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Abstract
Scientists predict that climate change will cause suitable habitat ranges to shift for many plant
species. To the extent that proximity to particular vegetation types increases residents’ utility
and/or these shifts affect services valued by all of society, such geographic shifts in ecosystems
may significantly affect societal welfare. In this paper, I estimate the possible welfare change
from the marginal loss of blue oak due to development and climate change in the Tulare Lake
Basin (Fresno, Kern, and Tulare Counties) in California. Using a hedonic pricing model, the
marginal values of blue oaks and the land cover types most likely to replace them (herbaceous,
urban, and crop land) are estimated at multiple spatial scales, using 1997-2003 sales of single
family residences for the Tulare Lake Basin. In addition to the common identification problems
of specification error, omitted variable bias, and multicollinearity, the variables measuring the
degree of proximity of a property to land cover types are endogenous. To identify the marginal
values of land cover types at multiple spatial scales using two-stage least squares, instrumental
variables are developed using soil data. Cluster robust standard errors are calculated due to
spatial autocorrelation within neighborhoods. Results indicate that households do not
differentiate between vegetation land cover types; there is no indirect cost of climate change
resulting from marginal shifts in land cover types. The results also indicate that Tulare Lake
Basin households are unlikely to be negatively affected by, and may actually benefit from,
marginal losses of blue oak woodlands to agriculture and urban land use. These results highlight
the importance of non-use and ecosystem services values, and the importance of coordinating
land use policies at spatial scales above the municipality level.