The capitalized amenity of green infrastructure in single-family housing values: An application of the spatial hedonic pricing method

Abstract

The environmental benefits of having retention/detention ponds as major stormwater management facilities in a neighborhood have been well documented since the adoption of green infrastructure strategies in early 1990s. However, the capitalization effect of stormwater treatment ponds in real estate values still remains unclear. This study developed classic hedonic pricing and spatial econometric models to examine the capitalization effects of neighborhood-level detention and retention ponds using both cross-sectional and longitudinal housing prices. The housing market value from 2007 to 2016 was assessed in four subdivisions in Houston, Texas. A subdivision, located in the upper neighborhood, had retention ponds which were converted from detention ponds in 2011, while three subdivisions in the lower neighborhood had detention ponds over the same study period. The study results show that living near retention ponds has positive capitalization impacts on single-family housing prices, not only cross-sectionally but also longitudinally. In contrast, maintaining detention ponds depreciates housing values, and living nearby lowers the price increase over a decade. The findings in this study imply the importance of converting stormwater facilities into a park-like amenity to enhance aesthetic value and generate long-term economic benefits to a neighborhood.