Water quality and cottage prices in Ontario

Abstract

We use hedonic analysis to show that water clarity has a significant effect on lakefront property values in the Near North Ontario, Canada. In this study, water clarity is measured by Secchi disc reading. Based on two different dependent variables; sales price and sales price per square foot, and the estimation of linear, log–linear and log–log models, we find that water clarity does matter to lakefront property buyers in the Near North, Ontario. In particular, our results indicate that buyers are willing to pay about 2% more for each 1-foot increase in water clarity or Secchi depth. This finding is consistent across all of our specifications.

Keywords:

• Near North Ontario
• Canada
• environment
• water quality
• hedonic regression

JEL Classification:

• Q51
• Q53
• R11

Acknowledgements

We are grateful to John Fincham of REMAX Parry Sound-Muskoka Realty Ltd. Brokerage, located in Magnetawan, Ontario, for assistance with the data.