Examining the economic impacts of hydropower dams on property values using GIS

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Environmental Valuation & Cost Benefit News covers legal, academic, and regulatory developments pertaining to the valuation of environmental amenities and disamenities, such as clean air, trees, parks, congestion, and noise. We apprise the reader about ways in which costs and benefits are measured, and the results of empirical studies. We hope that this information will allow public and private organizations to comprehend the risks and benefits of various actions, help disputants to resolve conflicts equitably and efficiently, and improve the quality of public policies. We will only discuss issues related to the empirical quantification of private and social costs and benefits and damages, and summarize information from daily newspapers, academic journals, legal publications, court decisions, professional newsletters commissioned studies, and on-line services. This newsletter is dedicated to the principle that all policies place values upon life, liberty, and the pursuit of happiness. We believe that more information, explicit specification of assumptions, and rigorous analysis can help our society to better meet these ends. This site will increasingly serve, in conjunction with others, as a valuation database. We will include a wide range of studies, including non-environmental reports, because omission of a factor effectively values it at zero, and biases decisions. Heavy traffic has caused several site crashes. We are attempting to correct these problems. Apologies for any inconvenience.
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Examining the economic impacts of hydropower dams on property values using GIS

By CostBenefit on Jul 6, 2009 | In Water, Energy, Land + Water, Academic Study/Journal Article, Economic Development and Green Jobs, Floods, Endangered Species, Northeast, Hedonic Analysis, Environmental Economics / Ecological Economics, Costs and Benefits | Send feedback »

Link: http://dx.doi.org/10.1016/j.jenvman.2008.07.026

Abstract:
While the era of dam building is largely over in the United States, globally dams are still being proposed and constructed. The articles in this special issue consider many aspects and impacts of dams around the world. This paper examines dam removal and the measurement of the impacts of dams on local community property values. Valuable lessons may be found.

In the United States, hundreds of small hydropower dams will come up for relicensing in the coming decade. Whether or not the licensees are renewed and what happens to the dams if the licenses expires is a subject of great debate. Dams are beginning to be removed for river restoration and fisheries restoration and these “end-of-life” decisions may offer lessons for countries proposing or currently building small (and large) hydropower dams. What can these restoration stories tell us?

In this paper, we examine the effects of dams along the Penobscot River in Maine (USA) on residential property values. We compare the results to findings from a similar (but ex post dam removal) data set for properties along the Kennebec river in Maine, where the Edwards Dam was removed in 1999.

The Penobscot River Restoration Project, an ambitious basin-wide restoration effort, includes plans to remove two dams and decommission a third along the Penobscot River. Dam removal has significant effects on the local environment, and it is reasonable to anticipate that environmental changes will themselves be reflected in changes in property values. Here we examine historical real estate transaction data to examine whether landowners pay a premium or penalty to live near the Penobscot River or near a hydropower generating dam.

We find that waterfront landowners on the Penobscot or other water bodies in our study area pay approximately a 16% premium for the privilege of living on the water. Nevertheless, landowners pay LESS to live near the Penobscot River than they do to live further away, contrary to the expectation that bodies of water function as real estate amenities and boost local property values. Results with respect to the effect of proximity to hydropower generating plants are equivocal. Homeowners pay a small premium for houses close to hydropower dams in our region, but the statistical significance of that result depends on the specific model form used to estimate the effect.

Consideration of the social and economic impacts of dam removal-based river restoration can complement studies of the ecological impacts of the practice. Such studies help us understand the extent to which human society's subjective perception of value of aquatic ecosystems relates to objective measures of ecosystem health. The paper also illustrates how geographic information systems (GIS) can help inform these analyses.

Keywords: Dams; Dam removal; Hedonic property value analysis; GIS

by Curtis Bohlen and Lynne Y. Lewis both of the Department of Economics, Bates College, Lewiston, ME 04240, United States

Journal of Environmental Management via Elsevier Science Direct www.ScienceDirect.com
Volume 90, Supplement 3; July, 2009; Pages S258-S269
Special Issue: Understanding and linking the biophysical, socio economic and geopolitical effects of dams