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The value of restoring urban drains to living streams

Author

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  • Polyakov, Maksym
  • Fogarty, James
  • Zhang, Fan
  • Pandit, Ram
  • Pannell, David J.

Abstract

Many urban streams have been cleared of native vegetation and converted to open drains resulting in a loss of ecological and aesthetic function. There is a growing recognition of the importance of these functions and work is being done to restore urban drains and create fully functioning wetland ecosystems (“living streams”). Such restoration work involves substantial cost, and it is important to know if the benefits generated from “living streams” are greater than restoration costs. This paper presents a detailed economic analysis of an urban drain restoration project in Perth, Western Australia. Controlling for other factors, we find homes within 200m of the restoration site increased in value by 4.4% once the restored area became fully established. When we compare benefits to cost we find that, with real discount rates of 5%, 7%, and 9%, project benefit−cost ratios are 2.6, 2.5, and 2.2, respectively. We then show that current institutional arrangements in Western Australia make it difficult to implement urban drain restoration projects, even when project benefits are greater than project costs. The paper concludes by identifying changes to governance arrangements that would allow value enhancing restoration projects to be undertaken.

Suggested Citation

  • Polyakov, Maksym & Fogarty, James & Zhang, Fan & Pandit, Ram & Pannell, David J., 2015. "The value of restoring urban drains to living streams," Working Papers 206300, University of Western Australia, School of Agricultural and Resource Economics.
  • Handle: RePEc:ags:uwauwp:206300
    DOI: 10.22004/ag.econ.206300
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    File URL: https://ageconsearch.umn.edu/record/206300/files/WP1512_Polyakov%20et%20al_The%20value%20of%20restoring%20urban%20drains%20to%20living%20streams.pdf
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    References listed on IDEAS

    as
    1. Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2010. "Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities?," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 145-160, November.
    2. Callum Jones, 2010. "House Price Measurement: The Hybrid Hedonic Repeat‐Sales Method," The Economic Record, The Economic Society of Australia, vol. 86(272), pages 95-97, March.
    3. Ram Pandit & Maksym Polyakov & Rohan Sadler, 2014. "Valuing public and private urban tree canopy cover," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), pages 453-470, July.
    4. Acharya, Gayatri & Bennett, Lynne Lewis, 2001. "Valuing Open Space and Land-Use Patterns in Urban Watersheds," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 221-237, March-May.
    5. Martin D. Heintzelman & Carrie M. Tuttle, 2012. "Values in the Wind: A Hedonic Analysis of Wind Power Facilities," Land Economics, University of Wisconsin Press, vol. 88(3), pages 571-588.
    6. 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.
    7. 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..
    8. Jack Triplett, 2004. "Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products," OECD Science, Technology and Industry Working Papers 2004/9, OECD Publishing.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. 298 – Potential value from restoring urban drains
      by David Pannell in Pannell Discussions on 2016-10-03 20:00:13
    2. 299 – Are higher house prices a benefit or a problem?
      by David Pannell in Pannell Discussions on 2016-10-10 20:00:12

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    Cited by:

    1. Plant, Lyndal & Rambaldi, Alicia & Sipe, Neil, 2017. "Evaluating Revealed Preferences for Street Tree Cover Targets: A Business Case for Collaborative Investment in Leafier Streetscapes in Brisbane, Australia," Ecological Economics, Elsevier, vol. 134(C), pages 238-249.
    2. Sorada Tapsuwan & Raymundo Marcos‐Martinez & Heinz Schandl & Zefan Yu, 2021. "Valuing ecosystem services of urban forests and open spaces: application of the SEEA framework in Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(1), pages 37-65, January.

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    Keywords

    Environmental Economics and Policy; Land Economics/Use;

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