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THE VALUE OF WATER AS AN URBAN CLUB GOOD: A MATCHING APPROACH TO HOA-PROVIDED LAKES

Joshua K. Abbott and Henry Klaiber

No 103781, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: Urban lakes located in arid environments require large quantities of water to maintain their water levels, with much of this water associated with high opportunity costs. Many of these lakes are manmade and provide various amenities to surrounding residents. In this paper we use matching techniques to recover the average capitalized value of lakes to surrounding communities and differentiate between community members and adjacent households to recover heterogeneous treatment effects. Importantly, we consider the role of both unobservable and observable features of matching to recover heterogeneous capitalization across lake communities. Our results suggest that the capitalized value of lakes to community residents is highly heterogeneous and ranges from an annual value of -$29 to +$20 per homeowner per acre foot of water. These results suggest that small changes in water pricing could remove the surplus benefits of lakes to community residents.

Keywords: Matching; Treatment effects; Urban lakes; Capitalization; Environmental Economics and Policy; Political Economy; Resource /Energy Economics and Policy (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-env and nep-ure
Date: 2011
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