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

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Listed author(s):
  • Abbott, Joshua K.
  • Allen Klaiber, H.

Abstract

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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File URL: http://www.sciencedirect.com/science/article/pii/S0095069612001210
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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
DOI: 10.1016/j.jeem.2012.09.007
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622870

Keywords: Matching; Treatment effects; Water valuation; Capitalization; Urban lakes; Water pricing;

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  17. Alberto Abadie & Guido W. Imbens, 2008. "On the Failure of the Bootstrap for Matching Estimators," Econometrica, Econometric Society, vol. 76(6), pages 1537-1557, November.
  18. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-675, November.
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Cited by:

  1. Joshua K. Abbott & H. Allen Klaiber & V. Kerry Smith, 2015. "Economic Behavior, Market Signals, and Urban Ecology," NBER Working Papers 20959, National Bureau of Economic Research, Inc.
  2. Wolf, David & Klaiber, H. Allen, 2017. "Bloom and bust: Toxic algae's impact on nearby property values," Ecological Economics, Elsevier, vol. 135(C), pages 209-221.
  3. repec:eee:foreco:v:26:y:2017:i:c:p:46-55 is not listed on IDEAS
  4. Mark van Duijn & Jan Rouwendal & Richard Boersema, 2014. "Transformations of Industrial Heritage: Insights into External Effects on House Prices," Tinbergen Institute Discussion Papers 14-122/VIII, Tinbergen Institute.
  5. Zhang, Congwen & Boyle, Kevin J. & Kuminoff, Nicolai V., 2015. "Partial identification of amenity demand functions," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 180-197.
  6. Rohlf, Alexander & Römer, Daniel & von Graevenitz, Kathrine, 2014. "The Effect of Emission Information on Housing Prices in Germany," Working Papers 0554, University of Heidelberg, Department of Economics.
  7. van Duijn, Mark & Rouwendal, Jan & Boersema, Richard, 2016. "Redevelopment of industrial heritage: Insights into external effects on house prices," Regional Science and Urban Economics, Elsevier, vol. 57(C), pages 91-107.
  8. H. Allen Klaiber & Joshua Abbott & V. Kerry Smith, 2015. "Some Like it (Less) Hot: Extracting Tradeoff Measures for Physically Coupled Amenities," NBER Working Papers 21051, National Bureau of Economic Research, Inc.

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