Valuing Beach Quality with Hedonic Property Models

Abstract

This paper explores the influence of beach quality on coastal residential property values. We hypothesize that beach and dune width provide local public goods in terms of recreation potential and storm/erosion protection, but that this relationship is limited by distance from the shoreline. Our findings support this hypothesis, as extending the influence of beach quality beyond 300 meters from the shore generally results in statistically insignificant parameter estimates. For houses within this proximity bound, high- and low-tide beach width and width of the dune field at the closest beach increases property value. Estimates of marginal willingness to pay (MWTP) range from $421 to $487 ($272 to $465) for an additional meter of high-tide (low-tide) beach, and MWTP for increases in dune width range from $212 to $383 per meter. We argue that interpretation of MWTP for beach quality depends upon individual understanding of coastal processes and expectations of management intervention. If property owners expect beaches and dunes to be maintained either naturally or through management, marginal implicit prices can be interpreted in the conventional manner. If, on the other hand, property owners expect beaches and dunes to degrade over time, MWTP from the hedonic model is an upper bound on true willingness to pay.

Keywords: beach, dune, quality, width, coastal, erosion, hedonic, property value

JEL Classification: H41, Q24