Economic Analysis of Poorly Sited Septic Systems: A Hedonic Pricing Approach

Abstract

Proper design and quality of soil play an important role in the functioning of soil-based septic systems. Septic systems with traditional leach fields are not suitable for treatment of domestic wastewater in Ohio due to shallow soils. Along with other adverse health effects, untreated or partially treated wastewater could lead to a loss of property valuation. The assessed value of 549 randomly selected properties in Licking County, Ohio was analyzed using hedonic pricing method to isolate the effect of poor site selection on the value of the properties. Results indicate that properties sited on soils that are deemed optimal for wastewater treatment are valued 6.2% to 6.8% higher than those sited on sub-optimal soils. The results from this study would not only help the property owners in making better private decisions regarding installation of septic systems, but would also guide policy decisions that affect public health and common waters.

Keywords: septic systems, soil quality, property valuation, hedonic pricing method

JEL Classification: Q25, R10