Grantee Research Project Results

2024 Progress Report: 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 , Phaneuf, Daniel J. , Kuwayama, Yusuke , Miller, Nolan , Zheng, Jiameng
Institution: University of Texas at Austin , University of Wisconsin - Madison , University of Maryland - Baltimore County , University of Illinois Urbana-Champaign
EPA Project Officer: Packard, Benjamin H
Project Period: September 1, 2022 through May 2, 2025
Project Period Covered by this Report: September 1, 2023 through August 31,2024
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 3 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 interregional 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.

Progress Summary:

Our work has proceeded as planned in the project’s second year. The team has engaged in the tasks listed below:

• Continued cleaning and managing the property characteristics and transaction data for all three study regions from CoreLogic, Inc.
• Continued cleaning and managing water quality data for all three study regions from the federal Water Quality Portal and the Washington State Department of Ecology.
• Continued cleaning and managing recreational visitation data for all three study regions from the National Oceanic and Atmospheric Administration’s Marine Resource Inventory Program, the Texas Coastal Creel Survey, and the Washington State Parks Visitation Reports.
• Continued using the supercomputing resources at the Texas Advanced Computing
• Center (TACC) to calculate travel costs from each zip code (in the Long Island Sound and Puget Sound regions) or county (in Texas) to the recreation sites in each of the three study regions, as well as to the sites visited by individuals in the mobility data.
• Continued recreation demand model and hedonic model estimation and refinement using the two-stage approach from the proposal, adapting as necessary to the specific characteristics of each site.
• Produced a full set of preliminary results using the administrative recreational visitation data for each site, making progress toward a final set of models for a first paper coauthored by the full project team that will report results from all three regions. We anticipate circulating the first working paper with these results by Feb. 2025.
• Continued collecting mobility data using Cuebiq-Spectus, using multiple approaches to defining aquatic recreation sites in the three study areas.
• Developed and estimated some preliminary models using the mobility data in a recreation demand context for the Long Island Sound study region, focused primarily on beach recreation. This work represents the start of a second working paper, likely coauthored by the full team, that we plan to submit for a special issue of Land Economics.
• Completed collection of sociodemographic data for the three study sites from the U.S. Census Bureau and integrated these with the recreation and housing data. Performed a review of existing literature on estimating differential benefits of environmental amenities across sociodemographic groups and an exploratory analysis of the Long Island Sound study site using visualizations and modeling heterogeneity within a regression framework.
• Estimated some preliminary models on the heterogeneity in both the recreational and amenity value of water quality changes by race and income in Long Island Sound.
• Used the water quality data and property transaction data collected for our work in the Long Island Sound region to begin a third paper (sole-authored by the UT Austin doctoral student working on the project) that estimates willingness-to-pay for nutrient reductions attributable to a TMDL in Long Island Sound, which has been implemented in the State of Connecticut using water quality trading.
• Continued outreach to and engagement with federal agency groups and initiatives, including the EPA Office of Research and Development and the Puget Sound Partnership.

Future Activities:

In year 3 of the project, we will: (1) continue with estimation and refinement of the two-stage models using the traditional recreational visitation data collected for each of the three study regions, with a goal of having a working paper to
circulate by Feb. 2025; (2) complete mobility data collection, model development and estimation using the new approach we will pilot with these data for Long Island Sound and draft paper 2; (3) continue examining differences in the degree to which water quality capitalizes into property prices by race and income in the three regions; (4) continue making progress on paper 3 (on the property-value impacts of nutrient trading in Long Island Sound), toward the goal of a complete job market paper for PhD student Yoojin Cha by Nov. 2025; (5) continue presenting results at scholarly seminars and conferences and responding to feedback.

References:

Project year 2 presentations:

Cha, Yoojin, “The economic value of reduced nutrient pollution driven by the U.S. capand- trade policy,” University of Texas at Austin Workshop on Environmental and Energy Economics, 23 September 2023.

Cha, Yoojin , “The economic value of reduced nutrient pollution driven by the U.S. cap-and-trade policy,” Association for Public Policy Analysis and Management (APPAM) annual conference, Atlanta, GA, 10 November 2023.

Cha, Yoojin, “The economic value of reduced nutrient pollution driven by the U.S. capand- trade policy,” Southern Economic Association annual conference, New Orleans.

Olmstead, Sheila, “Estimating the benefits of water quality using revealed preference,” Energy Policy Institute at the University of Chicago (EPIC), 5 December 2023.

Olmstead, Sheila, “Estimating the benefits of water quality using revealed preference,” University of Maryland, Dept. of Agricultural and Resource Economics, 6 March 2023.

Phaneuf, Daniel, “Estimating water quality benefits with revealed preference,” Arizona State University, 25 January 2024.

Kuwayama, Yusuke, “Estimating water quality benefits with revealed preference,” Appalachian Experimental & Environmental Economics Workshop, 27 April 2024.

Friesen, Dimitris and Daniel Phaneuf, “Recreation demand with mobility data: application to Long Island Sound,” AERE Summer Conference, 29 May 2024.

Olmstead, Sheila, “Estimating water quality benefits with revealed preference,” AERE
Summer Conference, 30 May 2024.

Olmstead, Sheila, “Estimating water quality benefits with revealed preference,”
Oxford University, 3 June 2024.

Kuwayama, Yusuke, “Estimating water quality benefits with revealed preference,” Northeastern Agricultural and Resource Economics Association Annual Meeting, 10 June 2024.

Journal Articles:

No journal articles submitted with this report: View all 16 publications for this project

Supplemental Keywords:

Water quality, watersheds, non-market valuation, willingness-topay, economics, recreation demand modeling, hedonic analysis, Northwest, Northeast, South Central

Progress and Final Reports:

Original Abstract

2023 Progress Report