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Working Paper: The Property Value Impacts of Groundwater Contamination: Agricultural Runoff and Private Wells

Paper Number: 2015-05

Document Date: 11/2015

Author(s): Dennis Guignet, Rachel Northcutt, and Patrick J. Walsh

Subject Area(s): Water Pollution; Valuation Methods; Non-Point Source Pollution; Valuation

Keywords: drinking water; groundwater; hedonic; nitrate; potable water; property value; water quality

Abstract: There are few studies examining the impacts of groundwater quality on residential property values. Using a unique dataset of groundwater well tests, we link residential transactions to home-specific contamination levels and undertake a hedonic analysis of homes in Lake County, Florida; where groundwater pollution concerns stem primarily from agricultural runoff. We find that testing and contamination yield a 2% to 6% depreciation, an effect that diminishes after the situation is resolved. Focusing specifically on nitrogen-based contamination, we find prices decline mainly at concentrations above the regulatory health standard, suggesting up to a 15% deprecation at levels twice the standard.

Published: Guignet, Dennis, Patrick J. Walsh and Rachel Northcutt. 2016. "Impacts of Ground Water Contamination on Property Values: Agricultural Run-off and Private Wells," Economics of Water Quality 45(2): 293-318.

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

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