The Value of Lake Adjacency in the Context of Dam Removal: A Hedonic Pricing Analysis on the Klamath River, Siskiyou County, California
Authors: Sarah A. Kruse, Ph.D. & Josh Ahmann, Ecotrust
April 2007
Intro
In the United States alone, there are now over 76,000 registered dams (i.e. two meters or higher) and an estimated two million dams of smaller size (Graf 1991). The majority of these dams were built for economic reasons, including hydroelectric power generation, irrigation and water supply, among others. More recently, however, there has been an increasing public interest in dam removal. Several key factors contribute to this growing trend, including: changing social values, increased scientific information on the environmental impacts of dams, and safety issues related with aging structures (Heinz Center 2002).
In many cases, a river has multiple uses benefiting numerous groups of stakeholders, such as, local communities, tribes, farmers, property owners, commercial and sport fishermen, outdoor enthusiasts and conservationists. The impact of dam removal on nearby property values is an issue that to date is neither widely understood nor widely studied. There is considerable uncertainty associated with this topic, and understanding the likely impacts is of critical importance for not only adjacent property owners, but also policy and decision-makers assessing the overall impact of dam removal.
The literature on this issue is limited at best, but preliminary studies in Wisconsin, focused primarily on removal of low-head dams, found that adjacent property values either remained constant or decreased briefly, then regained their entire value by the end of two years (Sarakinos and Johnson 2002). One study concluded that property values may actually increase after a dam removal that leads to improvements in water quality, river ecosystem restoration and/or provides new or improved recreational opportunities (Sarakinos and Johnson 2002). The recommendations of these existing studies suggest the impact of dam removal on property values is best done on a case by base basis, and that what happens in one place will not necessarily hold true in another.
One reason for the limited amount of research on this issue is that a proper analysis of the impacts of dam removal on nearby property values would require evaluation of property values both preand post-dam removal. Ideally, multiple points would be considered post-dam removal in order to assess differences in property values directly after dam removal and at points in time where previously inundated lands had been stabilized, revegetated, and/or developed. To date, few opportunities in the United States have presented themselves where this type of analysis could be conducted.
Given this knowledge, the question remains, whether there is a way to estimate the likely impact of dam removal on property values given the data available pre-removal. In this study we first use a hedonic pricing model to evaluate the current value of varying levels of adjacency to dam created lakes on the Klamath River and then discuss the findings in the context of dam removal.
