Environmental Impact on Property Values Along New York's Lake Erie Coastline

Abstract

This paper develops a method which enables the quantification of one type of benefit of water pollution control. It is hypothesized that water pollution tends to depress shoreline property values. A property values index is constructed which can be applied to different classifications of property types within an area. Since the index measures relative changes in property values, it can be used to compare the behavior of property values in different areas which are comparable except for the problem under study. In order to illustrate the usefulness of the property values index, data for New York State's Lake Erie shoreline are used to calculate the index. The result is then compared with indexes calculated for nearby non-shoreline sites and for properties along Chautauqua Lake, which has experienced less water pollution. The Chautauqua Lake results provide a benchmark to show what might have been expected along Lake Erie, if it had been cleaner. It can be predicted that the relatively depressed property values along Lake Erie will show growth similar to those along Chautauqua Lake, if the pollution is alleviated. This quantification of some of the benefits provides strong policy implications for pollution abatement programs along Lake Erie. The index could easily be applied to other Great Lakes areas.