Friday, December 9, 2011

Valuing Green Infrastructure in Portland, Oregon
Abstract: This study uses the hedonic price method to examine if proximity, abundance, and characteristics of green street facilities affect the sale price of single-family residential properties in the city of Portland, Oregon. Different methods for measuring proximity and abundance are explored with distance based on street network, and abundance of green streets at the census tract and census block level, producing statistically significant results. Sale prices increase as distance from the nearest green street facility increases although the magnitude of this effect is small. Preliminary results find that older green streets (10 years+), and those with a large number of trees (7 or more), have a positive effect on the sale price of nearby properties.

Over the past 20 years Portland has invested $1.4 billion in physical infrastructure projects to reduce combined sewer overflows. These projects, which are scheduled to be completed in December 2011, will reduce the number of overflows to the Willamette River to an average of four times each winter and once every third summer (Portland Bureau of Environmental Services 2011). Projects are funded, in large part, by Portland’s combined sewer/water bills, which are amongst the highest in the country (Frank 2011). Further rate increases to fund large capital projects may not be politically feasible, so in 2008 the city launched a new strategy, the $55 million “Grey to Green” program, to control stormwater runoff. Program goals include planting 33,000 yard trees and 50,000 street trees, adding 43 acres of ecoroofs, controlling invasive plant species, purchasing over 400 acres of natural areas, and constructing 920 new green street facilities.
Green streets are a low-impact development technique that use “vegetated facilities to manage stormwater runoff at its source” and include curb extensions, street planters, and rain gardens as well as “simple” green streets, which involve changes to existing planting areas between curbs and sidewalks.... Additional benefits attributed to these facilities include increased property values, traffic calming, better bike access, enhanced pedestrian safety, and added green space and wildlife habitat. These facilities “are more cost-effective than piping stormwater to a treatment plant” ...and are increasingly being promoted by city managers as an effective means for controlling stormwater runoff.

While green space and wildlife habitat have been estimated to increase the sale price of single-family residential properties (Donovan and Butry 2010; Mahan, Polasky, and Adams 2000; Netusil 2006), literature examining the relationship between green street facilities and the sale price of single-family residential properties is extremely limited. Ward et al. (2008) estimate that properties located in low-impact development project areas in Seattle, Washington sold for 3.5-5 percent more than properties in the same zip code located outside project areas. Williams and Wise (2009) reach the opposite conclusion finding that lots in Gainesville, Florida with low-impact development stormwater systems are valued less than lots that use conventional approaches.
Home characteristics are of the expected sign and magnitude across specifications—a property’s sale price is estimated to increase at a diminishing rate as lot size and building square footage increase. Additional full and half bathrooms, increases in elevation (a proxy for views), and neighborhood characteristics such as percentage white and median income at the census tract level, are also found to have a significantly positive effect on sale price. Land cover variables on a property and in surrounding buffers are included to avoid omitted variable bias because green streets are often located in areas with a high percentage of impervious surface area.

Tree canopy on a property, and in surrounding buffers, is found to have a positive but diminishing effect on a property’s sale price; water, which is only present in the 200-foot to ¼ mile and ¼ mile to ½ mile buffers, has a large and significant effect on sale price.
The economic magnitude of proximity, however, is small—increasing a property’s distance from a green street by 1,000 feet is estimated to increase its sale price from $430 (1/4 mile street network) to $851 (1/4 mile Euclidean).
The EPA estimates that between $331 and $450 billion of investment is needed over a 20-year period (2000 to 2019) to replace or update the existing sewer infrastructure in the United States.
by Noelwah R. Netusil 1, Zachary Levin 1 and Vivek Shandas 2
1. Reed College, Department of Economics, 3203 SE Woodstock Boulevard, Portland, Oregon 97202
2. Portland State University, Nohad A. Toulan School of Urban Studies and Planning, Portland, Oregon 97201
Association of Environmental and Resource Economists 2011 Summer Conference Seattle, Washington
June 10, 2011
Keywords: low impact development; green streets; hedonic price method; stormwater; Portland, Oregon

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