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Working Paper: Modeling the Property Price Impact of Water Quality in 14 Chesapeake Bay Counties

Paper Number: 2015-07

Document Date: 12/2015

Author(s): Patrick J. Walsh, Charles Griffiths, Dennis Guignet, Heather Klemick

Subject Area(s): Water Pollution; Recreation; Visibility; Valuation Methods; Water Resources; Benefit-Cost Analysis; Valuation

Keywords: water quality; hedonic property value analysis; Chesapeake Bay; valuation

Abstract: The Chesapeake Bay and its tributaries provide a range of recreational and aesthetic amenities, such as swimming, fishing, boating, wildlife viewing, and scenic vistas. Living in close proximity to the Bay improves access to these amenities and should be capitalized into local housing markets. We investigate these impacts in the largest hedonic analysis of water quality ever completed, with over 200,000 property sales across 14 Maryland counties. We use a spatially explicit water quality dataset, along with a wealth of landscape, economic, geographic, and demographic variables. These data allow a comprehensive exploration of the value of water quality, while controlling for a multitude of other influences. We also estimate several variants of the models most popular in current literature, with a focus on the temporal average of water quality. In comparing 1 year and 3 year averages, the 3 year averages generally have a larger implicit price. Overall, results indicate that water quality improvements in the Bay, such as those required by EPA’s Total Maximum Daily Load, could yield significant benefits to waterfront and near-waterfront homeowners.

Published: Walsh, Patrick, Charles Griffiths, Dennis Guignet, and Heather Klemick. 2017. “Modeling the Property Price Impact of Water Quality in 14 Chesapeake Bay Counties,” Ecological Economics, 135: 103-113.

This paper is part of the Environmental Economics Working Paper Series.

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