As a result of climate changes, more land is now needed in the Netherlands for water retention in towns and the countryside. Recently, this perceived need has resulted in new forms of water management and spatial planning strategies. Multi-functional land use is an option such as housing in combination with retention lakes. Some argue that the market potential is high and that water has an added value in residential environments. This added value could be used to compensate for non-profitable investments such as the creation of lakes. The key question is how to value this amenity. It is argued that non-economists often assume that a valuation is just a technique. The authors challenge this by presenting an overview of economic perspectives as well as techniques. A literature review reveals the main valuation perspectives and suggests estimated added values of 10‐15% for the seashore, 5‐10% for river locations (streams), and 5% for lakes.

In the Netherlands, the estimated rise in sea level together with more irregular and heavier river flows and rainfall require new policies. In particular the region in the western and central part of the country, known as Randstad-Holland, is facing new challenges to cope with water. Do residents move to safe areas as a consequence of this development? At the same time we may observe an increasing consumer popularity of housing areas situated by the coast, lakes, rivers and canals. The mostly American literature on the value attributable to having water in the vicinity of one's home suggests that various externalities increase or decrease the attractiveness of a given location, and thereby bring a positive or negative added value to property prices, depending on a number of factors in relation to water proximity, view, water quality, and flood risk. We argue that this literature falls short as the studies do not fit well with the Randstad circumstances. Furthermore, even for studies where comparable effects are identified any generalizations are difficult, particularly with the proximity variable.

The role of water in the locational bundle of residential value and choice determinants is multiple. Relevant attributes pertain to water quality, proximity and length of water frontage, view, size of water body, coastal development costs, and costs caused by flooding. They also pertain to different types of water: the sea, lake, river and so on. This is a systematic literature review of the influence of water proximity and use factors on property prices and area attractiveness within a spatial cost-benefit setting. According to the studies that were reviewed the composite effect for water quality, proximity and view generate a price premium up to ca 60% for seaside property, 25% for lakeside property, and up to 40% for a variety of other inland water bodies. In addition, few studies estimate the on-site potential for a coastal area with development restrictions as a net effect of the positive amenity benefits and negative opportunity costs to vary in the range from +21.5 to -14.5%. On balance these figures point to substantial benefits of water location. However, the price impact of flood risk was quantified separately as up to 22%, and may be deducted from these figures, given a localised tendency for such hazard. Thus, it may be concluded that for the attractiveness potential of a site the environmental externalities play a large role. Furthermore, when allocating housing claims spatially using an operational model where all land uses are covered extra costs to overcome conflict and scarcity situations may arise.