Comparing Pollution Where You Live and Play: A Hedonic Analysis of Enterococcus in the Long Island Sound

Megan Kung, Dennis Guignet and Patrick Walsh

No 201708, NCEE Working Paper Series from National Center for Environmental Economics, U.S. Environmental Protection Agency

Abstract: Hedonic property value methods typically examine the effect of water quality on home prices by focusing on waters nearest a home. While this captures any aesthetic values households may hold for water quality improvements, it may not fully reflect recreational values, particularly for nearby residents that do not live on the waterfront. This study is the first to compare the conventional approach of examining how property prices vary with the quality of waters closest to a home, versus water quality levels at the closest point of access for recreation (i.e., the beach). Using spatial econometric models, we conduct a hedonic analysis of residences within five kilometers of the Long Island Sound. Due to an aging infrastructure, high levels of precipitation often lead to sewage overflows, resulting in high counts of enterococcus – a bacterial indicator of fecal pollution. We also estimate the effect of subsequent beach closures, which we posit as an alternative and more salient signal of local water quality to residents. In line with previous literature, we find that enterococcus levels at waters nearest a home negatively affect home prices within 1 kilometer. However, this effect becomes insignificant when controlling for levels at the nearest beach. In contrast, enterococcus at the closest beach yields a negative 0.03% to 0.02% elasticity that extends 2.5 km. Controlling for beach closures suggests negative effects as far as 3.5 km from beaches. Our findings demonstrate that the impact of water quality on home prices may extend further than previously suggested by the literature, at least at large iconic waterbodies like the Sound.

Keywords: beach; enterococcus; hedonic; Long Island Sound; property value; water quality (search for similar items in EconPapers)
JEL-codes: Q24 Q51 Q53 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2017-12, Revised 2017-12
New Economics Papers: this item is included in nep-env and nep-ure
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Citations: View citations in EconPapers (2)

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https://www.epa.gov/environmental-economics/workin ... lay-hedonic-analysis First version, 2017 (application/pdf)

Related works:
Journal Article: Comparing Pollution Where You Live and Play: A Hedonic Analysis of Enterococcus in the Long Island Sound (2022)
Working Paper: Comparing Pollution Where You Live and Play: A Hedonic Analysis of Enterococcus in the Long Island Sound (2019)
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