The effects of ambient water quality and eurasian watermilfoil on lakefront property values in the Coeur d'Alene area of northern Idaho, USA

Abstract

Amenity value of water resources has become a major driving force of recent population growth in the region centered on Coeur d'Alene Lake in northern Idaho, USA. Despite regulatory measures aimed to protect lake water quality, surface water quality is increasingly threatened by lakefront development and invasions of Eurasian watermilfoil (Myriophyllum spicatum), a non-indigenous aquatic plant species. We used hedonic modeling to estimate the effects of ambient water quality and the presence of Eurasian watermilfoil on lakefront property values of single-family homes in the Coeur d'Alene area. We find that property values are positively associated with Secchi depth (a proxy of water quality or clarity), and negatively related to the presence of watermilfoil. Results of spatial regime analysis indicate the geographical variations of these associations. The presence of watermilfoil was related to a 13% decline in mean property value, corresponding to $64,255 USD, on average, lower property sales price. Our study demonstrates that proactive mitigation approaches to cope with potential environmental degradation in lake ecosystems could have significant economic benefits to owners of lakefront properties and local communities.