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Lake-front property owners are potentially the recipients of the greatest economic gains from improved lake-water quality because the benefits of water quality can be capitalized in the price of lake-front properties. These same lake-front owners may also directly affect lake-water quality through the actions they take on their properties. The objective of this study is to estimate the effect of water clarity on lake-front property prices for selected Maine lakes using a hedonic property-price model. Hedonic models are used to estimate the share of property prices that are attributable to characteristics of the properties. The share of a property’s price that is attributable to water quality is identified through the price differentials between properties on lakes with differing levels of water quality, while controlling for other property characteristics.
Maine Agricultural and Forest Experiment Station
water quality, lakeshore development
Agricultural and Resource Economics
Michael, H.J., K.J. Boyle, and R. Bouchard. 1996. Water quality affects property prices: A case study of selected Maine lakes. Maine Agricultural and Forest Experiment Station Miscellaneous Report 398.