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Water Quality and Residential Property Values: A Natural Experiment Approach

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  • O. Ashton Morgan
  • Stuart E. Hamilton
  • Victoria Chung

Abstract

We use hedonic techniques to measure the impact of improved water quality on inland real estate values. By considering a unique natural experiment setting where consistent and recognizable variation in water quality across two rivers within a small geographic area is well known to market participants, we avoid the major problems inherent in hedonic water quality studies. Controlling for spatial autocorrelation, results show that land and property values increase more substantially with proximity to the non-contaminated river as opposed to the mercurycontaminated river that carries a fish consumption advisory. Results suggest that the value of improving water quality to a level that will remove the advisory is between $7.3 and $12 million. Key Words:

Suggested Citation

  • O. Ashton Morgan & Stuart E. Hamilton & Victoria Chung, 2010. "Water Quality and Residential Property Values: A Natural Experiment Approach," Working Papers 10-12, Department of Economics, Appalachian State University.
  • Handle: RePEc:apl:wpaper:10-12
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    File URL: http://econ.appstate.edu/RePEc/pdf/wp1012.pdf
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    References listed on IDEAS

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    Cited by:

    1. Mahesh, Ramachandran, 2015. "Validating Spatial Hedonic Modeling with a Behavioral Approach: Measuring the Impact of Water Quality Degradation on Coastal Housing Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205664, Agricultural and Applied Economics Association;Western Agricultural Economics Association.

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