The Economic Value of Clean Water: Evidence from Three U.S. Coastal Regions

Why would someone pay more for a house because of water quality at a beach miles away? Most of us know that living near clean water is pleasant, but clean water also matters for the places we drive to on weekends to swim, fish, or boat.

October’s Lunch & Learn examines how both local amenity and recreational benefits are reflected in home prices across three U.S. coastal regions: Long Island Sound, Puget Sound, and the Texas Gulf Coast. By combining data on where people choose to go for recreation with data on home sales, we show that coastal water quality affects home prices not only through the benefits of living near clean water, but also through recreational opportunities enjoyed by households living farther from the coast.

We find that both matter in all three regions, and that recreation accounts for roughly a fifth to over half of the value of clean water reflected in home prices. Focusing only on the benefits of living near clean water can therefore overlook a substantial share of its economic value. This talk will also explore how these benefits vary across regions and how this evidence can inform investments in cleaner coastal waters, including along the Texas Gulf Coast.