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Negative externalities on property values resulting from water impairment: The case of the Pigeon River Watershed

  • Cho, Seong-Hoon
  • Roberts, Roland K.
  • Kim, Seung Gyu

The objective of this research was to determine whether willingness to bear the negative externality from water quality impairment differs between those who do and those who do not receive economic benefit from the impairment source. Differences were tested using a hedonic analysis of ambient water quality in two discrete housing markets in the Pigeon River Watershed, which have been polluted by the operation of a paper mill. The results suggest that North Carolina residents residing in subwatersheds with impaired portions of the Pigeon River, who experience economic benefit from the paper mill in addition to its harmful effects on water quality, do perceive the pollution as a negative externality. In contrast, the effects of both the degraded river and its contributing streams on property values are perceived as negative externalities by watershed residents in Tennessee who experience only harmful effects from the pollution. Differences in willingness to bear the water-impairment externality were not indicated by variables representing view of and proximity to impaired water bodies. The results suggest that the perception of water quality to which property owners implicitly apply value should be considered when establishing water-quality regulations.

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Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 12 ()
Pages: 2390-2399

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:12:p:2390-2399
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

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  1. Poor, P. Joan & Pessagno, Keri L. & Paul, Robert W., 2007. "Exploring the hedonic value of ambient water quality: A local watershed-based study," Ecological Economics, Elsevier, vol. 60(4), pages 797-806, February.
  2. Nelson, Jon P., 1979. "Airport noise, location rent, and the market for residential amenities," Journal of Environmental Economics and Management, Elsevier, vol. 6(4), pages 320-331, December.
  3. P. Joan Poor & Kevin J. Boyle & Laura O. Taylor & Roy Bouchard, 2001. "Objective versus Subjective Measures of Water Clarity in Hedonic Property Value Models," Land Economics, University of Wisconsin Press, vol. 77(4), pages 482-493.
  4. David M. Brasington & Diane Hite, . "Demand for Environmental Quality: A Spatial Hedonic Approach," Departmental Working Papers 2005-08, Department of Economics, Louisiana State University.
  5. Donald J. Epp & K. S. Al-Ani, 1979. "The Effect of Water Quality on Rural Nonfarm Residential Property Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(3), pages 529-534.
  6. Leggett, Christopher G. & Bockstael, Nancy E., 2000. "Evidence of the Effects of Water Quality on Residential Land Prices," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 121-144, March.
  7. Hamparsum Bozdogan, 1987. "Model selection and Akaike's Information Criterion (AIC): The general theory and its analytical extensions," Psychometrika, Springer;The Psychometric Society, vol. 52(3), pages 345-370, September.
  8. Cho, Seong-Hoon & Kim, Seung Gyu & Roberts, Roland K. & Jung, Suhyun, 2009. "Amenity values of spatial configurations of forest landscapes over space and time in the Southern Appalachian Highlands," Ecological Economics, Elsevier, vol. 68(10), pages 2646-2657, August.
  9. Seong-Hoon Cho & Dayton M. Lambert & Roland K. Roberts, 2010. "Forecasting Open Space with a Two-Rate Property Tax," Land Economics, University of Wisconsin Press, vol. 86(2), pages 263-280.
  10. Steinnes, Donald N, 1992. "Measuring the Economic Value of Water Quality: The Case of Lakeshore Land," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 26(2), pages 171-76, June.
  11. Jeffrey P. Cohen & Cletus C. Coughlin, 2006. "Spatial hedonic models of airport noise, proximity, and housing prices," Working Papers 2006-026, Federal Reserve Bank of St. Louis.
  12. David Brasington & D. Hite, . "Demand for Environmental Quality: A Spatial Hedonic Analysis," Departmental Working Papers 2003-02, Department of Economics, Louisiana State University.
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