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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.
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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.