Capitalized amenity value of urban wetlands: a hedonic property price approach to urban wetlands in Perth, Western Australia*

Abstract

Up to 60 per cent of potable water supplied to Perth, Western Australia, is extracted from the groundwater system that lies below the northern part of the metropolitan area. Many of the urban wetlands are groundwater-dependent and excessive groundwater extraction and climate change have resulted in a decline in water levels in the wetlands. In order to inform decisions on conserving existing urban wetlands, it is beneficial to be able to estimate the economic value of the urban wetlands. Applying the Hedonic Property Price approach to value urban wetlands, we found that distance to the nearest wetland and the number of wetlands within 1.5 km of a property significantly influence house sales price. For a property that is 943 m away from the nearest wetland, which is the average distance to the wetland in this study, reducing the wetland distance by 1 m will increase the property price by AU$42.40. Similarly, the existence of an additional wetland within 1.5 km of the property will increase the sales price by AU$6976. For a randomly selected wetland, assuming a 20 ha isolated circular wetland surrounded by uniform density housing, the total sales premium to surrounding properties was estimated to be around AU$140 million (AU$40 million and AU$230 million).

Canals vs. Streams: To What Extent Do Water Quality and Proximity Affect Real Estate Values? A Hedonic Approach Analysis

“…Positive amenities from proximity to water are also reported by Anderson and West (2006) [10]. Tapsuwan et al (2009) [11] argue that the value of houses increases by reducing the distance to the wetland. Cohen et al (2014) [12] show conflicting findings for proximity to wetlands but confirm the positive effect of water bodies' proximity.…”

Phragmites Removal Increases Property Values in Michigan’s Lower Grand River Watershed

“…Babb 2012;Tapsuwan et al 2009;Mahan et al 2000;Doss and Taff 1996). Similarly, our results show that Phragmites has a significant effect on property values.…”

“…That is, property prices increase as distance to wetlands decreases (Babb 2012;Doss and Taff 1996;Mahan et al 2000;Tapsuwan et al 2009). Associations ranged from $0.13/m (Mahan et al 2000) to about $33.60/m (AUS$42.40/m in the original paper) (Tapsuwan et al 2009). Metrics of wetland quality, such as size, buffer, and habitat diversity, also had a positive influence on housing values (Babb 2012).…”

Space matters: the importance of amenity in planning metropolitan growth

“…The hedonic pricing model is well established in the international economic literature (Rosen 1974;Freeman 2003 and Australian examples such as Fraser and Spencer 1998;Tapsuwan et al 2009;Hansen 2009;Hatton Space matters 39 MacDonald et al 2010;Neelawala et al 2012). Taylor (2008) provides an overview of equilibrium conditions where a hedonic price function relates the equilibrium market price of a house P h to its structural and lot characteristics S h , environmental amenity EA h , environmental dis-amenity ED h and neighbourhood attributes N h :…”

“…The Queensland Government (2009) Urban development to accommodate the projected additional dwellings that are likely to be required in the coming two or three decades will involve increasing urban density via infill and consolidation and expansion of urban boundaries into peri-urban land. In the short term, placing a value on the economic benefits of residential and environmental amenity provides decision support to planners who are charged with evaluating the need for open space such as parks, reserves and wetlands within suburbs (Morancho 2003;Seidl et al 2004;Cho et al 2008;Sander and Polasky 2009;Tapsuwan et al 2009;Poudyal et al 2009;Bark et al 2009Bark et al , 2011. Local governments, who are primarily responsible for regulating urban development, need information on the value of open space if optimal public provision of these areas is to be achieved.…”