Efficient allocation of water requires knowledge of water's value in both consumptive and nonconsumptive uses. This study estimates the marginal value of water in lake recreational and aesthetic (RA) use. An hedonic price equation (employing the Box-Cox functional form) indicates lake front location, distance to lake, and scenic view are significant RA characteristics of housing. Water front properties command a premium price for the private access they offer. Beyond the water front, the marginal RA price falls rapidly with increasing distance, becoming asymptotic to some minimum. Twenty-two percent of housing price is found to be attributable to the RA component.
[1] Groundwater management in the Edwards Aquifer in Texas is in the process of moving away from a traditional right of capture economic regime toward a more environmentally sensitive scheme designed to preserve endangered species habitats. This study explores economic and environmental implications of proposed groundwater management and water development strategies under a proposed regional Habitat Conservation Plan. Results show that enhancing the habitat by augmenting water flow costs $109-1427 per acre-foot and that regional water development would be accelerated by the more extreme possibilities under the Habitat Conservation Plan. The findings also indicate that a water market would improve regional welfare and lower water development but worsen environmental attributes.
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