Grantee Research Project Results

Estimating the missing benefits of water quality by nesting recreation demand and hedonic modeling

EPA Grant Number: R840466
Title: Estimating the missing benefits of water quality by nesting recreation demand and hedonic modeling
Investigators: Olmstead, Sheila , Kuwayama, Yusuke , Miller, Nolan , Phaneuf, Daniel J. , Zheng, Jiameng
Institution: University of Texas at Austin , University of Maryland - Baltimore County , University of Illinois Urbana-Champaign , University of Wisconsin - Madison
EPA Project Officer: Packard, Benjamin H
Project Period: September 1, 2022 through August 31, 2025
Project Amount: $741,054
RFA: Water Quality Benefits (2022) RFA Text |  Recipients Lists
Research Category: Water , Water Quality

Objective:

(1) Implement innovative models to estimate the effects on property values of water quality changes from nutrient pollution in three       under-studied coastal regions, separately estimating local amenity and regional recreation impacts. (2) Monetize the aggregate property value impact of long-run changes in dissolved oxygen in each region. (3) Describe regional differences in the extent of the market for and variation by waterbody type in the recreational and amenity value of water quality. (4) Describe intra- and inter-regional variation in recreational and amenity values of water quality by race, income, and other socioeconomic indicators. (5) Disseminate results widely. (6) Train a diverse set of graduate students.

Approach:

We will implement an integrated, two-stage econometric model of recreation and housing demand to estimate the recreational and amenity value of water quality changes in three regions: Puget Sound, Long Island Sound, and the Texas Gulf Coast. The first stage of the approach is a random-utility model of recreation demand, and the second is a hedonic property model that controls comprehensively and flexibly for observable and unobservable property characteristics. Time-varying independent variables in the hedonic model include both ambient water quality very close to each home and estimates of indirect utility from the first-stage recreation demand model, so we will estimate separately the portions of property value changes due to water quality that can be attributed to amenity and recreational effects. We will also compare estimates across waterbody types, regions, and socioeconomic characteristics of property owners and recreators.

Expected Results:

The team will produce regional water quality valuation estimates for three under-studied regions, at least three peer-reviewed journal articles, at least six scholarly presentations, two doctoral dissertations, and broad dissemination of results via policy-oriented publications, presentations, and social media.

Supplemental Keywords:

Water quality, watersheds, non-market valuation, willingness-to-pay, economics, recreation demand modeling, hedonic property analysis, nutrients, Pacific Northwest, Northeast, Gulf Coast