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Estimating the Capitalization Effects of Harmful Algal Bloom Incidence, Intensity and Duration? A Repeated Sales Model of Lake Erie Lakefront Property Values

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  • Baron, Aneil
  • Zhang, Wendong
  • Irwin, Elena

Abstract

The goal of this paper is to observe whether and how harmful algal blooms are capitalized in home prices in several Ohio counties along Lake Erie. Harmful algal blooms have increased in severity and frequency, reducing the amenity value of the lake, posing health risks, and even threatening the drinking water supply. To address the problems of omitted variable bias due to unobserved emitter sites, we employ a repeat sales model. We find that a reduction of 1μg/L of chlorophyll-a yields a 2% increase in home prices, though the effect decays rapidly by distance. Secchi disk depth, while previous found to be significant in the literature, is statistically insignificant when utilizing repeat sales, and we find noticeable evidence of omitted variable bias when we do not control for emitter effects.

Suggested Citation

  • Baron, Aneil & Zhang, Wendong & Irwin, Elena, 2016. "Estimating the Capitalization Effects of Harmful Algal Bloom Incidence, Intensity and Duration? A Repeated Sales Model of Lake Erie Lakefront Property Values," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236589, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:236589
    DOI: 10.22004/ag.econ.236589
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    File URL: https://ageconsearch.umn.edu/record/236589/files/Algae%20Lake%20Erie_AAEA.pdf
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    References listed on IDEAS

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