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The value of water as an urban club good: A matching approach to community-provided lakes

  • Abbott, Joshua K.
  • Allen Klaiber, H.

Community-provided urban lakes located in arid environments provide significant amenities to residents but require large quantities of water to maintain lake levels. We use matching techniques to recover the average capitalized value of lakes above the costs of maintenance by comparing transactions in lake communities to observationally similar transactions in surrounding communities. We differentiate between adjacent and non-adjacent houses to recover heterogeneous treatment effects and allow estimates to vary across communities. Importantly, we consider the role of imperfect matching on spatially and temporally varying unobservable variables in our choice of estimator and the appropriate set of potential control properties. Our results suggest that the capitalized value of lakes is heterogeneous with a mean estimate of $6500 an acre-foot. Our results provide estimates of the changes in water prices that would make this form of development unprofitable, illustrating the linkage between water pricing policy and the water intensity of development.

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Article provided by Elsevier in its journal Journal of Environmental Economics and Management.

Volume (Year): 65 (2013)
Issue (Month): 2 ()
Pages: 208-224

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Handle: RePEc:eee:jeeman:v:65:y:2013:i:2:p:208-224
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622870

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  8. Sheila M. Olmstead, 2010. "The Economics of Managing Scarce Water Resources," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(2), pages 179-198, Summer.
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  18. Patrick Bajari & Matthew E. Kahn, 2005. "Estimating Housing Demand With an Application to Explaining Racial Segregation in Cities," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 20-33, January.
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  28. repec:cup:cbooks:9780521477185 is not listed on IDEAS
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