Property values and cyanobacterial algal blooms: Evidence from satellite monitoring of Inland Lakes
Zhang, J., D. Phaneuf, AND B. Schaeffer. Property values and cyanobacterial algal blooms: Evidence from satellite monitoring of Inland Lakes. ECOLOGICAL ECONOMICS. Elsevier Science Ltd, New York, NY, 199:107481, (2022). https://doi.org/10.1016/j.ecolecon.2022.107481
By exploiting nationwide data on property values and cyanoHABs we draw several conclusions. First, we find strong evidence for the Upper Midwest and South regions that the frequency of cyanoHABs decreases the capitalized value of amenity and recreation services for near-shore homes. We find little evidence that cyanoHABs impact near-shore home values in the Southeast and West regions. We find some evidence that cyanoHAB frequency impacts the size of the proximity premium for lakes in the Northeast and Northwest regions. Finally, our findings for the Ohio Valley region are robustly counterintuitive for our main research design but somewhat plausible for our alternative research design. More generally, our results demonstrate how nationwide data on water quality and property values can be used to estimate regional models that generate heterogeneous findings.
We examine how the frequency of cyanobacterial harmful algal blooms (cyanoHABs) generates economic costs through the mechanism of residential property values. We assemble nearly two decades worth of nationwide data on property sales near US inland lakes along as well as satellite-derived measures of the annual frequency of cyanoHABs in over 2000 large lakes during the years 2008–2011. We combine these data sources to estimate broad scale hedonic property models to recover the marginal willingness to pay to reduce the frequency of cyanobacterial blooms in seven climate regions across the United States. We find heterogeneity in the marginal cost of cyanoHABs, with a 10-percentage point increase in annual occurrence reducing average home values for near-shore properties by 3.5% in the Upper Midwest, 3.8% in the South, 3.3% in the Southeast, and 4.3% in the Northeast. We find null or inconclusive results for other regions. We use our estimates to illustrate the household-, lake-, and regional-level impacts of counterfactual changes in the frequency of cyanoHABs.