In Preparation for Submission

A Valuation of Restored Streams using Repeat Sales and Instrumental Variables

With Charles Towe, H. Allen KlaibeR, and Joe Maher

Urban streams provide tremendous use and non-use value to local stakeholders and distant beneficiaries, alike, and can help mitigate some consequences of climate change such as the proliferation of Harmful Algal Blooms. Due to dense residential development and associated stormwater infrastructure, the services these streams provide are greatly diminished. Efforts to restore these streams are costly and distant benefits are quantifiably challenging, often necessitating calculation of more local benefits in order to pass cost benefit analyses. The capitalization of stream restoration projects in property values presents one of the largest potential benefits and has been studied in the United States and abroad. However, the assignment of restoration to streams has been taken as exogenous, potentially biasing estimates of the impact of stream restoration on property values. We provide the first causal estimates of the capitalization of stream restoration projects on nearby property values in the presence of endogenous stream selection. We find a local average treatment effect of 17% in property appreciation for our most inclusive distance buffer and that ignoring endogenous assignment of restoration leads to bias on the scale of an order of magnitude. These results render stream restoration projects significantly more economically viable.