Capitalized amenity value of urban wetlands: a hedonic property price approach to urban wetlands in Perth, Western Australia *

Sorada Tapsuwan, Gordon Ingram, Michael Burton and Donna Brennan

Australian Journal of Agricultural and Resource Economics, 2009, vol. 53, issue 4, 527-545

Abstract: Up to 60 per cent of potable water supplied to Perth, Western Australia, is extracted from the groundwater system that lies below the northern part of the metropolitan area. Many of the urban wetlands are groundwater-dependent and excessive groundwater extraction and climate change have resulted in a decline in water levels in the wetlands. In order to inform decisions on conserving existing urban wetlands, it is beneficial to be able to estimate the economic value of the urban wetlands. Applying the Hedonic Property Price approach to value urban wetlands, we found that distance to the nearest wetland and the number of wetlands within 1.5 km of a property significantly influence house sales price. For a property that is 943 m away from the nearest wetland, which is the average distance to the wetland in this study, reducing the wetland distance by 1 m will increase the property price by AU$42.40. Similarly, the existence of an additional wetland within 1.5 km of the property will increase the sales price by AU$6976. For a randomly selected wetland, assuming a 20 ha isolated circular wetland surrounded by uniform density housing, the total sales premium to surrounding properties was estimated to be around AU$140 million (AU$40 million and AU$230 million). Copyright 2009 The Authors. Journal compilation 2009 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.

Date: 2009
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