The value of water as an urban club good

A matching approach to community-provided lakes

Joshua Abbott, H. Allen Klaiber

Research output: Contribution to journalArticle

20 Citations (Scopus)

Abstract

Community-provided urban lakes located in arid environments provide significant amenities to residents but require large quantities of water to maintain lake levels. We use matching techniques to recover the average capitalized value of lakes above the costs of maintenance by comparing transactions in lake communities to observationally similar transactions in surrounding communities. We differentiate between adjacent and non-adjacent houses to recover heterogeneous treatment effects and allow estimates to vary across communities. Importantly, we consider the role of imperfect matching on spatially and temporally varying unobservable variables in our choice of estimator and the appropriate set of potential control properties. Our results suggest that the capitalized value of lakes is heterogeneous with a mean estimate of $6500 an acre-foot. Our results provide estimates of the changes in water prices that would make this form of development unprofitable, illustrating the linkage between water pricing policy and the water intensity of development.

Original languageEnglish (US)
Pages (from-to)208-224
Number of pages17
JournalJournal of Environmental Economics and Management
Volume65
Issue number2
DOIs
StatePublished - Mar 2013

Fingerprint

lake
pricing policy
water
arid environment
amenity
lake level
Water
cost
water pricing
effect
urban community
price
Residents
Estimator
Water price
Linkage
Amenities
Heterogeneous treatment effects
Costs
Pricing policy

Keywords

  • Capitalization
  • Matching
  • Treatment effects
  • Urban lakes
  • Water pricing
  • Water valuation

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Cite this

The value of water as an urban club good : A matching approach to community-provided lakes. / Abbott, Joshua; Allen Klaiber, H.

In: Journal of Environmental Economics and Management, Vol. 65, No. 2, 03.2013, p. 208-224.

Research output: Contribution to journalArticle

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