Valuing water quality in the United States using a national dataset on property values

High-quality water resources provide a wide range of benefits but the value of water quality is often not fully represented in environmental policy decisions, due in large part to an absence of water quality valuation estimates at large, policy relevant scales. Using data on property values with national-wide coverage across the contiguous United States, we estimate the benefits of lake water quality as measured through capitalization in housing markets. We find compelling evidence that homeowners place a premium on improved water quality. This premium is largest for lakefront property and decays with distance from the waterbody. In aggregate, we estimate that restoring lake water quality to pristine conditions for the contiguous United States has a value of $25-27 billion to property owners. This study provides credible evidence for policymakers to incorporate lake water quality value estimates in environmental decision making.

Impact/Purpose

Lakes are a crucial resource for the aesthetic, recreation, drinking water, habitat, and other services they provide. Yet, many lakes are threatened by nutrient loading that compromise water quality. We use spatially explicit data on property values and lake water quality to provide the most extensive nationwide estimates for benefits of water quality capitalized through property values. We find property values appreciate by $25-27 billion if water quality is restored to pristine level in the United States. These benefit estimates can support national, state, and local lake policies. The property value effects are particularly important because owners of properties around lakes are significant beneficiaries of lake policies, and they are the last line of protection from nutrient loadings.

Citation

Mamun, S., A. Castillo, K. Swedberg, J. Zhang, K. Boyle, D. Cardoso, C. King, C. Nolte, M. Papenfus, D. Phaneuf, AND S. Polasky. Valuing water quality in the United States using a national dataset on property values. National Academy of Sciences, WASHINGTON, DC, 120(5):e2210417120, (2023). [DOI: 10.1073/pnas.2210417120]

DOI: Valuing water quality in the United States using a national dataset on property values