Baltimore Ecosystem Study Institute of Ecosystem Studies

2014 BES Annual Meeting Presentation and Poster Abstracts

Stormwater Management Practices and Suburban House Prices
Irwin, Nicholas
Co-Authors: H. Allen Klaiber, Elena G. Irwin

Abstract: Urban expansion has confronted policymakers with a myriad of challenges, ranging from ecosystem degradation to congestion externalities. Policymakers have responded through new development regulations and changes to green infrastructure requirements aimed at mitigating these negative impacts. In large part, these policy responses have occurred without fully understanding how households perceive the resulting policy landscape. This paper examines households' valuation of one particular type of green infrastructure project, stormwater retention basins, which have undergone numerous changes in regulation and design over time. We utilize a difference-in-difference approach to identify the impact of new basins with a micro- dataset of 90,000 housing transactions and dataset of 3,000 stormwater basins from Baltimore County, Maryland. The current approach directly examines the implicit price of basins through its impact on existing housing stock that predates basin construction, rather than utilize a spatial equilibrium hedonic model as seen previously with this topic. Preliminary results indicate that the construction of new basins is a disamenity for existing housing stock, leading to a large decrease in housing prices of over 40 percent for houses within 100 feet with the negative impact falling with distance. Further results indicate the basins mandated by Marylandís 2001 Stormwater Act mitigate this negative price shock to some extent. The results of this paper are of special importance for policymakers, as it suggests that there are inherent tradeoffs between ecosystem improvement and household well-being that may result in under- provision of stormwater basins from an ecosystem functional perspective.