Determine whether and which lake amenities and water quality attributes are the most valued features of residential location in the Lake Erie basin using revealed preference methods (hedonic pricing model).
Estimate the demand for water quality and other lake amenities as a function of residential location using stated preference methods (conjoint choice experiment).
Predict how land use policies alter the demand for lakeshore and near lakeshore residential development.
Disseminate the results to policymakers, local and state agencies, and others through OSU Sea Grant and OSU Extension networks.

Previous research has demonstrated that a number of factors are important in influencing the demand for residential development. In a lake-based region there is evidence that proximity to the lake and aspects of lake quality also matter. A number of studies have documented the value that individuals place on particular amenities or changes in amenities associated with coastal areas. Although a substantial body of studies provides ample evidence that lake amenities are valued by individuals, relatively little work has been done to examine how such amenities influence residential housing choices and development surrounding the lake. The studies that do exist generally demonstrate a positive relationship between water quality/lake amenities and residential property values, but none have extended the analysis to consider the implications of these positively valued lake attributes for future development patterns and for lake and land use policies. This research will do both by combining the traditional hedonic model with experiments that will examine various water quality and lake amenity scenarios and that will allow us to extend the analysis to consider these additional questions.

In this research we propose to focus on the linkage between lake quality and residential development and how the lake and the amenities it provides influence the demand for residential housing. Through the use of extensive data available on housing transactions in the Lake Erie watershed, we will estimate the effects of changes in water quality and lake amenities on housing prices over time. By combining the estimated effects of water quality and lake amenities with experimental techniques for assessing individual decisions beyond the scope of the existing market, we will be able to estimate the effects of various current and future policies that affect lake quality and amenities on the demand for residential land. This unique combination of revealed decisions by consumers (housing market transactions) with stated preferences regarding various water quality and lake amenity scenarios (experiments) allows us to provide a more complete picture of the interactions between water quality and lake amenities on one hand and residential development and land use policies on the other.

Results To-date: A preliminary hedonic pricing model has been estimated using housing sales data from 1985-1998 from the seven county region surrounding Lake Erie. This statistical model tests the influence of housing characteristics, location attributes and lake amenities on housing prices. Initial results demonstrate that:

• Proximity to coast increases housing values for houses located within 0.25 miles. WIthin this 0.25 mile zone, the closer a house is to the coastline, the higher the price of the house.
• The fecal coliform count associated with the closest beach to a house has a negative influence on housing values.

The next step is to test the impact of other lake attributes on housing prices, including lake clarity (as measured by secchi depth readings) and erosion of the coastline.