Aliza Fleischer (Hebrew University of Jerusalem, Israel) Economic Valuation of Cultural Ecosystem Services: The Case of Landscape Aesthetics in the Agritourism Market

Natural and agricultural landscapes provide a wide range of ecosystem services, aesthetic landscapes being among them. Since these services have no market value, land-use decisions often ignore them in favour of urban sprawl, resulting with sub-optimal resource allocation. Here we suggest a novel method to evaluate the aesthetic landscape services of natural and agricultural ecosystems using the case of the agritourism market in Israel. We model the agritourism market as an oligopolistic market and formulate an equilibrium model with structural, double nested-logit, demand and pricing equations. The structural equations are expressed as a function of the attributes of the agritourism firm and the ecosystems adjacent to the attractions. We use aggregated market data and Geographic-Information-System (GIS) maps to estimate the model. Counterfactual scenarios of urban sprawl were used to estimate the economic value of aesthetic landscape services. The loss of welfare in the different scenarios ranges between 15 thousand USD to 21 thousand USD per squared kilometre depending on the type of ecosystem and the scope of the urban sprawl. We contend that this welfare loss can be used as the economic value of aesthetic landscape services to the agritourism market.  These findings illustrate the potential of this valuation method in guiding decision-making and place ecosystem services on a level playing field with market-priced goods, thereby, contribute to the sustainable use of the Earth’s limited resources.