Study: Water Quality Boosts Land Value

A new study of lakes in north-central Minnesota shows that clear water can boost the value of lakeshore property, giving property owners and elected officials a new reason to think about land-use and development issues.

Researchers at Bemidji State University calculated how much property values would rise or fall on 37 lakes if water clarity improved or worsened. Water clarity, a measure of how deep you can see into a lake, can be affected by pollution, erosion and other factors such as the removal of shore vegetation.

They examined 1,205 residential property sales from 1996 to 2001 on lakes in the upper Mississippi River watershed. The land values were compared to water quality data for those lakes.

"We concluded that water clarity is very significantly related to the price per foot of lakeshore," said Charlie Parson, a geography professor and co-author of the study. "We have enough lakes and enough parcels to establish that this is a real relationship."

Parson and Patrick Welle, a professor of economics and environmental studies, projected how property values could change if water clarity increases or decreases.

Leech Lake, for example, is clear to a depth of about 10 feet. The study said that if the water got clearer - so that you could see down another 3 feet - a lake property's value would rise by $423 for each foot of frontage. For a 40-foot lakefront lot, that amounts to nearly a $17,000 gain in value.

If the lake's clarity is reduced by more than 3 feet, the study said, it would cut values by $594 per frontage foot. Property values on other lakes would be less dramatically affected by changes in water quality, the study said.

Ten Mile Lake in Cass County, which is clear to nearly 22 feet, would see shore frontage rise an estimated $9 per foot if its water became clearer. Land values would drop by about $11 per foot if the lake lost more than 3 feet of clarity.

Researchers obtained a $100,000 grant from the Legislative Commission on Minnesota Resources to conduct the study. The work was done under the direction of the Mississippi Headwaters Board, a land-use planning group.

Jane Van Hunnik, executive director of the board, said the study could help property owners and elected officials understand that long-term economic value depends on wise decisions about land use.

Lakeshore property is under tremendous development pressure, she said, and builders and landowners change the landscape. Parson said the worst practices include removing trees, native plants and aquatic vegetation in front of the property, "and then mowing everything down to the water and fertilizing the heck out of it."

Total property value around a lake could increase or decrease by millions of dollars, he said. What happens to water quality depends partly on local ordinances related to lakeshore development, he added.

Associated Press

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