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The Impact of Wetlands Rules on the Prices of Regulated and Proximate Houses: A Case Study

Author

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  • Katherine Kiel

    (Department of Economics, College of the Holy Cross
    New England Public Policy Center, Federal Reserve Bank of Boston)

Abstract

Federal, state and local wetlands protection laws that restrict landowners’ ability to develop their properties in certain ways could decrease the value of the affected properties. However, the regulations could also give benefits to nearby neighbors who no longer need worry about increased development in their area. Given that some properties may decline in value, while others increase, the impact on individual properties must be determined empirically. This study uses a data set from Newton, Massachusetts to examine the impact of wetlands laws on the regulated properties, as well as on proximate properties. Looking at house sales data from 1988 through 2005, the hedonic technique is used to estimate the effect of wetlands regulations on single family home prices and finds that having wetlands on a property decreases its value by 4% relative to non-regulated properties. Homes that are contiguous to regulated houses do not experience any change in price. Thus it seems unlikely that neighbors are receiving any benefit from knowing that further development is restricted in their immediate vicinity.

Suggested Citation

  • Katherine Kiel, 2007. "The Impact of Wetlands Rules on the Prices of Regulated and Proximate Houses: A Case Study," Working Papers 0707, College of the Holy Cross, Department of Economics.
    • Handle: RePEc:hcx:wpaper:0707
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    File URL: https://hcapps.holycross.edu/hcs/RePEc/hcx/HC0707-Kiel_Wetlands.pdf
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    References listed on IDEAS

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    1. Frech, H. III & Lafferty, Ronald N., 1984. "The effect of the California Coastal Commission on housing prices," Journal of Urban Economics, Elsevier, vol. 16(1), pages 105-123, July.
    2. Lupi, Frank & Graham-Tomasi, Theodore & Taff, Steven J., 1991. "A Hedonic Approach To Urban Wetland Valuation," Staff Papers 13284, University of Minnesota, Department of Applied Economics.
    3. Katharine R E Sims & Jenny Schuetz, 2007. "Environmental Regulation and Land Use Change: Do Local Wetlands Bylaws Slow the Conversion of Open Space to Residential Uses?," CID Working Papers 18, Center for International Development at Harvard University.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Doss, Cheryl R. & Taff, Steven J., 1996. "The Influence Of Wetland Type And Wetland Proximity On Residential Property Values," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-10, July.
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    More about this item

    Keywords

    Environment; housing; amenities; hedonic pricing; wetlands;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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