Bloom and bust: Toxic algae's impact on nearby property values

Abstract

Over the past decade harmful algal blooms (HABs) have become a nationwide environmental concern. HABs are likely to increase in frequency and intensity due to rising summer temperatures caused by climate change and higher nutrient enrichment from increased urbanization. Policymakers need information on the economic costs of HABs to design optimal management policies in the face of limited budgets. Using a detailed, multilake hedonic analysis across 6 Ohio counties between 2009 and 2015 we show capitalization losses associated with near lake homes between 12% and 17% rising to over 30% for lake adjacent homes. In the case of Grand Lake Saint Marys, we find capitalization losses exceeding $48 million for near lake homes which dwarfs the State of Ohio's cleanup expenditure of $26 million.

The impact of water quality in Narragansett Bay on housing prices

“…This result is consistent with Dornbusch and Barrager [], Netusil et al . [], and Wolf and Klaiber [], which found that water quality could affect the value of nonwaterfront properties up to 1 mi from the waterbody. Our results suggest that water quality likely has no significant effect on properties a mile or more from the shoreline.…”

“…In order to determine the specific distance where the effect drops off, we use 22 dummy distance dummy variables at 100 m intervals (0–100, 100–200, 200–300 m, …, 2000–2100, and greater than 2100 m). Then, we run our model and our results suggest that the distance water quality interactions become insignificant above 1000 m and the distance impacts become insignificant above 1500 m. To be conservative, we chose 1500 m as the bench mark which is also consistent with the hedonic literature [ Netusil et al ., ; Wolf and Klaiber , ]. We use distinct distance categories because it has the advantage of capturing nonlinear effects unlike a continuous distance variable.…”

“…To our knowledge, the two prior studies to have used distance buffers to examine the impacts of water quality are Netusil et al . [] and Wolf and Klaiber []. Netusil et al .…”

“…[] incorporated buffers of one‐quarter mile (402 m), one‐half mile (805 m), 1 mi (1609 m), and more than 1 mi from a creek to estimate the impacts of changes in dissolved oxygen on housing prices. Wolf and Klaiber [] used both discrete and continuous variables for lake proximity measures, such as properties located next to the lake and near the lake by using the properties located on the shoreline, 300 m, and 600 m distance “donut” bands. They also allowed the proximity effect to vary continuously within each distance bands.…”

A Comprehensive Review of the Evidence of the Impact of Surface Water Quality on Property Values

“…Wolf and Klaiber (2017) reported the negative impact of these blooms on house values for six counties surrounding four Ohio lakes [55]. The data comprised property sales of single family homes between July 2009 and April 2015.…”