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The Property Value Impacts of Groundwater Contamination: Agricultural Runoff and Private Wells

Author

Listed:
  • Dennis Guignet
  • Rachel Northcutt
  • Patrick J. Walsh

Abstract

There are few studies examining the impacts of groundwater quality on residential property values. Using a unique dataset of groundwater well tests, we link residential transactions to home-specific contamination levels and undertake a hedonic analysis of homes in Lake County, Florida; where groundwater pollution concerns stem primarily from agricultural runoff. We find that testing and contamination yield a 2% to 6% depreciation, an effect that diminishes after the situation is resolved. Focusing specifically on nitrogen-based contamination, we find prices decline mainly at concentrations above the regulatory health standard, suggesting up to a 15% deprecation at levels twice the standard.

Suggested Citation

  • Dennis Guignet & Rachel Northcutt & Patrick J. Walsh, 2015. "The Property Value Impacts of Groundwater Contamination: Agricultural Runoff and Private Wells," NCEE Working Paper Series 201505, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Nov 2015.
    • Handle: RePEc:nev:wpaper:wp201505
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    File URL: https://www.epa.gov/environmental-economics/working-paper-property-value-impacts-groundwater-contamination-agricultural
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    References listed on IDEAS

    as
    1. Dennis Guignet, 2013. "What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks," Land Economics, University of Wisconsin Press, vol. 89(2), pages 211-226.
    2. Poor, P. Joan & Pessagno, Keri L. & Paul, Robert W., 2007. "Exploring the hedonic value of ambient water quality: A local watershed-based study," Ecological Economics, Elsevier, vol. 60(4), pages 797-806, February.
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    Cited by:

    1. Anna Alberini, 2017. "Measuring the economic value of the effects of chemicals on ecological systems and human health," OECD Environment Working Papers 116, OECD Publishing.

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    More about this item

    Keywords

    drinking water; groundwater; hedonic; nitrate; potable water; property value; water quality;
    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

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