Regular Article
Evidence of the Effects of Water Quality on Residential Land Prices

https://doi.org/10.1006/jeem.1999.1096Get rights and content

Abstract

We use hedonic techniques to show that water quality has a significant effect on property values along the Chesapeake Bay. We calculate the potential benefits from an illustrative (but limited) water quality improvement, and we calculate an upper bound to the benefits from a more widespread improvement. Many environmental hedonic studies have almost entirely ignored the potential for omitted variables bias—the possibility that pollution sources, in addition to emitting undesirable substances, are likely to be unpleasant neighbors. We discuss the implications of this oversight, and we provide an application that addresses this potential problem.

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  • Cited by (0)

    This work was partially funded by EPA Cooperative Agreement # CR821925. We thank Elena Irwin and Mark Fleming for assistance with GIS and SpaceStat software, Sally Levine for providing water quality data, and Anna Alberini and the anonymous reviewers for helpful comments on earlier drafts. All remaining errors are the responsibility of the authors.

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    Author to whom correspondence should be addressed: Dr. Nancy E. Bockstael, Department of Agricultural and Resource Economics, University of Maryland, College Park, MD 20742.

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