Do Housing Prices Reflect Water Quality Impairments? Evidence from the Puget Sound

Using data from Washington state and a set of empirical methods to control for confounding factors, we estimate the effects of water quality impairments on residential housing prices. We also examine the role of individual water quality parameters such as fecal coliform and dissolved oxygen that are used to judge the attainment of water quality standards. Results indicate that impairments have a negative effect on home values. Using a hedonic model that includes fine resolutionspatial fixed effects, we find that being located adjacent to an impaired waterbodylead to an annualized depreciation of $2,177. We also find that water quality impairments due to fecal coliform have the largest effects. Given the broad interest in evaluating the economic benefits of water quality, the use of impairment data to evaluate these benefits on a larger scale could lead to improved allocation of resources to protect the myriad beneficial uses that depend on water quality.

Impact/Purpose

In order to develop a national water quality benefits model, a variety of water body types need to be studied. No single national study will work because of the differences in water body and community attributes across the country (in fact, it is common practice to synthesize numerous estimates because of the difficulty in applying one estimate). The primary goal of this work is to develop a set of hedonic property value models to evaluate the economic benefits of improvements in water quality in the Puget Sound region. This work is the first in a series that will examine the usage of different water quality metrics in both freshwater and estuarine systems across 5 counties. The results of these studies will facilitate development of a benefits transfer model that combines these results with other hedonic studies across the country such as those already conducted in the Chesapeake Bay. This journal article is a product of the RAP SSWR 4.01E.

Citation

Papenfus, M. Do Housing Prices Reflect Water Quality Impairments? Evidence from the Puget Sound. Elsevier B.V., Amsterdam, NETHERLANDS, 27:100133, (2019). [DOI: 10.1016/j.wre.2018.12.001]

DOI: Do Housing Prices Reflect Water Quality Impairments? Evidence from the Puget Sound