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Gone with the Wind: Declines in Property Values as Harmful Algal Blooms Are Blown Towards the Shore

Abstract

Florida’s Gulf Coast is known as a retirement hotspot, with property values along the coast rising faster than almost anywhere else in the country. However, the coastal amenities that help boost prices, quickly turn to dis-amenities when there is a prolonged red tide bloom in the Gulf. Using a difference in differences hedonic valuation model, we examine six Southwestern Florida counties heavily impacted by four major algal bloom in the past 20 years. We find that affected properties within 1 mile of the coast sell for up to 30% less compared to similar homes sold during the same month in an unaffected county. With red tide predicted to increase in frequency and severity, mitigation of the effects must be paramount for these counties. Losses occur in almost all sectors of the economy, and for a state that relies so much on the health of the environment, declines in property values are a sign that action must be taken against these blooms.

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Correspondence to Andrew Bechard.

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Bechard, A. Gone with the Wind: Declines in Property Values as Harmful Algal Blooms Are Blown Towards the Shore. J Real Estate Finan Econ (2020). https://doi.org/10.1007/s11146-020-09749-6

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Keywords

  • Harmful algal blooms
  • Karenia brevis
  • Red tide
  • Florida Gulf Coast
  • Difference-in-differences
  • Econometrics
  • Hedonic valuation