A hedonic pricing method to estimate the value of waterfronts in the Gulf of Mexico

Abstract

Open spaces, including waterfront areas, are publicly-or-privately owned landscapes that provide numerous benefits and services such as opportunities for recreational activities, ecological benefits, and economic development. However, with rapidly growing populations, development pressure on these areas has been increasing, often leading to conflicts between proposed land uses. Information on the monetary value of environmental amenities provided by these spaces would help decision-makers account for their importance to quality of life. This study estimated the monetary value associated with waterfronts using the hedonic pricing method (HPM) and real estate sales data for the coastal cities of Mobile and Daphne in Alabama, USA. The price of houses sold during 2001 to 2015 was used as the dependent variable and house structural and neighborhood attributes and presence of environmental amenities served as independent variables. Results showed that coastal residents considered proximity to waterfronts as one of the most important factors when buying a house and paid higher prices for houses located near most waterfront types. In Mobile, marginal implicit prices of proximity to waterfronts ranged from $2490 to $3530 per km, whereas in Daphne, the price ranged from $9250 to $15,460 per km. Findings can help guide future decisions related to development of coastal areas, land-use planning, urban forestry, and open space preservation by balancing opportunities for urban and commercial development as well as providing public access to open space environmental amenities with close proximity to residential areas.