The Effects of Aquatic Invasive Species on Property Values: Evidence from a Quasi-Random Experiment
The invasion of ecosystems by non-native species is widely considered to be a principal threat to global biological diversity, yet the social costs of invasive species are not well-understood. The purpose of this study is to estimate a hedonic model of lakeshore property values to quantify the effects of a common aquatic invasive species â€“ Eurasian Watermilfoil â€“ on property values across an extensive system of over 170 lakes in the northern forest region of Wisconsin. In addition to providing empirical evidence as to the potential benefits from reducing the spread of invasive species, this paper also develops a quasi-experimental methodology to identify the effects of changes in endogenous neighborhood amenities within the commonly estimated hedonic framework. In our application, a lake is more likely to be invaded with Milfoil if it is more popular with recreational boaters. Therefore, since lakes popular with recreational boaters are also likely to be popular with potential residents, and since many aspects of a lakeâ€™s amenities may be difficult to quantify, the likelihood of Milfoil invasions is endogenous in a hedonic price equation. Our identification strategy is based on a spatial difference-in-difference specification, and uses fixed effects to control for observed and unobserved neighborhood effects, while exploiting changes in the Milfoil status of several lakes during the time period of our data. Results indicate that lakes invaded with Milfoil experienced an average 13% decrease in land values after invasion. The Milfoil results are robust across linear and non-linear specifications.
|Date of creation:||2008|
|Date of revision:|
|Contact details of provider:|| Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202|
Phone: (414) 918-3190
Fax: (414) 276-3349
Web page: http://www.aaea.org
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kenneth Y. Chay & Michael Greenstone, 2005.
"Does Air Quality Matter? Evidence from the Housing Market,"
Journal of Political Economy,
University of Chicago Press, vol. 113(2), pages 376-424, April.
- Kenneth Y. Chay & Michael Greenstone, 1998. "Does Air Quality Matter? Evidence from the Housing Market," NBER Working Papers 6826, National Bureau of Economic Research, Inc.
- 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 668-75, November.
- Greenstone, Michael & Gayer, Ted, 2009.
"Quasi-experimental and experimental approaches to environmental economics,"
Journal of Environmental Economics and Management,
Elsevier, vol. 57(1), pages 21-44, January.
- Michael Greenstone & Ted Gayer, 2007. "Quasi-Experimental and Experimental Approaches to Environmental Economics," Working Papers 0713, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- George Galster & Peter Tatian & Kathryn Pettit, 2004. "Supportive Housing and Neighborhood Property Value Externalities," Land Economics, University of Wisconsin Press, vol. 80(1), pages 33-54.
- Bender, Bruce & Gronberg, Timothy J & Hwang, Hae-Shin, 1980. "Choice of Functional Form and the Demand for Air Quality," The Review of Economics and Statistics, MIT Press, vol. 62(4), pages 638-43, November.
- Kim, Chong Won & Phipps, Tim T. & Anselin, Luc, 1998.
"Measuring The Benefits Of Air Quality Improvement: A Spatial Hedonic Approach,"
1998 Annual meeting, August 2-5, Salt Lake City, UT
20959, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003. "Measuring the benefits of air quality improvement: a spatial hedonic approach," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 24-39, January.
- Lovell, Sabrina J. & Stone, Susan F. & Fernandez, Linda, 2006.
"The Economic Impacts of Aquatic Invasive Species: A Review of the Literature,"
Agricultural and Resource Economics Review,
Northeastern Agricultural and Resource Economics Association, vol. 35(1), April.
- Sabrina J. Lovell & Susan F. Stone, 2005. "The Economic Impacts of Aquatic Invasive Species: A Review of the Literature," NCEE Working Paper Series 200502, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jan 2005.
- Armsworth, Paul R. & Kendall, Bruce E. & Davis, Frank W., 2004. "An introduction to biodiversity concepts for environmental economists," Resource and Energy Economics, Elsevier, vol. 26(2), pages 115-136, June.
- Palmquist, Raymond B., 1992. "Valuing localized externalities," Journal of Urban Economics, Elsevier, vol. 31(1), pages 59-68, January.
- Elena G. Irwin, 2002. "The Effects of Open Space on Residential Property Values," Land Economics, University of Wisconsin Press, vol. 78(4), pages 465-480.
- 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.
- Fiorenza Spalatro & Bill Provencher, 2001. "An Analysis of Minimum Frontage Zoning to Preserve Lakefront Amenities," Land Economics, University of Wisconsin Press, vol. 77(4), pages 469-481.
- Pimentel, David & Zuniga, Rodolfo & Morrison, Doug, 2005. "Update on the environmental and economic costs associated with alien-invasive species in the United States," Ecological Economics, Elsevier, vol. 52(3), pages 273-288, February.
- Small, Kenneth A, 1975. "Air Pollution and Property Values: Further Comment," The Review of Economics and Statistics, MIT Press, vol. 57(1), pages 105-07, February.
- Charles C. Tu, 2005. "How Does a New Sports Stadium Affect Housing Values? The Case of FedEx Field," Land Economics, University of Wisconsin Press, vol. 81(3).
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Hallstrom, Daniel G. & Smith, V. Kerry, 2005. "Market responses to hurricanes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 541-561, November.
- Geoffrey H. Donovan & Patricia A. Champ & David T. Butry, 2007. "Wildfire Risk and Housing Prices: A Case Study from Colorado Springs," Land Economics, University of Wisconsin Press, vol. 83(2), pages 217-233.
When requesting a correction, please mention this item's handle: RePEc:ags:aaea08:6199. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.