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Evidence Of The Effects Of Water Quality On Residential Land Prices

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  • Leggett, Christopher G.
  • Bockstael, Nancy E.

Abstract

We use hedonic techniques to show that water quality has a significant effect on property values along the Chesapeake Bay. Mindful of the limitations of using hedonic methods for welfare analysis, we calculate the potential benefits from an illustrative (but limited) water quality improvement. Past hedonic studies have almost entirely ignored the potential for omitted variables bias -- the possibility that pollution sources, in addition to emitting undesirable substances, are likely to be unpleasant neighbors. We discuss the implications of this oversight, and we provide an application that addresses the problem head-on.

Suggested Citation

  • Leggett, Christopher G. & Bockstael, Nancy E., 1998. "Evidence Of The Effects Of Water Quality On Residential Land Prices," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20919, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea98:20919
    DOI: 10.22004/ag.econ.20919
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    References listed on IDEAS

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    1. Douglas B. Diamond, Jr., 1980. "The Relationship between Amenities and Urban Land Prices," Land Economics, University of Wisconsin Press, vol. 56(1), pages 21-32.
    2. Cassel, Eric & Mendelsohn, Robert, 1985. "The choice of functional forms for hedonic price equations: Comment," Journal of Urban Economics, Elsevier, vol. 18(2), pages 135-142, September.
    3. Timothy J. Bartik, 2008. "Measuring the Benefits of Amenity Improvements in Hedonic Price Models," Book chapters authored by Upjohn Institute researchers, in: Richard E. Just & Darrell L. Hueth & Andrew Schmitz (ed.),Applied Welfare Economics, pages 643-654, W.E. Upjohn Institute for Employment Research.
    4. Clark David E. & Nieves Leslie A., 1994. "An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 235-253, November.
    5. 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.
    6. Dorfman, Jeffrey H. & Keeler, Andrew G. & Kriesel, Warren, 1996. "Valuing Risk-Reducing Interventions With Hedonic Models: The Case Of Erosion Protection," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-11, July.
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    Cited by:

    1. Acharya, Gayatri & Bennett, Lynne Lewis, 1999. "Land Use Diversity and Urban Watersheds: The Case of New Haven County," Western Region Archives 321772, Western Region - Western Extension Directors Association (WEDA).
    2. Fishman, Kara J. & Leonard, Robert L. & Shah, Farhed A., 1999. "Valuing Water Quality Changes At Connecticut Lakes With Contingent Price Data," 1999 Annual meeting, August 8-11, Nashville, TN 21568, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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    Environmental Economics and Policy;

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