The Economics of Terroir

For the wine lovers among us progressive economists, which definitely includes me, this NBER paper offers up a, well, sobering argument.

“We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir – as proxied for by locational attributes – is not significant.”


  • The key, I think, is what the definition of terroir used is. It is usually misused in North America — being a more complex concept merely than one to do with locational attributes, whether one is talking about a local wine or a fromage “de chez nous”. Terroir and “les produits du terroir” as a word has such a great ring to it that it is easily used to market local and regional products, but, as an oenologist explained to me a few years ago in Burgundy, terroir refers both to locational attributes AND to a set of social relations and traditional practices (and, yes, local natural, social, political and religious conditions) associated with prodution of the wine, and I do not believe that this article captures that aspect of the term. Of course the concept of terroir may be entirely bogus, and too complicated to be meaningful.

  • Because we all know that the price of wine is a perfect reflection of its value. Oh wait…

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