By Marguerite Huber
Have you ever taken an economics course? If so, you probably studied the concept of “willingness to pay,” or WTP. A person’s willingness to pay for something is the dollar value they have attached to it. For most of us, it’s easy to decide how much we are willing to pay for a car or new home. But what about environmental benefits? EPA researchers are exploring that exact question for green spaces and land development options.
Low impact development (LID) and green infrastructure practices reduce the amount of stormwater running off a particular site. So in places where stormwater runoff has become a significant source of water pollution, the use of these practices has become more necessary. Low impact development benefits and characteristics can include:
- improvement in air quality
- increased natural areas and wildlife habitat
- improved water quality
- aesthetic benefits
- minimized parking lots and other impervious surfaces
- increased access to transit, shared parking, and bicycle facilities
EPA researchers have identified an additional benefit of such practices: increased property values. They and Abt Associates contractors found that property values increase for both new developments and existing properties when located near green spaces associated with low impact development.
The researchers analyzed 35 studies and focused on predicting how much people were willing to pay for small changes in open space. The investigation evaluated the differences in value between open spaces with and without recreational uses.
Results showed that the design and characteristics of a low impact development affects the level of benefits property owners could expect, and that effects on property values declined the farther they are from open spaces. For example, consider a plan that includes a 10% increase in park space or other green space. Property values are projected to increase by 1.23% to 1.95% when located within 250 meters of such a green space, but by 0.56% to 1.2% when located 250-500 meters away. For a homeowner, that could mean a lot of money.
Overall, researchers found that the proximity to and the percent change in open space determined a household’s willingness to pay for low impact open spaces, but it may be site-specific for type of vegetation and recreational use.
Additionally, many states are encouraging developers to use these practices through regulations, incentives, and educational campaigns, so knowing which low impact characteristics maximize the benefits can be useful for policymakers and developers.
You don’t need to have taken an economics course to understand the concept of willingness to pay. It can be applied to the value you place on increased green space and improved water quality. So just how much are you willing to pay for the benefits of low impact development?
About the Author: Marguerite Huber is a Student Contractor with EPA’s Science Communications Team.