37. Shabman, L., and M.K. Bertelson. 1979. The use of development value 

 estimates for coastal wetland permits decisions. Land Economics 55(2) :213- 

 222. 



The authors develop techniques and equations for quantifying wetland 

 development values. The approach is essentially the same as that developed in 

 Abdalla and Libby {[58]). A simple hedonic equation is developed for relating 

 the transfer price of a lot as a function of the value of improvement expendi- 

 tures, lot size, the year of the sale, and waterfront amenity characteristics 

 of the lot. Thus if P is the transfer price, W represents the waterfront 

 amenities value, Y represents the year of the sale, X is a vector of qualitative 

 variables (that represent the impact of the neighborhood in which the lot is 

 located), and A is the lot size, then the estimated equation is 



V = K + bi A + b2 V + bj Y + a^ Xi + a^ X2 + 



aj X3 + a^ X4 + b^ W + bg W^ + bg (Y W^). 



There are some differences between this equation and the equation estimated 

 by Abdalla and Libby. The waterfront variable in the work of Shabman and 

 Bertelson is represented by an index that combines several variables (including 

 water frontage in feet, and a dummy to indicate whether the land parcel was on 

 a natural bay or manmade channel), while the separate variables are used as 

 independent dummy or quantitative variables in the work of Abdalla and Libby. 

 Also, the dependent variable in the work of Shabman and Bertelson is not the 

 recorded transfer price, which is the present value of a set of annual income 

 payments, but the size of the annual income payments. In the equation estimated 

 by Abdalla and Libby ([58]), it is the actual transfer price. Abdalla and Libby 

 discuss Michigan wetlands, while the wetlands discussed in the work of Shabman 

 and Bertelson are Virginia coastal wetlands. The social opportunity cost of 

 preserving the "undeveloped" waterfront is partially captured through the 

 coefficient of the amenity variable, since it quantifies the contribution of the 

 wetland to the increase in the transfer price. However, as Abdalla and Libby 

 ([58]) point out, there is a presumption that no other site has similar (though 

 lesser amenity value) that would also enhance the value of improvement 

 expenditures. Thus the equation represents an approximation to a more 

 complicated situation. 



Shabman and Bertelson do not make the mistake of asserting that the 

 coefficient of the waterfront amenity value captures the development benefits 

 of the wetland. Without the wetland, there are no waterfront amenities, so one 

 of the preservation benefits of the wetland is enhanced real estate values for 

 all waterfront lots. There is a difference between the preservation benefits 

 of the completely undeveloped wetlands, and the preservation benefits of the open 

 space and water that remains after the strip around the wetlands has been used 

 for real estate development. The larger the open space and the more water it 

 contains, and the more variegated (e.g., islands with hillocks might be located 

 within the undeveloped interior of the island) the landscape, the higher the real 

 estate value of the waterfront lots. 



Hence, enhanced real estate values may be one of the preservation benefits 

 provided by a wetlands. However, this preservation benefit is somewhat more 



33 



