Economic Valuation for Coastal Water Infrastructure Planning: Analysis of the Housing Market and Nutrient Pollution in Suffolk County, NY

The waters around Suffolk County, New York, are plagued by water quality concerns from nitrogen inputs, algal blooms, and eutrophication. Meanwhile, waterfront and near-water homes fuel a robust real estate market with many iconic regions, such as the Hamptons. Aging cesspools and septic systems are a paramount concern in the area. With approximately 74% of homes outside sewer systems, several jurisdictions are evaluating approaches to funding retrofits that would improve septic systems and water quality. It is therefore an ideal location to assess the impact that water quality has on home values; this paper investigates property sales near the Long Island Sound, South Shore Bays, and Peconic Estuary System. Results show that water quality has a significant impact on nearby home sales, with the largest effects generally seen nearest to the coastline. These results inform a discussion about potential benefits and costs of widespread septic tank and cesspool retrofitting, which is currently incentivized by grant and loan programs.