Convergent Validity of Satellite and Secchi Disk Measures of Water Clarity in Hedonic Models

Spatial Heterogeneity in Hedonic Price Effects for Lake Water Quality

“…Michael, Boyle, and Bouchard 2000) test different measures of Secchi depth (water clarity) averaged over different time scales and find an effect on implicit price estimates but do not draw a conclusion about which measures are most appropriate. Wolf and Kemp (2021) find similar impacts when comparing minimum and mean Secchi depth and satellite water clarity measures.…”

“…While studies in the late 1990's and early 2000's had sample sizes of only a few hundred and at times less than a hundred (Boyle, Poor, and Taylor 1999;Michael, Boyle, and Bouchard 2000;Poor et al 2001;Boyle and Taylor 2001), recent studies, due to the advent of large spatial scale data on property sales and environmental characteristics, may include 10,000 to 50,000 observations (Walsh, Milon, and Scrogin 2011;Liu, Opaluch, and Uchida 2017;Weng et al 2020). The smallest sample size we found in the recent literature comprises 1,020 observations in two counties in Wisconsin (Wolf and Kemp 2021). Thus, we set the minimum sample size for our study at 1,000 transactions, and no alternative is considered.…”

“…Water quality is measured by Secchi, an indicator of water clarity. 4 Secchi is commonly used in hedonic studies for lake water quality as clearer water has repeatedly been shown to be valued by homeowners (Michael, Boyle, and Bouchard 2000;Calderón-Arrieta, Caudill, and Mixon 2019;Wolf and Kemp 2021;Guignet et al 2022, Mamun et al 2023 and is one of the most available measures throughout the United States. We consider water quality samples from June through September when most people enjoy lake activities and use average, minimum, and maximum values for each lake for each year.…”

“…To monetize potential water quality benefits to homeowners, economists frequently use hedonic property models that examine how lake water quality is capitalized in housing markets. Over time these models have revealed price premiums for improved water clarity and reductions in nutrient levels and algal content (Gibbs et al 2002;Walsh, Milon, and Scrogin 2011;Walsh and Milon 2016;Wolf and Klaiber 2017;Weng et al 2020;Wolf and Kemp 2021).…”