The amenity value of constructed wetlands

Abstract

Natural wetlands in urbanised areas provide practical services, including flood control and amenity values such as views, wildlife habitat and recreational opportunities. But cities also construct wetlands to improve flood control and ecosystem services, the value of which might change property prices. This paper reports analyses of property prices that provide estimates of wetlands' localised amenity values in Auckland, New Zealand's largest city. A major challenge is that the selection of sites for wetlands’ construction is not random; amenity value is potentially confounded by property and neighbourhood characteristics that vary across space and over time. We use a combination of repeat-sales models, difference-in-differences and matching models to control for unobserved heterogeneity in property and neighbourhood characteristics. The results indicate that local benefit from constructed wetlands ranges from about 5% to 9% depending on the location of the property in areas adjacent to the wetlands or in a larger catchment of interest. Our results have a causal interpretation if the selection criteria are applied uniformly across Auckland and are valuable in assessing the benefits of constructed wetlands.