Can Red Pay for Blue? Methods to Estimate the Added Value of Water in Residential Environments

Abstract

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.

The Value of Proximity to Water in Residential Areas

“…Moreover, while waterfront locations are particularly valuable, price effects are found to be present in distances of one mile. Goetgeluk et al (2005) conclude that the added value of water in residential environments is highly context-dependent. However, although most studies used housing and neighborhood characteristics as control variables in the hedonic analysis, omitted variable bias could still provide explanation to the differences in estimated results (as was shown in (Cho et al, 2006;Anderson and West, 2006)).…”

El cambio de los usos agrarios del suelo en el actual ámbito metropolitano de Barcelona (del siglo XVIII a la actualidad)

“…Finalmente, se detecta un creciente rol de la administración ambiental en la toma de decisiones; ésta suele privilegiar los usos forestales a los agrarios, considerados estos segundos más lesivos desde el punto de vista del medio; todo ello puede conllevar en casos extremos planificar la substitución de usos agrarios por forestales u otros como lagunas, parques, etc. (Fleury y Donadieu, 1997;Goetgeluk et al, 2005;Paül, 2006Paül, , 2009.…”

Effect of water features proximity on farmland prices in a landlocked country: the consequences for planning

“…When considering the higher value for parcels of land that in the future will have visual connection with the new water feature or access to water, upon agreement with the landowners it is possible to reallocate parcels within a wider area (Goetgeluk et al 2005) so that the increase in value is reflected in the lands the owners of which financially supported the construction of the new water features, or in the lands the municipality is interested in. Similarly, it is appropriate to interest the stakeholders of lands in the wider vicinity of the water feature in revitalization, in augmenting the capacity of the water feature, and in modifications motivated by enhanced aesthetic quality of the water feature, as this not only increases the value of the water feature itself but also that of the surrounding lands (Mooney & Eisgruber 2001).…”

“…the presence of water features like a river, stream, lake or pond (Acharya & Bennett 2001;Jennings 2007), distance to forest or its proportion in a the vicinity of a parcel (Pukkala et al 1995), value of wildlife habitats or natural resources (Mittenzwei et al 2010), scenic value of the surrounding landscape, or attractive views of the landscape (Mooney & Eisgruber 2001). Practical valuation of a scenic view is mentioned by Goetgeluk et al (2005) in a case wherein the seller of a large property divided it into several smaller ones so that all would have a lake view preserved. In maritime countries, the distance from the seaside or important shore sites as harbours and beaches cannot be overlooked (Rush & Bruggink 2000).…”