenants instead
of landowners increased by 20% between 2000 and 2011 (DIEA, 2011). Moreover, tenancy with
sharecropping grew by 96%. Some of these tenants were “sowing pools”: agricultural trusts
constituted by capital investors (not necessarily producers), to manage companies that rent land.
Sowing pools usually provide essential services for agricultural production as well.

Under this scenario, Uruguay experimented with two major episodes of algae bloom in the main
sources of drinking water of the country in 2013 and 2015, which gave another social and political
dimension to the environmental impacts of agricultural activities. The purification costs of the
state-owned water utility company soared (Amorín y Larghero, 2017). Public officials and the
World Bank declared soil erosion “the main environmental problem in Uruguay linked to
agricultural activities” (Hill, Freeman and Orejas, 2016, p.3).

The Ministry of Agriculture (MGAP) policy response was a nationwide soil conservation program
called Responsible Soil Use and Management Plans.1 Mainly, these Plans establish that the
producer needs to present crop rotation schedules to the regulator. If these comply with a maximum
legally permitted level of soil erosion, the regulator approves them. To calculate the estimated
erosion of the proposed rotation, the farmer must use a software based on USLE and freely
available to producers in the Ministry's website. An agronomist, duly registered with the MGAP,
should present the producer’s plans and the related soil management strategies to the MGAP's
Directorate of Natural Resources (RENARE).

1We will refer to it as "Ministry of Agriculture" or "MGAP" for practical reasons. The full name is Ministerio de
Ganadería, Agricultura y Pesca (Ministry of Stockbreeding, Agriculture and Fisheries).

4
Policymakers implemented the Plans in an experimental way in 2011. In the winter of 2013, the
plans became compulsory for landowners and land tenants planting more than 100 hectares of
wheat and barley.2 The government extended the plans to sorghum, corn, soybean and sunflower
in the summer of 2013-2014. The government also incorporated the soil conservation Plans into
the toolbox of policy measures implemented in the Santa Lucía river basin, source of drinking
water for half the population of Uruguay, in the summer of 2013–2014. More specifically, the plans
recently became compulsory for dairy producers in this basin. 3

4. Methodology and Empirical Strategy

In the hedonic approach, the market price for a good is a function of the implicit market prices of
its relevant characteristics (Rosen, 1974; Vásquez, Cerda and Orrego, 2007). In our case, we expect
the market price for a lot with a given level of erosion to be lower than the market price for a similar
piece of land that has no erosion.

Palmquist (1989) developed the model for the rental market for farmland. To our knowledge, there
is no formal model in the literature for the case of sales of farmland as a differentiated factor of
production. Nevertheless, authors in the applied literature offer hints about how to modify the
farmland rental market model in the case of the sales market. In the case of the rental market, the
present productive capacity of the soil is the main value of the agricultural land. In the case of the
sales market, the price reflects the present value of the flow of future net benefits derived from the
land´s sequence of future best alternative uses (Palmquist and Danielson, 1989). Following Xu et
al. (1993), albeit with some differences, we divide the value of agricultural land into components
to define the list of variables to include in the regression. Its possible agricultural use gives rural
land an obvious component of its value. Rural land may also have a consumptive component, which
derives from its possible use as enjoyment of the rural environment. This may not be a use that
competes with the productive use of land, so we are not interested in disentangling the two sources

2 Holders of separated plots (that add up to more than 100 hectares) should present a plan only for plots greater than
50 hectares.
3 Dairy farmers in the Santa Lucía basin also have to present plans for fertilizer use. The Santa Lucía River is the

main source of drinking water for half the population in Uruguay, including the metropolitan area of Montevideo; it has
had severe episodes of algae blooms. For this reason, the government wants to control the level of phosphorous in
soil and water in the basin (Hill et al. 2016).

5
of value. Finally, the speculative component of land value arises because land is an investment
asset. In particular, rural land may be valued for its potential development. This source of value
affects land that is closer to the urban fringe. As explained below, we leave those lots closer to
towns out of our sample for this reason.

As a result, we can write the hedonic price equation as:

log⁡(𝑝𝑖,𝑡 ) = 𝑓(𝐸𝑖,𝑡 , 𝑆𝑖 , 𝐵𝑖 , 𝐿𝑖 , 𝑀𝑡 , 𝑌𝑡 ) (1)

Where 𝑝𝑖,𝑡 is the per-hectare-price of lot i in quarter t, 𝐸𝑖,𝑡 is the level of erosion of farm i in quarter
t, 𝑆𝑖 is a set of other relevant physical characteristics of the lot, such as water-retaining capacity,
𝐵𝑖 indicates buyer’s characteristics, i.e. whether the buyer is a physical person or a commercial
society, 𝐿𝑖 is a set of location characteristics of the lot i (i.e. jurisdiction, distance to relevant towns
and/or highways), and 𝑀𝑖,𝑡 is a set of values of relevant market prices that may influence land
prices (i.e. prices of relevant agricultural commodities, such as soybean, cellulose pulp, meat, and
relevant other commodities, e.g. iron, gold). Finally, 𝑌𝑡 is a set of year indicators.

The hedonic price equation represents the equilibrium locus of land prices. The implicit price of
the characteristic z of [the] lot i is obtained as 𝜕𝑝𝑖 /𝜕𝑧𝑖 . Thus, in our example, the implicit price of
soil erosion is the marginal impact on land price, assuming the market is in equilibrium, and given
the rest of the determinants. With no adjustments from the part of buyers and sellers in response to
the change in erosion, the aggregate change in welfare due to a non-marginal change in erosion is
given by the sum of the areas under each individual's marginal willingness to pay curve, over the
change in erosion. (Freeman, 2014). Nevertheless, a non-marginal change in one of the
characteristics is likely to cause the hedonic price function to shift, as sellers and buyers adjust to
the change. Given the enormous amount of information needed to calculate the true value in this
case, Palmquist (1989) shows that the above aggregate measurement is a lower limit of the true
value of the change (after adjustments). At the same time, Bartik (1988) suggests that the area
under the ex-ante hedonic price function in the relevant range is an upper bound of the true value
of the change. Palmquist and Danielson (1989) use Bartik's result to estimate this upper bound
using the coefficient of a hedonic price function for the case of erosivity.

6
Following Maddison (2009), we add a spatio-temporal dimension to the usual specification of a
hedonic price equation such as (1). The reason is the same as in Maddison (2009): it is costly to
potential buyers of land (producers or investors) to observe the quality of the soil throughout the
entire area of the farm. Given this, they may use the value of recently sold nearby farms to gain
additional information on the quality of the soil in the farm in question. Not to take into account
the spatial dependence discussed above leads conventional OLS estimates into bias and
inconsistency, as expectable from measurement errors (Anselin, 1988; LeSage, 1999).

An accepted way of testing for spatial dependence is through the Global Moran's I-statistic
(LeSage, 1999; Mena et al., 2014). The I-statistic varies between -1 and 1. A positive and
significant value of I implies positive spatial correlation, whereas a negative and significant value
of I implies the opposite. Nevertheless, Moran’s I statistic does not inform us about the form of
spatial correlation. It could be the case that we confirm the existence of spatial dependence through
Moran’s I, but specify an incorrect spatial model (i.e. assuming spatial dependence to be caused by
the dependent variable when in the true data generating process the cause of the phenomenon is
related to the error term). As in Maddison (2009), we test the adequacy of spatial models via
Lagrange Multiplier (LM) and Robust Lagrange Multiplier (RLM) tests.

As suggested by the results of the Moran's I and Lagrange Multiplier tests (see Table 3 in Section
6.1), the model that best fits our data is a spatial autoregressive moving average (SARMA) model.
SARMA models assume spatial correlation to be influenced by both the dependent variable 𝑝 and
the error term 𝑢. This model assumes that the spatial spillovers do not come only from the
dependent variable, but from unobservable neighboring characteristics, otherwise omitted in the
model (Maddison, 2009; LeSage and Pace, 2009):

𝑝 = 𝜌𝑊𝑝 + 𝑋𝛽 + 𝑢 (2.a)

𝑢 = (𝐼𝑛 − 𝜃𝑊)𝜀 (2.b)

or, what is the same, the data generating process:

7
 𝑝 = (𝐼𝑛 − 𝜌𝑊)−1 𝑋𝛽 + (𝐼𝑛 − 𝜌𝑊)−1 (𝐼𝑛 − 𝜃𝑊)𝜀 (3)

where 𝑝 is the outcome of interest (in our case, land values), 𝑋 is the vector of explanatory variables
defined in (1) and 𝜀~𝑁(0, 𝜎 2 𝐼𝑛 ). 𝑊 is a 𝑛x𝑛 spatial weighting matrix in which every element 𝑤𝑖𝑗
represents the spillover of observation 𝑗 on observation 𝑖. 4 There are two main different ways to
specify the spatial weighting matrix. 𝑊 could be defined as a contiguity matrix, in which each
element 𝑤𝑖𝑗 is either 0 or 1 depending on whether the lots 𝑖 and 𝑗 are contiguous or not. Contiguity
matrices may be extended to neighboring but non-contiguous lots, i.e. if lots 𝑖 and 𝑗 are separated
by a single lot (second-order contiguity), or if 𝑖 and 𝑗 are separated by less than a given distance.
In those cases, it is important to give different weight to first and second order neighbors, since
spatial spillovers will probably not be the same. 𝑊 could also be an inverse distance matrix, in
which each element 𝑤𝑖𝑗 represents the inverse of the distance between lot 𝑗 and lot 𝑖 (LeSage,
1999; Smith, n.d).

To remove problems such as differences in units of measure or scale of distances, it is

recommended to normalize the weighting matrices (Smith, n.d.). This may be done in several ways.
The most common ones are spectral normalization (dividing each element 𝑤𝑖𝑗 by the largest 𝑤𝑖𝑗
in the whole matrix), minmax normalization (dividing each element 𝑤𝑖𝑗 by the minimum between
the maximum row sum and the maximum column sum of the matrix) and row normalization (scale
each element 𝑤𝑖𝑗 by the sum of its corresponding row 𝑗). Note that the first two alternatives imply
simply multiplying the original matrix by a scalar, whereas the third may slightly change the
relative weights of each element 𝑤𝑖𝑗 within the matrix.5 Thus, only in the first two cases do we get
symmetric matrices.

Our weighting matrix has the intuition of an inverse distance matrix, although we truncate it
spatially and temporally in a way similar to Maddison (2009). We first separately estimate an
inverse distance matrix, a contiguity matrix (identifying every lot in the sample in a 50-km radius)

4Note that setting 𝑊 = 0, we get 𝑦 = 𝑋𝛽 + 𝑢, the standard OLS model

5Assume a simple contiguity matrix. Before normalization, its elements take value 1 if 𝑖 and 𝑗 are contiguous, and 0 if
not. Assume further that a given row 𝑗1 has two non-zero eigen values and another, 𝑗2 , has four. After a row
normalization, non-zero eigen values in 𝑗1 will equal 0.5, and those in 𝑗2 , 0.25.

8
and a “temporal contiguity” matrix (in which elements 𝑤𝑖𝑗 take value 1 if lot 𝑗 was traded in the
same quarter or in a period of up to eight quarters before lot 𝑖). Finally, we multiply the three
matrices to get our 𝑊 matrix. The main idea is that only trades close in space and in time can
influence other trades. Since it simplifies calculations greatly (and thus, computing time), we chose
a row normalization for our matrix.

In Section 6.3 we test some alternative specifications of our central model which serve as
robustness checks of our results. Among them, we introduce an extension of the SARMA model
in (2) and (3), allowing a spatial lag of dependent variables along with the other spatial lags in
SARMA. This is called the spatial Durbin error model (SDEM). Let 𝐸 be the single independent
variable that causes spatial spillovers and assume the same spatial weighting matrix for 𝑝, 𝜀 and 𝑧,
so then (2.a), (2.b) and (3) become (LeSage and Pace, 2009):

𝑝 = 𝜌𝑊𝑝 + 𝛾𝑊𝐸 + 𝑋𝛽 + 𝑢 (4.a)

𝑢 = (𝐼𝑛 − 𝜃𝑊)𝜀 (4.b)

𝑝 = (𝐼𝑛 − 𝜌𝑊)−1 𝑋𝛽 + 𝑊(𝐼𝑛 − 𝜌𝑊)−1 𝛾𝐸 + (𝐼𝑛 − 𝜌𝑊)−1 (𝐼𝑛 − 𝜃𝑊)𝜀 (5)

where 𝜀~𝑁(0, 𝜎 2 𝐼𝑛 ) and the rest of the parameters are as usual. Note that least-square estimation
of these models still produces biased and inconsistent estimates since the spatially lagged
dependent variable is correlated with the error term (Kelejian and Prucha, 1998; Le Sage, 1999).
The estimation, thus, will need to be carried out by maximum likelihood (ML) or generalized
method of moments (GMM) to gain consistency. ML estimation procedure is complex and requires
considerable computing time. Thus, in this paper we estimate our model by generalized spatial two
stages least squares (GS2SLS) as it appears in Kelejian and Prucha (2010). GS2SLS estimates
parameters 𝛽, 𝜌 and 𝛾 by a 2SLS procedure and the parameter 𝜃 by a GMM procedure.

An important feature of the SAR models is that the conventional interpretation of estimates as
marginal impacts on the dependent variable no longer holds. All through the forthcoming analysis
we follow LeSage and Pace (2009). We can rewrite the expression in (3) as follows:

9
 𝑝 = ∑𝑘𝑟=1 𝑆𝑟 (𝑊) 𝑥𝑟 + (𝐼𝑛 − 𝜌𝑊)−1 (𝐼𝑛 − 𝜃𝑊)𝜀 (6)

where 𝑆𝑟 (𝑊) = (𝐼𝑛 − 𝜌𝑊)−1 𝛽𝑟 .

More specifically, we can express (6) as

𝑝1 𝑆𝑟 (𝑊)11 𝑆𝑟 (𝑊)12 ⋯ 𝑆𝑟 (𝑊)1𝑛 𝑥1𝑟

𝑝 𝑆 (𝑊)21 𝑆𝑟 (𝑊)22 ⋯ 𝑆𝑟 (𝑊)2𝑛 𝑥2𝑟
( 2 ) = ∑𝑘𝑟=1 ( 𝑟 ) ( ) + (𝐼𝑛 − 𝜌𝑊)−1 (𝐼𝑛 − 𝜃𝑊)𝜀 (7)
… ⋮ ⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⁡⋮ ⋱ ⋮ …
𝑝𝑛 𝑆𝑟 (𝑊)𝑛1 𝑆𝑟 (𝑊)𝑛2 ⋯ 𝑆𝑟 (𝑊)𝑛𝑛 𝑥𝑛𝑟

If we focus on observation 𝑖, we have:

𝑝𝑖 = ∑𝑘𝑟=1[𝑆𝑟 (𝑊)𝑖1 𝑥1𝑟 + ⋯ + 𝑆𝑟 (𝑊)𝑖𝑖 𝑥𝑖𝑟 + ⋯ + 𝑆𝑟 (𝑊)𝑖𝑛 𝑥𝑛𝑟 ] + (𝐼𝑛 − 𝜌𝑊)−1 (𝐼𝑛 − 𝜃𝑊)𝜀 (8)

As it follows from (8), the full marginal impact of 𝑋𝑟 on 𝑝𝑖 does not only consist of the traditional
“𝑥𝑖𝑟 on 𝑝𝑖 ” effect. There might also be non-zero effects originated from other observations, which
magnitude will depend on the 𝑖𝑗th element of 𝑆𝑟 (𝑊). Note that this element embeds the spatial
correlation between observations 𝑗 and 𝑖. More generally, all diagonal elements of 𝑆𝑟 (𝑊) are
“own-derivative” direct impacts, and all off-diagonal elements are “cross-derivative” indirect
impacts.

Note that the own-derivative element 𝑆𝑟 (𝑊)𝑖𝑖 = (𝑖𝑖𝑖 − 𝜌𝑤𝑖𝑖 )−1 𝛽𝑟 , which in turn may be expressed
through the infinite series (𝑖𝑖𝑖 − 𝜌𝑤𝑖𝑖 − 𝜌2 𝑤𝑖𝑖2 − 𝜌3 𝑤𝑖𝑖3 − ⋯ )𝛽𝑟 . 𝑆𝑟 (𝑊)𝑖𝑖 includes feedback loops:
observation 𝑖 impacts observation 𝑗 and observation 𝑗 impacts observation 𝑖. This 𝑗-on-𝑖 effect is a
part of the direct impact since it is a “second-round hit” of the impact of 𝑥𝑖𝑟 on 𝑝𝑖 . Feedback loops
may also comprise more complex relationships, i.e. effects from 𝑖 to 𝑗 to 𝑘 and back to 𝑖. These are
reflected in the elements 𝑤𝑖𝑖2 , 𝑤𝑖𝑖3 , …𝑤𝑖𝑖𝑛 presented above. The direct effect of a given variable 𝑋𝑟
all through the 𝑛 observations, can be summarized by calculating the average direct effect of 𝑋𝑟 on
𝑝, which equals 𝑛−1 tr(𝑆𝑟 (𝑊)).

10
The cross-derivative elements 𝑆𝑟 (𝑊)𝑖𝑗 , 𝑖 ≠ 𝑗 represent the spatial spillovers (indirect effects)
through which observation 𝑖 potentially affects observation 𝑗. The magnitude of each individual
indirect effect will of course depend on the corresponding element 𝑤𝑖𝑗 . The row-sum of all the
𝑆𝑟 (𝑊)𝑖𝑗 , 𝑖 ≠ 𝑗 elements of (7) comprise the sum of all the indirect effects that the other relevant
observations have onobservation 𝑖. In the same way, the column-sum of 𝑆𝑟 (𝑊)𝑖𝑗 , 𝑖 ≠ 𝑗 elements
of (7) comprise the sum of indirect effects from observation 𝑗. The indirect effect of a given variable
𝑋𝑟 all through the 𝑛x𝑛 matrix 𝑆𝑟 (𝑊) can be summarized by calculating the average indirect effect
of 𝑋𝑟 on 𝑝. This equals the difference between the average total effect and the average direct effect.
The total effects represent the total marginal impact of 𝑋𝑟 on 𝑝. For a single observation 𝑖 (or to a
single observation 𝑖), the total effect is calculated in the same fashion as the indirect effect,
including the direct impact element 𝑆𝑟 (𝑊)𝑖𝑖 in the corresponding row/column sum. Defining 𝜄𝑛 as
a vector of ones, the average total effect equals 𝑛−1 𝜄𝑛′ 𝑆𝑟 (𝑊)𝜄𝑛 .

5. The Dataset

In this section, we present the dataset used for the hedonic price equation estimation. We will define
the relevant variables of the model and the data sources, as well as briefly describe some aspects
of the database building process. The table in Appendix 2 summarizes this information. In this
paper, we rely on a large-scale land transaction database, which identifies a great quantity of land
under transaction. We then add to this database the rest of the controls we will describe below. In
addition, we geolocate each traded lot (i.e. we calculate its centroid). This step is essential to create
the location variables and to calculate the W matrix we presented in the last section.

We draw our agricultural land transaction data from the Directorate of Agricultural Statistics
(DIEA), dependent on MGAP. DIEA defines “agricultural land transactions” as the ones involving
at least 10 hectares of land, with a total price of at least USD 1,000 and a per-hectare value between
USD 50 and USD 30,000 (DIEA, n.d.). The reason behind these criteria is to avoid including
transactions in the data base that may be indicating other uses of land, like real estate or tourism
(in the case of high prices), or transactions that do not reflect land market conditions, like the ones

11
between relatives or neighbors (in the case of low prices). Transactions of small areas of land may
also be indicating uses of land for development or transactions between relatives.

From this dataset, we obtain three variables: the implicit per hectare price of land of each
transaction (PRICE, measured in 2000 US dollars) and two dummies identifying buyer’s individual
characteristics.6 One of them identifies the buyer’s nationality, and takes value 1 if the buyer is a
Uruguayan national (ACQUY). The other identifies the buyer’s legal condition (if it is a person, a
firm, a government agency, etc.), and takes value 1 if the buyer is a natural person (ACQNP).

Usually, the traded lot involves more than one parcel. A parcel is the smallest official subdivision
of land for registry purposes. We use the traded lot as the unit of analysis (instead of a parcel)
because the amount of the transaction is the total value of the lot. Working at the parcel level would
require allocating each of them as part of the lot with the same price per hectare. This would reduce
variation of price due to erosion. This is particularly true in those farms with more than one level
of erosion, which represent most of our sample. In sum, the original, raw dataset consisted of
30,568 parcels. The 30,568 parcels were traded in 16,254 transactions during the period January
2007 to December 2013. This is the period in which the increase in agricultural activity cited above
led the government to produce the aforementioned Plans as instruments to control erosion. The
years 2007-2013 matches almost exactly with the main boom of soybean prices (as defined in
Appendix 2): from USD 270.29 in the beginning of 2013 to 479.39 by the end of 2013, reaching a
peak of USD 615.85 in the third quarter of 2012 (quarterly averaged current values) Within these
years, the country received a more intense flow of Argentinian investment. About 65% of the
transactions involving Argentinian buyers in the period 2000-2014 were carried out between 2007
and 2013. For non-Argentinian buyers, the analogous figures are about 54%. Presumably as a result
of the preceding, land values rose sharply: for observations in our sample, average price per hectare
rose from USD 1,445.17 in 2007 to USD 4,108.98 in 2013 (at current values).

The original database included rural, as well as urban and suburban parcels. We decided to drop
all the lots defined as urban by the National Directorate of Cadastre. In addition, we dropped all

6 More precisely, PRICE is measured in 2000 US dollars, but we used inflation in US dollars in Uruguay instead of
American CPI as a deflator, to account for the systematic appreciation of the Uruguayan peso against the US dollar
that took place within our period of study.

12
the parcels (suburban and rural) within a distance of the urban limits. The justification for the latter
is that although there might be agricultural production at the edges of cities or towns, parcels within
the urban fringe may be also useful for future development. For this reason, their prices may not
reflect the agricultural value of the piece of land. The existing literature does not define unique
criteria to establish the limits of suburban areas.7 In the case of Montevideo, we defined the distance
to be 30 km from the city’s center. This criterion matches with several definitions of the
Metropolitan Area of Montevideo (Martínez, 2007). In the case of the rest of the country, since we
lack a previous technical definition of “metropolitan area” or “influence area” for any of them, we
proceeded as follows: We define “relevant towns” as those non-port towns and cities having both
a branch of the public national bank (Banco República) and an ANCAP gas station (ANCAP is the
government-owned oil company). Banco República and ANCAP are, respectively, the country’s
largest bank and fuel supplier. For relevant towns, we draw the suburban area based on free access
cartography of the Directorate of Spatial Planning (Spatial Information System). These maps are,
in turn, based on soil use definitions by the Spatial Planning and Sustainable Development Act
(Ley de Ordenamiento Territorial y Desarrollo Sostenible, 2009).8 We drop all lots within the
suburban area (including the Metropolitan Area of Montevideo). We are aware that some rural soils
may be located within the suburban area we defined. We could have simply dropped the parcels
defined as suburban. Nevertheless, we decided to draw a fringe because we assume two contiguous
parcels to have very similar location characteristics, regardless of their administrative
denomination. This refers back to the discussion in the introduction about causes of spatial
correlation in the data.

Apart from excising from the original database from urban and parcels within a fringe of “relevant
towns,” we also deleted from it parcels in tourist areas, for similar reasons. Coastal tourism in
Uruguay (besides urban tourism in cities like Montevideo or Colonia) is heavily concentrated on
the coastline of the departments of Canelones, Maldonado and Rocha. We defined this coastline as
the territory between the sea and the closest coastal national highway. We dropped the land
transactions within the area. Additionally, we decided to drop traded lots with an area smaller than

7 See, for example, Hushak (1975), Plantinga and Miller (2001), Carrión-Flores and Irwin (2004) or Debolini, Valette,
François and Chéry (2015).
8 The Spatial Planning and Sustainable Development Act defines urban, suburban and rural soils, posing restrictions

and/or directly banishing real estate development in rural areas.

13
25 hectares from the Lavalleja department. This department is a popular destination for tourism in
the sierras and the countryside. We drop as well the top and bottom 1% of the distribution of land
values for each year. The final number of observation is, thus, 10,717 transactions.

We obtain our erosion measure from the 2004 Anthropic Erosion Map, provided by the Directorate
of Natural Resources (RENARE), of the Ministry of Agriculture. This 2004 cartography is an
updated version of previous works on soil erosion estimation, particularly of an extensive survey
of soil erosion that took place in Uruguay in the late 1960s. With the original cartography in hand,
RENARE’s soil experts corrected the soil erosion measurement when necessary, mostly via
fieldwork, although they used satellite and aerial images as well. With the 2004 Anthropic Erosion
Map, we construct our two variables of interest. The first one is sheet erosion. Sheet erosion occurs
when the soil is lost uniformly, in layers, to erosion. The other one, gully erosion, refers to erosion
in the form of gullies, canals or ditches. The Anthropic Erosion Map defines landscape units that
divide the Uruguayan territory in “iso-erosion” polygons.9 These iso-erosion polygons have the
same percentages of intensity and extension of sheet and gully erosion. Intensity measures the
relative loss of the soils’ A-horizon and the average depth of gullies (in the cases where these are
present). Extension measures the share of the land under each level of erosion intensity.10 Using
this map and GIS tools, we were able to assign an intensity and extension of sheet and gully erosion
to every traded lot. In the case of lots extending over different iso-erosion polygons, we calculate
the average value of erosion of the lot, weighted by the percentage of the lot that lies in each iso-
erosion polygon. We opted to use three measures of soil erosion. Sheet erosion (SHEET) represents
the share of A-horizon (topsoil) lost to sheet erosion. GULLY is a dummy indicating the presence
of severe gullies in the field (i.e. gullies deeper than A-horizon). We include, as well, the share of
the lot surface affected by any sheet erosion (EXTENSION). This variable measures the percentage
of the lot’s surface that a given level of sheet erosion affects. The source of the data is the 2004
Anthropic Erosion Map.

9 Note that we use the term “iso-erosion polygons” but it does not mean that we necessarily have a single level of
erosion within landscape units. For example, we may have a landscape unit in which half the land is severely eroded
and half is non-eroded. For every lot within this landscape unit, we assume that erosion is severe in half the tract and
zero in the remaining half. In other words, we assume erosion to be uniform across a parcel within a landscape unit.
We do so because the data we have is defined in a scale which is greater than our unit of analysis.
10 See Appendix 1 for further details.

14
We use two variables as proxies of the quality of the soil: the average water-retaining capacity of
each lot, in millimeters (MM), and the topsoil thickness (THICKNESS), measured in centimeters.
We take MM as calculated by Molfino (2009). The most widely used land productivity index in
Uruguay is the CONEAT index.11 This measures the productivity of groups of soils in terms of
meat and wool (Durán and García Préchac, 2007); it is a good predictor of cropland productivity
as well. We prefer to use MM instead of the CONEAT index because its correlation with SHEET
is lower (0.19 vs. 0.31). The soil’s ability to store water, as measured by MM, is correlated with
the CONEAT index because Molfino estimated a different level of water-retaining capacity for
each CONEAT soil group. We obtain the topsoil average thickness of the lot from the Geographic
Information System of the Unit of Agriclimate and Information Systems (GRAS), available online
at the National Institute of Agricultural Research (INIA) website. The measure is based on the
findings of a working paper by Molfino (2012).

Apart from the above-mentioned soil and plot characteristics, we include three dummy variables.
The first one (FOREST) indicates whether at least one of the parcels comprising the lot is under
forestry priority. This status was created by the 1988 Forestry Act (Ley Forestal, 1988). Plantations
of artificial forest in these lands do not pay income, land or patrimony taxes. The data was obtained
from the 2010 Forestry Priority Soils Map, through RENARE. The second dummy indicates that
at least one of the parcels that comprise the lot is potentially apt for rice cultivation (RICECULT).
We distinguish this particular activity because land use for rice industry tends to concentrate in
wetlands with little to no erosion. These properties are of lower average value than the rest of the
land tracts in our sample.12 Our data on potential for rice cultivation comes from Molfino (2013)
and Carrasco-Letelier and Beretta-Blanco (2017). The third dummy identifies whether at least one
of the parcels that comprises the lot is part of the National System of Protected Areas (SNAP,
Sistema Nacional de Áreas Protegidas). This is an important control, since Uruguayan law imposes
restrictions on both economic activity and land transactions for tracts under conservation (Ley
17.234, 2000). Besides, in some cases, protected areas have become touristic spots as well. In any

11 CONEAT is a widespread soil taxonomy used in Uruguay, which classifies and associates soils in groups with
similar properties. Each group is given a CONEAT productivity index value in terms of its potential for meat and wool
production, as noted in the main body of the text.
12 In our sample, average topsoil loss was 10.8% in rice cultivation areas (vs. 28.2% in the rest), whereas price per

hectare averaged USD 2,289.27 (vs. USD 2,660.66 in the rest, both at current values). Note that sales distribution
between years is similar in rice and non-rice transactions, and thus rising land values do not explain the price
difference.

15
case, prices in transactions of land under conservation may not represent land market prices. We
draw this data from the National Directorate of Environment (DINAMA). We are aware that some
of the protected areas identified in the SNAP variable were officially included in the National
System of Protected Areas during or after our period of interest. Nevertheless, as of 2006 all of
them had been recognized as protected areas.

Apart from the lot´s soil characteristics, we incorporate three characteristics regarding the lot's
location, namely three distances: to closest non-port town (DISTURBAN), port (DISTPORT) and
national highway. We calculate these distances using Google Maps and GIS softwares.
DISTURBAN measures the distance from the centroid of the lot to the closest non-port urban center,
in kilometers. As King and Sinden (1988) and Plantinga and Miller (2001) do, we included distance
to towns to capture the value of agricultural land that is closer to relevant goods and services
markets. DISTPORT measures the distance from the centroid of the lot to the closest commercial
port: Montevideo, Nueva Palmira and La Paloma. Since the latter only ships forestry output, we
only consider it for properties under forestry priority. Finally, we control for the distance between
each lot and the closest national highway. Given that Uruguay has 109 national highways, we use
a set of categorical variables instead of a cardinal one to simplify calculations. Thus, we have three
dummies, indicating whether the centroid of any of the parcels of the lot is between 10 and 20 km
(DISTHIGHWAY_1020), between 20 and 30 km (DISTHIGHWAY_2030), and more than 30 km
(DISTHIGHWAY_30+) from the nearest national highway. The omitted category is composed of
those properties between 0 and 10 km from a national highway.

Uruguay is divided in 19 departments. These are administrative territories between the level of the
national government and municipalities. Although they are not financially independent from the
central government, the collect their own taxes. We include two department-related dummies,
MALDLAV and SOUTHLIT. The first one identifies whether the transaction took place in the
departments of Maldonado or Lavalleja. The aim of this dummy is to capture the effect of non-
coastal tourism (mostly linked to the sierra zones in those departments). The second one identifies
whether the transaction took place in the departments of Río Negro, Soriano, Colonia, Flores or

16
San José. These departments, located in the southwest of Uruguay, have the best soil in the
country.13

To complete our model, we control for a set of commodity prices (soybean, pulp, beef, gold, iron
ore), dummies identifying quarter, and year in which the transaction takes place. All commodity
prices are quarterly averages in 2000 US dollars, adjusted for Uruguayan inflation in dollars.
Appendix 2 describes with further detail these controls. The first three of them represent the
country’s most important export commodities. Within our period of analysis, much expectation
was created around an iron ore surface mining megaproject to be held in central Uruguay that
would have represented the largest investment project in the country’s history. Thus, we add iron
ore price to our commodity set. Gold is included as a proxy for the value of an investment
alternative to land. We obtain these prices from the World Bank, International Monetary Fund and
the French National Institute of Statistics and Economic Studies (INSEE).

6. Estimation Results and Discussion

In the present section we present the results of our empirical analysis. Table 1 presents the
summary statistics of the variables we use.

Table 1: Summary Statistics

Variable Mean Std. Dev. Min. Max.
Price per hectare, in logs (PRICE) 7.205 0.955 4.094 9.426
Share of topsoil lost to sheet erosion (SHEET) 26.906 23.913 0 88.750
Presence of gully deeper than topsoil, dummy (GULLY) 0.824 0.381 0 1
Topsoil thickness (THICKNESS) 28.675 9.061 9 74
Share of lot surface affected by sheet erosion
0.514 0.357 0 1
(EXTENSION)
Water-retaining capacity (MM) 112.043 30.893 20.3 194.8
Forestry priority, dummy (FOREST) 0.408 0.492 0 1
Lot within protected area, dummy (SNAP) 0.009 0.095 0 1
Aptitude for rice cultivation, dummy (RICECULT) 0.075 0.263 0 1
Distance to closest relevant town or city (DISTURBAN) 21.807 13.855 1.222 93.850
Distance to closest relevant port (DISTPORT) 176.650 112.229 9.643 441.363

13Average CONEAT index for the departments in SOUTHLIT is 137, whereas in the rest of the lots in the dataset the
average CONEAT index is approximately 87.

17
Distance to closest national highway: less than 10 km,
0.838 0.368 0 1
dummy
Distance to closest national highway: 10 to 20 km, dummy
0.126 0.332 0 1
(DISTHIGHWAY_1020)
Distance to closest national highway: 20 to 30 km, dummy
0.024 0.152 0 1
(DISTHIGHWAY_2030)
Distance to closest national highway: more than 30 km,
0.004 0.061 0 1
dummy (DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan, dummy (ACQUY) 0.667 0.471 0 1
Lot buyer’s nationality: not Uruguayan, dummy 0.333 0.471 0 1
Lot buyer’s legal condition: natural person, dummy
0.755 0.430 0 1
(ACQNP)
Lot buyer’s legal condition: not a person, dummy 0.245 0.430 0 1
Soybean price (SOYBEAN) 332.708 46.374 257.797 435.808
Pulp price (PULP) 662.835 118.942 465.818 847.968
Beef price (BEEF) 114.256 8.954 95.734 133.945
Gold price (GOLD) 867.141 129.970 704.395 1093.380
Iron ore price (IRON) 104.991 31.378 60.139 177.517
Year 2007, dummy 0.110 0.313 0 1
Year 2008, dummy 0.182 0.386 0 1
Year 2009, dummy 0.107 0.309 0 1
Year 2010, dummy 0.128 0.334 0 1
Year 2011, dummy 0.141 0.348 0 1
Year 2012, dummy 0.129 0.336 0 1
Year 2013, dummy 0.116 0.320 0 1
Quarter 1 (January to March), dummy 0.229 0.420 0 1
Quarter 2 (April to June), dummy 0.265 0.441 0 1
Quarter 3 (July to September), dummy 0.261 0.439 0 1
Quarter 4 (October to December), dummy 0.263 0.440 0 1
Maldonado and Lavalleja departments (MALDLAV) 0.120 0.325 0 1
Southwest littoral departments (SOUTHLIT) 0.261 0.439 0 1
Rest of departments 0.619 0.486 0 1

The mean value of PRICE is 7.205. Recall that this variable is measured in logarithms. Actual
average price per hectare in our sample is USD 1957.15. The maximum and the minimum per-
hectare prices are USD 59.99 and USD 12,411.93. This large variation within land values is driven
by both very heterogeneous characteristics of plots and the exogenous increase of average land
values throughout our period of analysis. The incidence of sheet erosion is heterogeneous as well.
The average share of topsoil loss is 26.9%, whereas the minimum and maximum are 0% and 88.8%,
respectively. Meanwhile, the average extension of sheet erosion is 53.7%, whereas the minimum
and maximum are 0% and 100%, respectively. Most lots present gullies deeper than their topsoil,

18
since the gully dummy averages 0.824. This makes sense, because average topsoil depth is about
29 centimeters, whereas we assume the least severe gullies to be 50 centimeters deep (see Appendix
1).

6.1 OLS Estimation

In Table 2 we present the results of an OLS estimation of our model. We specify two versions, with
and without the department dummies. In both cases we specified a semilog functional form for the
hedonic price function to better fit the data. Although the R2 tended to be slightly higher in linear
specifications, both Akaike and Bayesian information criteria suggested the use of a semilog form.
The results of a Breusch-Pagan test for heteroskedasticity confirm both OLS models have non-
constant variances. We then use robust standard errors in the models in Table 3.

Table 2: OLS Estimation

OLS (without dept. dummies) OLS (with dept. dummies)
Variable Std. error
Coefficient Std. error (robust) Coefficient (robust)
Share of topsoil lost to sheet erosion
-0.005*** 0.001 -0.004*** 0.001
(SHEET)
Presence of gully deeper than topsoil,
-0.018 0.024 -0.031 0.024
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.003** 0.001 0.002* 0.001
Share of lot surface affected by sheet
0.588*** 0.055 0.538*** 0.058
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.002*** 0.000
Forestry priority, dummy (FOREST) -0.084*** 0.018 -0.078*** 0.019
Lot within protected area, dummy
-0.051 0.063 -0.065 0.063
(SNAP)
Aptitude for rice cultivation, dummy
-0.064* 0.035 -0.073** 0.035
(RICECULT)
Distance to closest relevant town or
-0.004*** 0.001 -0.004*** 0.001
city (DISTURBAN)
Distance to closest relevant port
-0.002*** 0.000 -0.002*** 0.000
(DISTPORT)
Distance to closest national highway:
10 to 20 km, dummy -0.102*** 0.025 -0.109*** 0.025
(DISTHIGHWAY_1020)
Distance to closest national highway:
20 to 30 km, dummy -0.149*** 0.053 -0.143*** 0.053
(DISTHIGHWAY_2030)
Distance to closest national highway:
more than 30 km, dummy -0.153 0.136 -0.154 0.136
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.464*** 0.026 -0.451*** 0.026
dummy (ACQUY)

19
 Lot buyer’s legal condition:person,
-0.061** 0.028 -0.079*** 0.028
dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.000
Pulp price (PULP) 0.000 0.000 0.000 0.000
Beef price (BEEF) 0.001 0.003 0.001 0.003
Gold price (GOLD) -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.149*** 0.030
(MALDLAV)
Southwest littoral departments
0.113*** 0.025
(SOUTHLIT)
Constant 7.544*** 0.384 7.446*** 0.384

Year dummies Yes Yes

Quarter dummies Yes Yes

*p<0.10, **p<0.05, ***p<0.01

Both sheet erosion and gully erosion have a negative sign, as expected. Nevertheless, gully erosion
is not significant, even at 10% level, which is somewhat unexpected. Extension of sheet erosion
has a positive and significant impact on land values. The rationale behind this is that, other things
being equal, the less concentrated erosion is, the better for soils. In particular, at a given level of
sheet erosion, the less concentrated erosion is, the less it harms productive properties of soil.
Consequently, for a given level of soil erosion, the less concentrated the erosive process is in the
lot, the more the buyer is willing to pay for it. This is exactly what the positive and significant sign
of extension means.

In general terms, the rest of the coefficients are in line with our expectations, although some of
them have results that are non-significant. We do not make a further analysis of these coefficients
since we assume they are biased because of spatial dependence. Our next step will be to test this
assumption. We take as a starting point the model with department dummies, since both
information criteria and R2 suggest it better fits the data. Global Moran’s I-statistic for the OLS
model with department dummies is 0.053 and significant at the 1% level, which reveals positive
spatial correlation within observations in our dataset. More precisely, simple and robust Lagrange
Multiplier tests confirm the existence of spatial spillovers caused by both the dependent variable
and the error term, and the adequacy of a spatial autoregressive moving average specification. We

20
thus incorporate spatial dependence in our analysis in the form of a SARMA model. Table 3 below
shows the results of the spatial dependence diagnostic tests.

Table 3: Testing for spatial correlation in OLS model

Test Statistic
Global Moran's I-statistic 0.053***
Spatial dependence due to error term
Lagrange Multiplier test 596.36***
Robust Lagrange Multiplier test 35.942***
Spatial dependence due to dependent variable
Lagrange Multiplier test 595.37***
Robust Lagrange Multiplier test 34.952***
Lagrange Multiplier test for SARMA 631.32***

*p<0.10, **p<0.05, ***p<0.01

6.2 SARMA Estimation

We estimated our SARMA model by GS2SLS. Note that the Kelejian and Prucha GS2SLS
estimator deals properly with heteroskedasticity (Kelejian and Prucha, 2010). Table 4 presents our
SARMA estimation.

Table 4: SARMA Estimation

SARMA
Variable
Coefficient Std. error
Share of topsoil lost to sheet erosion (SHEET) -0.002*** 0.001
Presence of gully deeper than topsoil, dummy (GULLY) 0.029 0.026
Topsoil thickness (THICKNESS) 0.000 0.001
Share of lot surface affected by sheet erosion (EXTENSION) 0.304*** 0.066
Water-retaining capacity (MM) 0.002*** 0.000
Forestry priority, dummy (FOREST) -0.053** 0.021
Lot within protected area, dummy (SNAP) -0.065 0.067
Aptitude for rice cultivation, dummy (RICECULT) -0.019 0.037
Distance to closest relevant town or city (DISTURBAN) -0.002*** 0.001
Distance to closest relevant port (DISTPORT) -0.001*** 0.000
Distance to closest national highway: 10 to 20 km, dummy
-0.105*** 0.025
(DISTHIGHWAY_1020)
Distance to closest national highway: 20 to 30 km, dummy
-0.116** 0.054
(DISTHIGHWAY_2030)

21
 Distance to closest national highway: more than 30 km, dummy
-0.058 0.152
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan, dummy (ACQUY) -0.424*** 0.026
Lot buyer’s legal condition: natural person, dummy (ACQNP) -0.070** 0.027
Soybean price (SOYBEAN) 0.000 0.000
Pulp price (PULP) 0.000 0.000
Beef price (BEEF) 0.001 0.003
Gold price (GOLD) -0.001 0.001
Iron ore price (IRON) 0.000 0.000
Maldonado and Lavalleja departments (MALDLAV) 0.107*** 0.034
Southwest littoral departments (SOUTHLIT) 0.026 0.032
Rho 0.578*** 0.061
Theta 0.233*** 0.078
Constant 3.326*** 0.568

Year dummies Yes

Quarter dummies Yes

Wald test of spatial terms: chi2(2) = 322.17

Prob > chi2 = 0.0000

*p<0.10, **p<0.05, ***p<0.01

In qualitative terms, we found that the results are similar to those of our OLS estimation. Note that
the joint Wald test of spatial terms confirms that SARMA specification is preferable to OLS. Our
erosion variables keep the same sign as in the OLS models: sheet erosion remains reporting a
negative and statistically significant impact on land values, gully erosion remains non-significant
and extension remains positive and significant. The non-significance of gully erosion calls our
attention. It could be the case, for the reasons discussed in the last subsection, that it is relatively
“easy” for a gully to exceed the depth of topsoil. Thus, the effect of gully presence on price may
not be significant, except for very deep gullies that exceed by far A-horizon depth. The other
hypothesis is that the whole effect of erosion on land values is internalized by sheet erosion 14. We
will return to this discussion by the end of this section.

14Note, once again, from Appendix 1 that severe and very severe sheet erosion stages may capture, by construction,
some effects of gully erosion.

22
Among the soil and plot characteristics, water-retaining capacity and forestry priority have a
statistically significant impact on land values. As expected, the first one is positive, since we use
water-retaining capacity as a proxy of soil productivity. The negative sign of the second indicates
that land devoted to forestry activities tends to be bad soil in terms of overall productivity. 15 Note
that the remaining soil and plot variables (topsoil thickness, lot within protected area, and aptitude
for rice cultivation) are not statistically significant, although only protected areas were not
significant in the OLS models.

The location characteristics of the lots (distance to town/city, port and highway) are, as expected,
negative and highly significant. This confirms the importance of being close to services for the
value of agricultural land. The single exception is the last national highway dummy, which is
negative but non-significant. Note that in Table 1 only a few lots are located further than 30
kilometers from any national highway, thus the non-significance may be caused by lack of
observations.

Dummies indicating Uruguayan nationality and natural-person legal condition of buyers are both
negative and statistically significant at 1% and 5% level, respectively. This seems to point out that
Uruguayan buyers, as well as natural persons, tend to have a lower willingness to pay for a given
agricultural land tract. This makes sense. Recall from Section 3 that Argentinians buyers and firms
such as sowing pools were the great dynamizers of agricultural land markets in the period. On the
other hand, none of the commodity prices were significant. Neither was gold price, which we
included to control for an alternative asset. Year dummies were all positive and, in the case of years
2012 and 2013, significant. This may be capturing the effect of systematically rising land prices.
Finally, the dummy identifying lots from Maldonado and Lavalleja is positive and significant,
reflecting the greater-than-average value that non-coastal tourism gives to land in those areas.

As we discussed in Section 4, the point estimates presented on Table 3 do not represent the marginal
impact of the independent variables. Those are shown in Table 5 below:
.

15Average CONEAT index for rice soils is 89 and for forestry priority soils is 75, whereas for the rest of the lots in the
dataset it is 122.

23
 Table 5: SARMA Total, Direct and Indirect Effects
SARMA
Variable
Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion (SHEET) -0.005*** 0.002 -0.002*** 0.001 -0.003** 0.001
Presence of gully deeper than topsoil, dummy (GULLY) 0.070 0.065 0.030 0.027 0.040 0.039
Topsoil thickness (THICKNESS) 0.000 0.003 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet erosion (EXTENSION) 0.721*** 0.160 0.306*** 0.066 0.415*** 0.115
Water-retaining capacity (MM) 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.125** 0.050 -0.053** 0.021 -0.072** 0.032
Lot within protected area, dummy (SNAP) -0.154 0.159 -0.065 0.067 -0.088 0.093
Aptitude for rice cultivation, dummy (RICECULT) -0.046 0.087 -0.019 0.037 -0.026 0.050
Distance to closest relevant town or city (DISTURBAN) -0.005*** 0.002 -0.002*** 0.001 -0.003** 0.001
Distance to closest relevant port (DISTPORT) -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
Distance to closest national highway: 10 to 20 km, dummy
-0.249*** 0.069 -0.106*** 0.025 -0.143*** 0.049
(DISTHIGHWAY_1020)
Distance to closest national highway: 20 to 30 km, dummy
-0.274** 0.134 -0.116** 0.055 -0.158* 0.083
(DISTHIGHWAY_2030)
Distance to closest national highway: more than 30 km, dummy
-0.138 0.360 -0.059 0.153 -0.080 0.207
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan, dummy (ACQUY) -1.004*** 0.152 -0.426*** 0.026 -0.577*** 0.145
Lot buyer’s legal condition: natural person, dummy (ACQNP) -0.165** 0.067 -0.070** 0.027 -0.095** 0.042
Soybean price (SOYBEAN) 0.000 0.001 0.000 0.000 0.000 0.000
Pulp price (PULP) 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.002 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments (MALDLAV) 0.253*** 0.085 0.107*** 0.034 0.145*** 0.056
Southwest littoral departments (SOUTHLIT) 0.062 0.072 0.026 0.032 0.036 0.041

*p<0.10, **p<0.05, ***p<0.01

24
Table 5 presents the direct, indirect and total effects of independent variables on land values. Recall
from Section 4 that it is the total effect that indicates the marginal impact of a given regressor on
the outcome in SAR models. Comparing marginal effects of both OLS and SAR models (with
department dummies), we notice that the OLS model systematically underestimates the magnitude
of marginal effects, whether positive or negative. This is to be expected, due to the measurement
error, which incurs OLS in presence of spatial spillovers. Measurement error, in turn, causes
attenuation bias, which SAR seems to clear out. Another lesson of the SAR model is the importance
of inter-lot impacts, that is, spatial spillovers. Table 4 shows that, in most cases, indirect effects are
greater in magnitude than the direct effects themselves. This is also the case of sheet erosion.

The total effect coefficient of sheet erosion in Table 5 is -0.00538 (it has been rounded to -0.005
for reasons of space). This should be interpreted as a semielasticity, since price per hectare is
expressed in logarithms. Nevertheless, it is the same thing to analyze a unit change and a 1% change
in sheet erosion, since we defined SHEET as the share of topsoil lost to sheet erosion (see Appendix
2). Then, an additional 1-percentage loss of topsoil to sheet erosion causes a 0.538% drop in price
per hectare. The average price per hectare in our sample is USD 1,957.15. It follows that a 0.538%
drop in price per hectare (i.e. the impact of 1% of topsoil loss) represents a USD 10.53 drop.

In our sample, per hectare average volume of topsoil is 2,875 cubic meters. According to Califra,
Beretta and Del Pino (2014), average apparent density of soil in Uruguay is about 1.32 tons per
cubic meter. 16 Thus, per hectare average weight of topsoil in Uruguay is about 3,795 tons. In a
back-of-the-envelope calculation, a 1% loss of topsoil should then represent a 37.95-ton loss per
hectare. Then, in average, a one-ton topsoil loss should be valued at about USD 0.277.

Recall from the beginning of Section 6 that the mean share of topsoil loss is 26.9%. That means an
average of 773.38 cubic meters and 1,020.86 tons per hectare of soil loss. Then, in a rough
calculation, every lot has been traded for about USD 282.78 less per hectare on average, if we
compare with a hypothetical case of no sheet erosion. This is a significant conclusion, given that
land price levels within the period 2007-2013 remained between USD 1,500-2,500 per hectare in
average.

16 “Apparent density” refers to density of dry soil (ratio of weight of dry soil to its volume).

25
6.3 Robustness Checks
In this section, we run seven alternative specifications of our SARMA model to check the
robustness of our findings. For reasons of space, we do not show the total effects of each of them
in the main text. We devote Appendix 3 (Tables 3.1 to 3.7) to the full tables for each specification.

The first check we make is to remove department dummies from the model (see table in Appendix
3.1). Qualitative results are the same as the ones in our central model, although the magnitude of
some coefficients change slightly. In particular, the total effect of sheet erosion increases in
absolute value. In this model, the effect of an additional 1% of topsoil lost to sheet erosion is a drop
in price per hectare of 0.583% (against 0.538% in our central model). This is similar to what
happened within OLS models.

In our second robustness check, we add an interaction term between share of topsoil lost to erosion
and concentration of sheet erosive process over a land tract (see table in Appendix 3.2).17 The
negative and significant direct effect of the interaction between sheet erosion and extension
indicates that the decrease in price caused by sheet erosion is not linear in the extension of erosion.
According to the negative coefficient of the interaction, in more concentrated sheet erosive
processes, the effect of sheet erosion on price is stronger. Evaluating concentration at the mean,
the direct effect of an additional loss of 1% of topsoil to sheet erosion is a drop in price per hectare
of 0.547%, which is almost the same as that in our central model. The rest of the coefficients in
Table 3.2 show almost no changes.

Our third check is to drop gully erosion from our central model (see table in Appendix 3.3). As in
the latter cases, the qualitative results hold. Some point estimates of direct effects show some minor
changes. Sheet erosion is one of them. In this specification, the effect of an additional topsoil loss
of 1% is a drop in per hectare land values of 0.495%. The fact of sheet erosion not changing in a
drastic way when gully erosion is not incorporated in the regression, given that it is not significant
when included, seems to support the idea that sheet erosion may be capturing some effect of gullies
(recall the discussion in Section 6.1). The dummy variable for Uruguayan national buyers seems
to change in a slightly more significant way (from -1.004 to -0.916).

17 More precisely, SHEET_EXT is the ratio between SHEET and EXTENSION.

26
The fourth check includes a SDEM with a spatial lag of sheet erosion (see table in Appendix 3.4).
This new feature does not change the qualitative conclusions of our original SARMA model,
although the negative impact of sheet erosion becomes slightly stronger. In the SDEM
specification, the total effect of a 1-percentage point increase in topsoil lost to sheet erosion is a
0.6% drop in per hectare land values. Nevertheless, it is not clear whether the results of the SDEM
model are more accurate than the results of SARMA. For instance, although the three spatial terms
are jointly significant, the spatial lag of sheet erosion does not result significant individually.
Besides, most of the total effect of sheet erosion on land values in the SDEM model is due to its
indirect impact, which in turn does not result individually significant. The rest of the coefficients
tend to change only barely. Thus, we cannot be conclusive about the incidence of the fact that
erosion data was collected at a higher-than-parcel scale on our estimation. However, we can state
that this interference does not seem to be of a great scale in any case.

Our fifth check is to change the asset we consider as an alternative to land. We drop gold price and
we include TREASURY, the 1-year U.S. Treasury Bond interest rate instead (see table in Appendix
3.5). We draw this data from the St. Louis Federal Reserve databank (FRED). In contrast to gold
price, the rate is negative and statistically significant at 1% level. The negative sign confirms land
and securities may act as substitute assets. Additionally, in this specification beef price has a
positive, significant impact on land values. The rest of the coefficients remain barely the same as
in the original SARMA model. Sheet erosion shows virtually no change in comparison to the
original SARMA model (the total effect of an additional 1% of topsoil lost to sheet erosion becomes
a reduction of price per hectare of 0.547%).

In our original SARMA model, our distance to closest city/town variable does not include distances
to Montevideo, La Paloma or Nueva Palmira, included in our distance to port variable. Our sixth
check modifies our original distance to town variable to include the above-mentioned cities (see
table in Appendix 3.6). We call this new distance to urban center variable DISTURBAN2. We
maintain distance to closest port as in the original model because we want to keep capturing the
impact on prices of the three most important ports of the country by themselves. The change from
DISTURBAN to DISTURBAN2 does not cause significant changes in our original model. What is
more, the total effect of sheet erosion remains the same as in our central model.

27
Our last check incorporates in the central model a variable controlling for the total area of traded
lot, in hectares. This information was drawn from the agricultural land transaction database of the
Directorate of Agricultural Statistics (see table in Appendix 3.7). Like in Maddison (2000) and
Maddison (2009), a significant, big-sized effect of lot size on land values could be indicating
potential profits from dividing or fusing plots for land sellers. We find a significant, positive but
almost-zero effect of an additional hectare of land in the lot.18 Again, none of the rest of the direct
effects change significantly. Specifically, the impact on land values of an additional 1% loss of
topsoil presents almost no change in comparison with the central model (-0.540%).

7. Concluding Remarks

We have performed an estimation of the market price of soil erosion for the case of the late 2000s
in Uruguay. Based on the results of Global Moran’s I-statistic and Lagrange Multiplier tests, we
have estimated a semilog hedonic price equation under the form of a spatial autoregressive moving
average (SARMA) model. We relied on Kelejian and Prucha’s GS2SLS estimator under
heteroskedasticity. In addition, we observe the importance of indirect effects (i.e. spatial spillovers
from one observation to another), which result in about half of the total marginal impact of
regressors in many cases.

In qualitative terms, the results confirm our prior hypotheses and, in general, are in line with
existing literature. Given soil productivity and other plot characteristics, lot location, lot buyer’s
characteristics and relevant commodity prices, the coefficient for our measurement of sheet erosion
(share of topsoil lost to erosion) resulted negative and significant, as expected. This means that
markets internalize into land prices, at least up to some extent, the loss of soil properties that erosion
represents. Somewhat surprisingly, the dummy indicating presence of deep gully (i.e. deeper than
A-horizon) was not statistically significant. If we exclude this variable from the model, we get quite
similar estimates as to the original findings. This might be strengthening the hypothesis that SHEET
may be capturing some of the effects of gullies. Recall from Section 5 that, by construction, SHEET

18For reasons of space, we show in Appendix 3.7 that the total effect of the lot’s size in hectares is 0.000. More
precisely, the point estimate is 0.00014. This means that a 100-hectare increase in lot’s total area induces just a 1.4%
increase in price per hectare, which is a quite negligible effect.

28
may include gullies along with sheet erosion in the most severe stages of erosion. Extension of
erosion over the tract is positive and significant, indicating that concentration of sheet erosion
matters since it determines if a given soil loss effectively harms productive properties of land. On
average, an additional 1% of topsoil lost to erosion leads to a 0.538% fall in per hectare price. Put
another way, the average lot in the period was traded by about USD 282.78 less per hectare than
its potential price if it had no erosion at all. Finally, we ran seven alternative specifications of our
central SARMA model. In particular, the sheet erosion point estimate showed arguable robustness
to the changes made. In each alternative specification of our central model, price reductions as a
consequence of an additional 1% loss of topsoil to sheet erosion remained between 0.495% and
0.6%, remaining statistically significant. In terms of economic cost per unit of soil, this means that
a one-ton topsoil loss remains between USD 0.255 and USD 0.309 in all cases. What is more, they
remained between 0.53% and 0.55% in four of the seven cases. This reinforces the quantitative
results of our original SARMA model.

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Value of Agricultural Land. Land Economics, Vol. 69, No. 4 (Nov., 1993), pp. 356-369.

33
Appendix 1: the 2004 Anthropic Erosion Map
The 2004 Anthropic Erosion Map defines four levels of sheet erosion intensity:

- Mild erosion. Mainly sheet or inter-furrow erosive phenomenon. Reduces original topsoil
by less than 25% in average. Soil loses productivity but not aptitudes or use capabilities.
- Moderate erosion. Sheet or inter-furrow erosive phenomenon with some canaliculus
formation. Reduces original topsoil in between 25% and 75% in average. Soil loses part of
its aptitudes and diminishes moderately its use capabilities.
- Severe erosion. Sheet or inter-furrow erosive phenomenon with formation of canaliculus
and gullies that reduces solum in an amount equal to original topsoil. Soil loses most of its
aptitudes and diminishes its use capabilities significantly.
- Very severe erosion. Erosive phenomenon in canaliculus and gullies that reduces solum in
an amount greater than original topsoil and prevent the normal traffic of agricultural
equipment. Soil diminishes its aptitudes and use capabilities to soil recovering activities.

Sheet erosion extension is defined in the following way:

- Infrequent: 1-5% of land tract
- Common: 6-10% of land tract
- Frequent: 11-25% of land tract
- Very frequent: 26-50% of land tract
- Dominant: more than 50% of land tract

Gullies’ depth and extension are defined in a similar fashion. Depth is defined as follows:
- Shallow: up to 50 cm
- Moderately deep: 50-100 cm
- Very deep: more than 100 cm

Extension is defined as follows:

- Isolated (less than 1% of land tract). Does not affect soil use.
- Common (1-10% of land tract). Affects soil use and modifies it in localized areas
- Frequent (11-50% of land tract). Affects soil use and modifies it in significant areas
- Dominant (more than 50% of land tract). Affects soil use and modifies it almost completely

Note that the Anthropic Erosion Map defines each stage of erosion intensity/depth and extension
with an interval. In order to get our measurement of erosion, we assumed the worst-case scenario.
This is, we assumed mild sheet erosion to reduce original topsoil in 25%, moderate erosion in 75%
and so on. The same is true for the extension intervals.

34
 Appendix 2: Variable Definitions and Sources of Data
The following table summarizes the description and sources of data of the variables used in our
model

Appendix 2: Variable Definitions and Sources of Data

Variable Definition Source

Per hectare price of farmland transaction, in logs (US dollars, adjusted

PRICE DIEA/DGR
for Uruguayan inflation in dollars)

Ratio: volume of topsoil lost due to sheet (soil layer) erosion to total
SHEET RENARE
volume of topsoil

GULLY Dummy: presence of severe gully (deeper than topsoil) RENARE

THICKNESS Topsoil thickness (cm) INIA

EXTENSION Share of the lot affected by any level of sheet erosion (%) RENARE

MM Average net potentially available water in subsoil (mm) Molfino (2009)

Dummy: 1 if at least one of the parcels involved in transaction is

FOREST RENARE
considered under forestry priority by law, 0 otherwise

Dummy: 1 if at least one of the parcels involved in transaction is

SNAP under conservation (integrated in the National System of Protected DINAMA
Areas), 0 otherwise

Molfino (2013),
Dummy: 1 if at least one of the parcels involved in transaction is Carrasco-Letelier and
RICECULT
considered potentially apt for rice cultivation, 0 otherwise Beretta-Blanco
(2017)

DISTUC Distance to closest relevant town (km, see discussion in text) Own calculation

DISTPORT Distance to closest relevant port (km, see discussion in text) Own calculation

Dummy: 1 if distance to closest national highway is between 10 and

DISTHIGHWAY_1020 Own calculation
20 km, 0 otherwise
Dummy: 1 if distance to closest national highway is between 20 and
DISTHIGHWAY_2030 Own calculation
30 km, 0 otherwise
Dummy: 1 if distance to closest national highway is more than 30 km,
DISTHIGHWAY_30+ Own calculation
0 otherwise

ACQUY Dummy, 1 if the acquirer (buyer) of the lot is Uruguayan, 0 otherwise DIEA/DGR

35
 Dummy, 1 if the acquirer (buyer) of the lot is a natural person, 0
ACQNP DIEA/DGR
otherwise
Quarterly average soybean price (Chicago Soybean futures contract,
SOYBEAN first contract forward, No. 2 yellow and par), in 2000 US IMF
dollars/metric ton, adjusted for Uruguayan inflation in dollars
Quarterly average pulp price (Chicago wood pulp - Index NBSK), in
PULP 2000 US dollars/metric ton, adjusted for Uruguayan inflation in INSEE
dollars
Quarterly average beef price (Australia and New Zealand 85% lean
BEEF fores, CIF U.S. import price), in 2000 US dollar cents/pound, adjusted IMF
for Uruguayan inflation in dollars
Quarterly average iron ore price (Brazil, VALE (formerly CVRD)
Carajas sinter feed, contract price, f.o.b. Ponta da Madeira; prior to
IRON year 2010 annual contract prices), in 2000 US dollar cents/dtmu, WB
adjusted for Uruguayan inflation in dollars. Unit dry metric ton unit
(dmtu) stands for mt 1% Fe-unit.
Quarterly average gold price (UK, 99.5% fine, London afternoon
GOLD fixing, average of daily rates), in 2000 US dollars/toz, adjusted for WB
Uruguayan inflation in dollars
Dummy, 1 if the transaction took place in Lavalleja or Maldonado
MALDLAV DIEA/DGR
departments

Dummy, 1 if the transaction took place in Río Negro, Soriano,

SOUTHLIT DIEA/DGR
Colonia, San José or Flores departments

36
 Appendix 3: Alternative Specifications of SARMA Model
Appendix 3.1: SARMA (without dept. dummies)
SARMA (without dept. dummies)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00242*** 0.001 -0.00583*** 0.002 -0.00244*** 0.001 -0.00339*** 0.001
(SHEET)
Presence of gully deeper than topsoil,
0.038 0.026 0.091 0.067 0.038 0.027 0.053 0.041
dummy (GULLY)
Topsoil thickness (THICKNESS) -0.000 0.001 -0.001 0.004 -0.000 0.001 -0.000 0.002
Share of lot surface affected by sheet
0.296*** 0.065 0.714*** 0.154 0.298*** 0.066 0.415*** 0.109
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.046** 0.020 -0.110** 0.048 -0.046** 0.020 -0.064** 0.030
Lot within protected area, dummy (SNAP) -0.061 0.067 -0.148 0.162 -0.062 0.067 -0.086 0.096
Aptitude for rice cultivation, dummy
-0.007 0.037 -0.018 0.089 -0.007 0.037 -0.010 0.052
(RICECULT)
Distance to closest relevant town or city
-0.002*** 0.001 -0.005*** 0.002 -0.002*** 0.001 -0.003** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.103*** 0.025 -0.247*** 0.070 -0.103*** 0.025 -0.144*** 0.049
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.120** 0.055 -0.288** 0.136 -0.120** 0.055 -0.167* 0.086
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.060 0.153 -0.143 0.368 -0.060 0.154 -0.084 0.214
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.426*** 0.026 -1.026*** 0.151 -0.429*** 0.026 -0.597*** 0.145
dummy (ACQUY)
Lot buyer’s legal condition: natural
-0.064** 0.027 -0.154** 0.068 -0.064** 0.027 -0.090** 0.043
person, dummy (ACQNP)

37
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.001 0.003 0.002 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Rho 0.585*** 0.059
Theta 0.238*** 0.074
Constant 3.310*** 0.559

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

38
 Appendix 3.2: SARMA (with interaction)
SARMA (with interaction)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00216** 0.001 -0.00522** 0.002 -0.00218** 0.001 -0.00305** 0.001
(SHEET)
Presence of gully deeper than topsoil,
0.031 0.026 0.075 0.067 0.031 0.027 0.044 0.040
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.000 0.001 0.000 0.004 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.297*** 0.066 0.718*** 0.163 0.299*** 0.066 0.419*** 0.118
erosion (EXTENSION)

Interaction: sheet erosion and -0.00005*** 0.000 -0.00013** 0.000 -0.00005*** 0.000 -0.00007** 0.000
concentration (SHEET_EXT)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.053** 0.021 -0.127** 0.052 -0.053** 0.021 -0.074** 0.033
Lot within protected area, dummy (SNAP) -0.065 0.067 -0.157 0.162 -0.066 0.067 -0.092 0.096
Aptitude for rice cultivation, dummy
-0.018 0.037 -0.045 0.089 -0.019 0.037 -0.026 0.052
(RICECULT)
Distance to closest relevant town or city
-0.002*** 0.001 -0.006*** 0.002 -0.002*** 0.001 -0.003** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10
to 20 km, dummy -0.105*** 0.025 -0.254*** 0.070 -0.106*** 0.025 -0.148*** 0.050
(DISTHIGHWAY_1020)
Distance to closest national highway: 20
to 30 km, dummy -0.115** 0.054 -0.278** 0.136 -0.116** 0.055 -0.162* 0.086
(DISTHIGHWAY_2030)
Distance to closest national highway:
more than 30 km, dummy -0.057 0.152 -0.139 0.368 -0.058 0.153 -0.081 0.215
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.423*** 0.026 -1.023*** 0.158 -0.426*** 0.026 -0.597*** 0.151
dummy (ACQUY)

39
Lot buyer’s legal condition: natural
-0.070** 0.027 -0.168** 0.068 -0.070** 0.027 -0.098** 0.044
person, dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.001 0.001 0.000 0.000 0.000 0.001
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.001 0.003 0.002 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.106*** 0.034 0.256*** 0.087 0.107*** 0.034 0.150** 0.058
(MALDLAV)
Southwest littoral departments
0.025 0.032 0.060 0.074 0.025 0.032 0.035 0.042
(SOUTHLIT)
Rho 0.586*** 0.061
Theta 0.225*** 0.078
Constant 3.269*** 0.568

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

40
 Appendix 3.3: SARMA (without gully erosion)
SARMA (without gully erosion)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00229*** 0.001 -0.00495*** 0.002 -0.00230*** 0.001 -0.00264** 0.001
(SHEET)
Topsoil thickness (THICKNESS) 0.000 0.001 0.001 0.003 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.324*** 0.066 0.699*** 0.148 0.326*** 0.066 0.373*** 0.104
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.003*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.052** 0.021 -0.113** 0.046 -0.053** 0.021 -0.060** 0.027
Lot within protected area, dummy (SNAP) -0.061 0.068 -0.133 0.146 -0.062 0.068 -0.071 0.079
Aptitude for rice cultivation, dummy
-0.021 0.037 -0.046 0.080 -0.022 0.038 -0.025 0.043
(RICECULT)
Distance to closest relevant town or city
-0.003*** 0.001 -0.005*** 0.002 -0.003*** 0.001 -0.003*** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.106*** 0.026 -0.228*** 0.062 -0.106*** 0.026 -0.122*** 0.042
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.122** 0.055 -0.264** 0.123 -0.123** 0.055 -0.141* 0.072
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.064 0.152 -0.138 0.328 -0.064 0.153 -0.074 0.176
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.425*** 0.026 -0.916*** 0.134 -0.427*** 0.026 -0.489*** 0.127
dummy (ACQUY)
Lot buyer’s legal condition: natural person,
-0.071*** 0.027 -0.154** 0.061 -0.072*** 0.027 -0.082** 0.036
dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000
Beef price (BEEF) 0.001 0.003 0.001 0.006 0.001 0.003 0.001 0.003

41
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.111*** 0.034 0.238*** 0.079 0.111*** 0.035 0.127** 0.049
(MALDLAV)
Southwest littoral departments
0.035 0.033 0.076 0.068 0.035 0.033 0.040 0.036
(SOUTHLIT)
Rho 0.536*** 0.064
Theta 0.272*** 0.080
Constant 3.637*** 0.582

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

42
 Appendix 3.4: SDEM (with spatial lag of SHEET)
SDEM (with spatial lag of SHEET)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00206** 0.001 -0.00600** 0.003 -0.00208** 0.001 -0.00392 0.002
(SHEET)
Presence of gully deeper than topsoil,
0.029 0.026 0.070 0.066 0.029 0.027 0.041 0.040
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.000 0.001 0.000 0.004 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.304*** 0.066 0.732*** 0.164 0.306*** 0.066 0.426*** 0.120
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.054** 0.021 -0.131** 0.053 -0.055** 0.021 -0.076** 0.034
Lot within protected area, dummy (SNAP) -0.063 0.067 -0.152 0.161 -0.063 0.067 -0.088 0.095
Aptitude for rice cultivation, dummy
-0.021 0.037 -0.050 0.089 -0.021 0.037 -0.029 0.052
(RICECULT)
Distance to closest relevant town or city
-0.002*** 0.001 -0.006*** 0.002 -0.002*** 0.001 -0.003** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.105*** 0.025 -0.253*** 0.070 -0.106*** 0.025 -0.147*** 0.050
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.115** 0.054 -0.276** 0.136 -0.115** 0.055 -0.161* 0.085
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.057 0.152 -0.137 0.366 -0.057 0.153 -0.080 0.214
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan, dummy
-0.423*** 0.026 -1.020*** 0.158 -0.426*** 0.026 -0.594*** 0.152
(ACQUY)
Lot buyer’s legal condition: natural person,
-0.069** 0.027 -0.167** 0.068 -0.070** 0.027 -0.097** 0.044
dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001

43
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.001 0.003 0.001 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.105*** 0.034 0.254*** 0.086 0.106*** 0.034 0.148** 0.057
(MALDLAV)
Southwest littoral departments
0.025 0.031 0.059 0.073 0.025 0.032 0.035 0.042
(SOUTHLIT)
Rho 0.585*** 0.061
Gamma -0.043 0.111
Theta 0.224*** 0.079
Constant 3.290*** 0.569

Year dummies Yes

Quarter dummies Yes

Wald test of spatial terms: chi2(3) = 318.96

Prob > chi2 = 0.000

*p<0.10, **p<0.05, ***p<0.01

44
 Appendix 3.5: SARMA (with 1-yr US Treasury Bond rate)
SARMA (with 1-yr US Treasury Bond rate)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00230*** 0.001 -0.00547*** 0.002 -0.00231*** 0.001 -0.00316** 0.001
(SHEET)
Presence of gully deeper than topsoil,
0.029 0.026 0.068 0.065 0.029 0.027 0.039 0.039
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.000 0.001 0.000 0.003 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.308*** 0.066 0.732*** 0.161 0.310*** 0.066 0.423*** 0.117
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.053** 0.021 -0.126** 0.051 -0.053** 0.021 -0.073** 0.032
Lot within protected area, dummy (SNAP) -0.061 0.067 -0.144 0.160 -0.061 0.067 -0.083 0.094
Aptitude for rice cultivation, dummy
-0.021 0.037 -0.049 0.087 -0.021 0.037 -0.028 0.050
(RICECULT)
Distance to closest relevant town or city
-0.002*** 0.001 -0.005*** 0.002 -0.002*** 0.001 -0.003** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.104*** 0.025 -0.248*** 0.069 -0.105*** 0.025 -0.143*** 0.049
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.114** 0.054 -0.271** 0.134 -0.114** 0.055 -0.156** 0.083
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.053 0.153 -0.125 0.365 -0.053 0.154 -0.072 0.211
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.422*** 0.026 -1.005*** 0.153 -0.425*** 0.026 -0.580*** 0.146
dummy (ACQUY)
Lot buyer’s legal condition: natural person,
-0.068** 0.027 -0.163** 0.067 -0.069** 0.027 -0.094** 0.042
dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000

45
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000
Beef price (BEEF) 0.005** 0.002 0.012** 0.005 0.005** 0.002 0.007** 0.003
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

1-yr US Treasury Bond interest rate -0.145*** 0.035 -0.345*** 0.095 -0.146*** 0.035 -0.199*** 0.067
(TREASURY)
Maldonado and Lavalleja departments
0.110*** 0.034 0.262*** 0.085 0.111*** 0.034 0.151*** 0.057
(MALDLAV)
Southwest littoral departments
0.025 0.032 0.060 0.073 0.025 0.032 0.035 0.041
(SOUTHLIT)
Rho 0.580*** 0.061
Theta 0.233*** 0.079
Constant 3.548*** 0.572

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

46
 Appendix 3.6: SARMA (including Montevideo, Nueva Palmira and La Paloma in distance to closest town variable)
SARMA (including Montevideo, Nueva Palmira and La Paloma in distance to closest town variable)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00227*** 0.001 -0.00538*** 0.002 -0.00229*** 0.001 -0.309** 0.130
(SHEET)
Presence of gully deeper than topsoil,
0.029 0.026 0.070 0.065 0.030 0.027 0.040 0.039
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.000 0.001 0.000 0.003 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.304*** 0.066 0.720*** 0.160 0.306*** 0.066 0.414*** 0.115
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.053** 0.021 -0.125** 0.050 -0.053** 0.021 -0.072** 0.032
Lot within protected area, dummy (SNAP) -0.065 0.067 -0.154 0.159 -0.065 0.067 -0.088 0.093
Aptitude for rice cultivation, dummy
-0.019 0.037 -0.046 0.087 -0.019 0.037 -0.026 0.050
(RICECULT)
Distance to closest relevant town or city
-0.002*** 0.001 -0.006*** 0.002 -0.002*** 0.001 -0.003*** 0.001
(DISTURBAN2)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.105*** 0.025 -0.248*** 0.069 -0.106*** 0.025 -0.143*** 0.049
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.115** 0.054 -0.273** 0.133 -0.116** 0.055 -0.157* 0.083
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.058 0.152 -0.138 0.360 -0.059 0.153 -0.079 0.207
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan,
-0.424*** 0.026 -1.003*** 0.152 -0.426*** 0.026 -0.576*** 0.145
dummy (ACQUY)
Lot buyer’s legal condition: natural person,
-0.070** 0.027 -0.165** 0.067 -0.070** 0.027 -0.095** 0.042
dummy (ACQNP)
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000

47
 Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.001 0.003 0.002 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.107*** 0.034 0.253*** 0.085 0.107*** 0.034 0.145*** 0.056
(MALDLAV)
Southwest littoral departments
0.026 0.032 0.062 0.072 0.026 0.032 0.036 0.041
(SOUTHLIT)
Rho 0.578*** 0.061
Theta 0.233*** 0.078
Constant 3.329*** 0.569

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

48
 Appendix 3.7: SARMA (with total area of transaction)
SARMA (with total area of transaction)
Variable
Coefficient Std. Error Total effect Std. Error Direct effect Std. Error Indirect effect Std. Error
Share of topsoil lost to sheet erosion
-0.00228*** 0.001 -0.00540*** 0.002 -0.00230*** 0.001 -0.00311** 0.001
(SHEET)
Presence of gully deeper than topsoil,
0.030 0.026 0.071 0.065 0.030 0.027 0.041 0.039
dummy (GULLY)
Topsoil thickness (THICKNESS) 0.000 0.001 0.001 0.003 0.000 0.001 0.000 0.002
Share of lot surface affected by sheet
0.309*** 0.066 0.731*** 0.160 0.311*** 0.066 0.420*** 0.116
erosion (EXTENSION)
Water-retaining capacity (MM) 0.002*** 0.000 0.004*** 0.001 0.002*** 0.000 0.002*** 0.001
Forestry priority, dummy (FOREST) -0.057*** 0.021 -0.134*** 0.051 -0.057*** 0.021 -0.077** 0.033
Lot within protected area, dummy (SNAP) -0.061 0.067 -0.144 0.159 -0.061 0.067 -0.083 0.093
Aptitude for rice cultivation, dummy
-0.026 0.037 -0.061 0.087 -0.026 0.037 -0.035 0.050
(RICECULT)
Total area of traded lot (AREA) 0.000*** 0.000 0.000*** 0.000 0.000*** 0.000 0.000*** 0.000
Distance to closest relevant town or city
-0.003*** 0.001 -0.006*** 0.002 -0.003*** 0.001 -0.003*** 0.001
(DISTURBAN)
Distance to closest relevant port
-0.001*** 0.000 -0.002*** 0.000 -0.001*** 0.000 -0.001*** 0.000
(DISTPORT)
Distance to closest national highway: 10 to
-0.107*** 0.025 -0.254*** 0.069 -0.108*** 0.025 -0.146*** 0.049
20 km, dummy (DISTHIGHWAY_1020)
Distance to closest national highway: 20 to
-0.128** 0.054 -0.302** 0.135 -0.129** 0.055 -0.174** 0.085
30 km, dummy (DISTHIGHWAY_2030)
Distance to closest national highway: more
than 30 km, dummy -0.069 0.153 -0.165 0.362 -0.070 0.154 -0.095 0.209
(DISTHIGHWAY_30+)
Lot buyer’s nationality: Uruguayan, dummy
-0.420*** 0.026 -0.995*** 0.151 -0.423*** 0.026 -0.572*** 0.143
(ACQUY)
Lot buyer’s legal condition: natural person,
-0.058** 0.027 -0.137** 0.066 -0.058** 0.027 -0.079* 0.041
dummy (ACQNP)

49
Soybean price (SOYBEAN) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.000
Pulp price (PULP) 0.000 0.000 0.000 0.001 0.000 0.000 0.000 0.001
Beef price (BEEF) 0.001 0.003 0.002 0.006 0.001 0.003 0.001 0.004
Gold price (GOLD) -0.001 0.001 -0.002 0.002 -0.001 0.001 -0.001 0.001
Iron ore price (IRON) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
Maldonado and Lavalleja departments
0.111*** 0.034 0.262*** 0.085 0.111*** 0.034 0.151*** 0.057
(MALDLAV)
Southwest littoral departments
0.023 0.032 0.054 0.072 0.023 0.032 0.031 0.041
(SOUTHLIT)
Rho 0.578*** 0.060
Theta 0.236*** 0.078
Constant 3.281*** 0.567

Year dummies Yes

Quarter dummies Yes

*p<0.10, **p<0.05, ***p<0.01

Wald tests for the spatial terms were omitted for reasons of space

50

The Latin American and
Caribbean Environmental
Economics Program – LACEEP
is a capacity building effort that
provides research grants to
Latin American and Caribbean
(LAC) researchers.
El Programa Latinoamericano y
del Caribe de Capacitación en
Economía Ambiental – LACEEP
es la creación de capacidades
para proveer becas de
investigación para
investigadores de
Latinoamericana del Caribe.
Recent LACEEP working papers
Documentos de trabajo recientes de LACEEP
Climate change adaptation and
Spatial spillovers in the implicit market
price of soil erosion: An estimation
Marcelo Caffera, Mariela Buonomo,
Leonidas Carrasco-Letelier, José Ignacio
Hernández, Daniel Rodríguez Anza, Felipe
Vásquez
WP-102
December, 2017
Exploring the role of trust, information
and institutional reputation on the
consumption of water in Mexico City
Hernán Bejarano, David Heres
WP-101
December, 2017
Price premium for open green space and
tree cover in the city of Buenos Aires
Juan Ignacio Zoloa, Mariano Javier
Rabassa, Alvaro Federico Barra
WP-100
December, 2017
Financing energy efficiency retrofits in
Chilean households: The role of financial
instruments, savings and uncertainty
Alejandra Schueftan, Claudia Aravena,
René Reyes
WP-99
December, 2017
The effects of Moyobamba rewards for
Hydrological Ecosystem Services
Mechanism on plot land cover and
household wellbeing
Javier Montoya Zumaeta, Eduardo Rojas
WP-98
December, 2017
The Sons of Climate Change:
Child Exposure to Temperature
Variability Regional Index
Oswaldo Molina, Victor Saldarriaga
WP-97
December, 2017
Spreading the word: Effects of a nudge
on residential water conservation. A field
experiment in small urban villages in
Colombia
José David Lopez
WP-96
December, 2017
Unintended consequences of
conservation: Estimating the causal
effect of protected areas on violence in
Colombia
Julian Diaz-Gutierrez, Gustavo Canavire-
Bacarreza, Merlin M. Hanauer
WP-95
December, 2017
Early rainfall shocks and later-life
outcomes: Evidence from Colombia
Bladimir Carrillo Bermúdez
WP-94
December, 2017
Weather Shocks and Labor Allocation:
Evidence from Northeastern Brazil
Danyelle Santos Branco
WP-93
December, 2017
Tourism as a driver of increased fisheries
and conflicts in Marine Protected Areas
Priscila Lopes
WP-92
May, 2017