BA, Oberlin College, 1999, Economics
In my experiment, I am trying to find the value, to Lorain County property owners, of cleaning up the Black River which runs through Lorain County. This study involves a number of property variables, a number of neighborhood variables, and the environmental variables. The hedonic price function takes this general form:
Property Price = c + β1Property Characteristics + β2Neighborhood Characteristics + β3Environmentai Characteristics + u.
This equation says that the price of a piece of property is a function of several things: the characteristics of the property, the characteristics of the neighborhood it's in, and the characteristics of the environment. The slope coefficients β1, β2, and β3 are the hedonic prices of the property, neighborhood, and environmental characteristics, respectively. u represents the combined effect of all the housing characteristics about which I have no information.
I hypothesize that the environmental health of the Black River is a commodity (or source of pleasure) in the housing bundle. At first, one might suspect that the health of a
nearby stream is not considered when purchasing a house. However, recall that water moves in a hydrologic cycle. The Ohio EPA says, "the populations of fish in a river
reflect the overall state of environmental health of the watershed as a whole. This is because fish live in water which has previously fallen on the cities, fields, strip mines,
grasslands, and forests of the watershed." The water and other solutes in the river are products of the land around a river. A river near an urban center that sends off sulfur and
carbon monoxide will have elevated acidity because the rain washes the airborne pollutants into the river. The fish and insects will reflect this increased acidity. Therefore,
the river is a good approximation of the health of the surrounding area.
In order to test this hypothesis, I determine the implicit price of the health of the Black River. In regression
Property Price = c + β1Property (open full item for complete abstract)
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