Using Satellite Data To Improve Land Value Estimations In Bolivia

Precise land valuation is necessary for an efficient allocation of resources at the private level, and territorial planning and provision of public good at the government level. This information can be obtained from real data transactions in limited areas where they occurred, leaving the rest of the land valuation depending on precise estimation models. These estimation models may use sold land characteristics to forecast the value of land with similar characteristics, by using existing data (i.e. returns on land, productivity, surface, soil maps, precipitation data, land use constraints by law, etc.). In many low and middle-income countries this data is scarce, limiting the possibility of developing these models. This information gap may be filled using satellite data. This study uses average biomass production estimations based on satellite data as a proxy for fertility. By using biomass production estimates for Bolivia over a period of 6 years, together with administrative land transaction data and geographical maps including precipitation, average temperature, slope, distance to closest road, to closed local and national markets, we are able to significantly improve previous land price models. This improvement allowed us to develop a land price index to inform farmers about current price trends and expected sale price for their own land.