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The Implicit Price of Aquatic Grasses

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  • Guignet, Dennis
  • Griffiths, Charles
  • Klemick, Heather
  • Walsh, Patrick

Abstract

Almost 30% of aquatic grasses worldwide are either lost or degraded (Barbier et al, 2011). The Chesapeake Bay is no exception, with levels of submerged aquatic vegetation (SAV) remaining below half of the historic levels. This decline is largely attributed to excessive nutrient and sediment loads degrading Bay water quality. SAV provide many important functions to natural ecosystems, many of which are directly beneficial to local residents. To understand the implicit value residents place on SAV and the localized ecosystem services it provides, we undertake a hedonic property value study using residential transaction data from 1996 to 2008 in eleven Maryland counties adjacent to the Chesapeake Bay. These data are matched to high resolution maps of Baywide SAV coverage. We pose a quasi-experimental comparison and examine how the price of homes near and on the waterfront vary with the presence of SAV. On average, waterfront and near-waterfront homes within 200 meters of the shore sell at a 5% to 6% premium when SAV are present. Applying these estimates to the 185,000 acre SAV attainment goal yields total property value gains on the order of $300 to 400 million.

Suggested Citation

  • Guignet, Dennis & Griffiths, Charles & Klemick, Heather & Walsh, Patrick, 2014. "The Implicit Price of Aquatic Grasses," National Center for Environmental Economics-NCEE Working Papers 280922, United States Environmental Protection Agency (EPA).
    • Handle: RePEc:ags:nceewp:280922
    DOI: 10.22004/ag.econ.280922
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    2. Kuwayama, Yusuke & Olmstead, Sheila & Zheng, Jiameng, 2022. "A more comprehensive estimate of the value of water quality," Journal of Public Economics, Elsevier, vol. 207(C).
    3. Dennis Guignet & Matthew T. Heberling & Michael Papenfus & Olivia Griot, 2022. "Property Values, Water Quality, and Benefit Transfer: A Nationwide Meta-analysis," Land Economics, University of Wisconsin Press, vol. 98(2), pages 191-218.
    4. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    5. Matthew T. Heberling & Dennis Guignet & Michael Papenfus, 2022. "Water Quality and Hedonic Models: A MetaAnalysis of Commodity, Market, and Methodological Characteristics," Working Papers 22-06, Department of Economics, Appalachian State University.
    6. Guignet, Dennis & Jenkins, Robin R. & Nolte, Christoph & Belke, James, 2023. "The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study," Journal of Housing Economics, Elsevier, vol. 62(C).
    7. Matthew Burlingame & Dennis Guignet & Matthew Heberling & Michael Papenfus, 2023. "Using Benefit Transfer to Estimate Housing Value Increases from Improved Water Clarity," Working Papers 23-07, Department of Economics, Appalachian State University.
    8. Dennis Guignet & Charles Griffiths & Heather Klemick & Patrick J. Walsh, 2017. "The Implicit Price of Aquatic Grasses," Marine Resource Economics, University of Chicago Press, vol. 32(1), pages 21-41.

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    Keywords

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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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