The Value of Beach Quality Using the Hedonic Pricing Model in Galveston, Texas
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Date
2016-05-04
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Abstract
The hedonic pricing method is employed to estimate the value of quality beaches, including features such as beach width, presence of dunes, dune width, and proximity to a beach access point. Using the residential housing transaction data on Galveston Island from 2000-2014, and data on beach quality attributes, the implicit price associated with good quality beaches is revealed through the households’ marginal willingness to pay for increased beach width. The results from this thesis indicates that the marginal willingness to pay for Galveston beaches, on average, is $161 per foot of beach. Thus for the average beach width of 124 feet, homeowners are willing to pay approximately $20,000. Given the sample size of 11,701, the total welfare derived from 1 foot increase of Galveston beaches is estimated at $1,883,861. The regression results also indicate that the MWTP per 1 foot of increased dune width is, on average, $229. This estimated MWTP yields a total welfare of $2,690,832 for a one foot increase of dune width.
Estimates of welfare measures associated with quality beaches represent an important component in benefits-costs calculation related to beach creation and nourishment policy. Beach nourishment projects are likely to continue due to frequent storms, projected sea level rise, and erosion impacting the quality of beaches in the Galveston area. This thesis aims to fill the research gap concerning benefits of beaches and nourishment projects to the residential housing market in Galveston.
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Hedonic Model, Environmental Valuation, Beach Quality