by Lynne Lewis, Elmer W. Campbell
Chair of Economics, Bates College
A number of scientific studies have shown that environmental amenities such as clean, free-flowing rivers provide positive value, including to local property values.
A number of scientific studies have shown that environmental amenities such as clean, free-flowing rivers provide positive value, including to local property values.
My colleague Curtis Bohlen I
estimated the impacts of dams (and dam removals) on property values on the Kennebec and Penobscot Rivers. We were particularly interested in the impact of
the 1999 Edwards Dam removal on local property values. Had property values
plummeted as local homeowners had feared? We collected house sales data and
housing characteristics from before and after the dam removal. Using geographic
information systems mapping technology, we were able to examine location and
distance in particular. On the Kennebec,
we found a sizable penalty for living near a dam site. In other words, for an
identical house, homeowners were willing to pay to live farther away from the dam. We found that when the Edwards Dam was
removed from the Kennebec River, this penalty disappeared and nearby homes
increased in value.
After our study on the Kennebec, we did a similar analysis on house
sales along the Penobscot River prior to the removal of Great Works and Veazie
Dams and found that people were also willing to pay to be farther from the
river. We have not yet
revisited the data to see how things have changed after the dam removal, but
predict a similar increase in property values.
A study by William Provecher and
colleagues at the University of Wisconsin also found that small dam removals
improve nearby property values. Specifically, they found that “shoreline frontage along small impoundments
confers no increase in residential property value compared to frontage along free-flowing streams and
that nonfrontage residential property located in the vicinity of a free-flowing
stream is more valuable than similar nonfrontage property in the vicinity of a
small impoundment."
A 2006 study from Oregon looking at the economic effects of
riparian corridors and upland wildlife habitat found strong evidence that property
owners place a premium on lots with habitat providing the highest ecological
values and a discount on lots with lower-valued habitat. The economic benefit
of being adjacent to rivers and streams and high-quality riparian corridors even
extended to properties up to half a mile from the valued resource.
An analysis of urban stream
restoration projects in California estimated that restoration projects that
reduce flood damage and improve fish habitat increase property values by 3 to
13 percent of the mean property price in the study area.
These studies offer convincing
evidence of, what seems in hindsight, an obvious conclusion--people place a
higher value on property adjacent to environments that are more natural and
perceived as being more healthy and vibrant. A free-flowing river with a robust
riparian corridor will be an appealing landscape with increasingly vibrant fish
and wildlife populations, all of which can benefit nearby property values.
Finally, our homeowner survey work indicates that people value clean, free-flowing rivers
including those who live on the river.
References
Lewis, L.Y., C. Bohlen, and S. Wilson. 2008. Dams, dam removal, and river restoration: A hedonic property value analysis. Contemporary Economic Policy 26(2):175-186.
Netusil, N.R. 2013.
Urban environmental amenities and property values: does ownership matter? Land
Use Policy 31:371-377.
Netusil, N.R. 2006.
Economic valuation of riparian corridors and upland wildlife habitat in an urban watershed. Journal of Water Research and Education 134(July):39-45.
Provencher, B., H. Sarakinos, and T. Meyer. 2008. Does small dam removal affect local property values? An empirical analysis. Contemporary Economic Policy 26(2):187-197.
Robbins, J.L., and L.Y. Lewis. 2008. Demolish it and they will come: estimating the economic impacts of restoring a recreational fishery. Journal of the American Water Resources Association 44(6):1488-1499.
Streiner, C. F., and J.B. Loomis. 1995. Estimating the
benefits of urban stream restoration using the hedonic price method. Rivers
5.4:267-278.
