Episode 24: The Hidden Benefits of Water Recreation with Dr. Yusuke Kuwayama
4:18PM Jul 23, 2022
Speakers:
Dr. Ian Anson
Campus Connections
Sophia Possidente
Dr. Yusuke Kuwayama
Keywords:
umbc
quality
water
home
hedonic
study
economists
recreational
research
people
benefits
fishing
property
prices
paper
liberal arts education
regions
bodies
question
chesapeake bay
Hello and welcome to Retrieving the Social Sciences, a production of the Center for Social Science Scholarship. I'm your host, Ian Anson, Associate Professor of Political Science here at UMBC. On today's show, as always, we'll be hearing from UMBC faculty, students, visiting speakers, and community partners about the social science research they've been performing in recent times. Qualitative, quantitative, applied, empirical, normative. On Retrieving the Social Sciences, we bring the best of UMBC's social science community to you.
It's another summertime episode of Retrieving the Social Sciences and even as I consider it a great privilege and a source of enjoyment to bring you some of you UMBC's most interesting research week in and week out, you know, I can't help but find myself thinking about getting a little vacation time. The heat and humidity of a Maryland summer always seems to cry out for one thing and one thing only in my mind: some time on the water. All throughout our chilly winters I fantasize about swimming, boating, fishing, enjoying the best of our beaches, our estuaries, and of course, the Chesapeake Bay. Today's featured researcher spends a lot of time thinking about these topics, but not just because he enjoys the water like I do. Dr. Yusuke Kuwayama is an Assistant Professor in the UMBC School of Public Policy and a fellow at Resources for the Future in Washington, DC. Not only that, but Dr. Kuwayama also currently serves as Director of the Consortium for the Valuation of Applications Benefits Linked with Earth Science, or VALUABLES. You know, we love acronyms here at UMBC, and that is a really good one. Anyway, Dr. Kuwayama's research focuses on the economics of water resource management. And in our recent conversation, Dr. Kuwayama discusses a recent study on the subject that was published in the prestigious Journal of Public Economics in 2022. It's a fascinating study, and I'm excited to bring you the interview right now.
All right, joining me today is Dr. Yusuke Kuwayama of the School of Public Policy at UMBC. Dr. Kuwayama, thank you so much for agreeing to be on the podcast today.
Thanks for having me, Ian. It's great to be here.
Awesome. So my first question to you is really just to think broadly about the topic of this research that we're discussing today. I'm interested in what got you interested in the topic of water quality. Why do we care about this?
Yeah. So sort of, yeah, big picture. The reason why I became interested in studying water quality from from an economist's perspective, I'm trained as an economist and study, use that frame to study a variety of environmental issues, but water quality is one of them and specifically, it's water quality in rivers, streams, lakes, coastal areas, so what we call ambient water quality, so not so much drinking water quality, which is sort of a separate set of issues regulated by a separate set of policies. Yeah, mostly the kind of water quality that we care about when we go for water based recreation, right? Kayaking or swimming or boating. If we go to the beach, or for fishing, right, recreational fishing, we care about the water quality at the water body where we are undertaking that fishing. So the reason why I got interested in that topic has to go back to my liberal arts education as an undergraduate at Amherst College where I was studying to become an ECON major, but I took a geology class, because under these liberal arts curricula, you're encouraged to kind of take a diverse set of topics. I happened to have a geology professor who spent quite a bit of time talking about water quality, and teaching us the hydrology and pollution aspects of water. And so that really got me fascinated sort of a fairly early stage on water quality issues. And more recently, I had this opportunity to work with two great collaborators, Sheila Olmstead from the LBJ School of Public Policy at UT Austin, and Jiameng Zheng, who is a postdoc currently at the University of Illinois in the business school, to take a, again on economic framework to understanding the water quality in particular the benefits of water quality, right, the kinds of benefits that I was just talking about earlier. We value water quality because it is nice to swim, boat, fish in clean water.
I really appreciate, first of all that plug for a broad based liberal arts education. That's a really important thing, I think and I hope students who are listening are, you know, taking to heart that that's a really nice way to get some some new interests and to develop your a sort of, you know, broad, you know, researc, research interest and approaches. And I also want to mention, you know, so we had Dr. Maria Bernardo del Carpio on the podcast, actually, ago who was talking about water. But again, as you mentioned, a very different sense, right? We had, Dr. Bernardo del Carpio's research has focused more on the provision of water that we might use to drink and bathe in and that, that kind of thing. But of course, as you're saying, right water, it can be used for a variety of different purposes, and it's kind of nice to think that, you know, here during the summer months, right, we can think a little thematically about all the fun things that we might do recreationally with water, like boating and swimming and, and fishing, right. And, you know, as we start thinking about this article, obviously, that you've written with these two fantastic co authors, I wanted to think a little bit about this, this term that sort of appears early in the paper, this hedonic property model, right. So could you break this down for us, for our listeners, what is this this model? And how does this research go beyond what those previous papers that may have asserted that kind of model? How does this how does this take us beyond that, that original model?
Yeah, I think that's a fundamental question that motivates our paper. So heconic analysis is, broadly speaking, a tool that economists use to try to decompose the contributors of value to something, a good a service, something that we enjoy, like water quality. So these things have different attributes that we enjoy, right, and value. And hedonic analysis is a methodology that helps us quantitatively decompose, what at these attributes independently contribute to the total value of these things. And so in the context of valuing water quality, but also other environmental amenities, such as air quality, or access to parks, access to good views, these things that we value about improved environmental conditions, we use hedonic analysis, often by looking at the prices of homes. So as homes, properties get sold, the transaction prices, right, the sale prices are recorded, usually in tax assessing agencies of various jurisdictions, and so that those data are there. And we can also have information about what those homes are like, right? So how many bedrooms they have, what's the square footage, what's the lot size, and we know, right, especially those of us who have who have purchased a home before, that you know, all of these things relate directly to the sale price of a home, right. But the theory behind the use of hedonic analysis in placing a value and water quality is that it to the extent that the location of that home also provides access to water based recreation, and water based amenities, that the quality of the water is actually also captured in the value of the home and the sale price of the home. And the idea being that if you have two homes that are exactly the same, right, the same number of bedrooms, the same square footage, but one is close to a lake that is kind of dirty and full of algae and you know, not really pleasant to you know, actually recreate in or you know, be near. And another home again, exact same home same attributes, except that it is located in a much next to a much cleaner water body. The idea behind hedonic analysis is that we should see a higher sale price for that home and near the clear, cleaner water body. And over, over time, economists have shown that that is indeed the case, by conducting many hedonic analyses that home prices do capture the value of improved water quality near these homes.
That's really interesting. And, you know, obviously, this being a UMBC podcast, I'm reminded a little bit of, you know, the areas near the Inner Harbor and Baltimore City, right. Back in the day, you know, the harbor was filthy, right, it was full of industrial runoff and pollutants and you think about a neighborhood like Canton, for example, that was right there near the port. You know, you had almost waterfront access there, but those home values were very low because nobody wanted to live near the harbor because it smelled terrible. And now, you know, we could imagine that the property values in those areas have you know, maybe increase tenfold relative to what they were in the 1950s or so or 1970s. So yeah, I think that's that's a really interesting, you know, theory as applied you know, perhapse even to the kinds of home prices that we might see in certain areas of Baltimore City. But obviously, in this paper, you're taking us beyond that, that theory, and we're seeing that there's something else, there's something else going on in terms of water quality, and how people appraise, right, various places to live, right. So tell us a little bit more about that.
Right. So the key innovation in this paper, which was put forth by another paper that was published maybe a little over 10 years ago, but it only sort of put forth the this innovation in theory and hadn't tested the theory using data on property prices and observed changes in water quality near these properties. The innovation is that, in the past, when economists have conducted hedonic analyses to quantify the value of improved water quality, they looked at water quality and water bodies very close to the homes for which they had sales data. So typically one kilometer radius, for example, around a property. So you know, specifically what these economists do is to you know, find a property for which we know its sale price, draw a one kilometer radius circle around it, and calculate the average water quality and water bodies within that circle, right and say, okay, this is the water quality that's associated with this home. And any fluctuations in the water quality associated with this home, we hope to be able to see fluctuations in the in the home price, and that is sort of how we back out the contribution of water quality to the price of the home, and therefore the value that people place on water quality, right. Now, the sort of the theory that we were working with was that people who purchase homes probably don't only value water quality in these water bodies that are very close to their homes, right. And in particular, in some regions, including sort of the general Chesapeake Bay Area, that sure people do, you know, would prefer to have water bodies that are very clean right near their home. But when thinking specifically about recreation, people can travel a fair distance from their home in order to enjoy a day at the beach, or a day, a fishing day, right? A kayaking day. And so just looking at water quality within these one kilometer circles around the properties may not capture sort of the broader regional benefits of improved water quality, right. So to kind of go back to your example, you know, if you live in parts of Baltimore City, right, that are close to water bodies, sure, those water bodies will, the quality of the water in yhose water bodies will be important to you, you will have a value for them. But you probably, you know, hop in your car and drive, you know, an hour away to a beach along, along the bay or, you know, fishing in other parts of the bay, right. And so, and it's, you know, especially in regions like Chesapeake Bay, where we've had significant improvements in water quality regionally over time, right, you would expect that some of those recreational benefits, the added recreational benefits are captured in home prices as well. But it's a little trickier to capture those benefits, right? Because now we can't just draw these one kilometer circles around the properties and average the water quality changes within those circles, we actually need to understand where people go, in order to recreate on water bodies, right? Where do they go for their fishing trips? Where do they go for the day at the beach? The way we handle that in this paper is to look at a completely different source of data, right. So in addition to the property, sales data, and the water quality data near the these property sales, we examined data on where people go, and we focus, particularly on fishing trips.
I was gonna ask you a little bit more about this, this this survey instrument, right? Because I think, you know, from your description of this, this innovation in this theory, you really get the appreciation for why maybe you know, papers in the past wrote about this and said, Hey, we need to think about this angle. And yet, it was not something that people were able to bring into the empirical data analysis world because, you know, creating a methodology to appropriately measure these things is really hard. But what you're describing here is a super interesting survey instrument that that maybe gets us closer to the answer right and so, so your team was able to conduct surveys at fishing, places where people fish, is that correct, or?
Well, we actually used so yeah, two caveats about that. The first is we use of existing survey, has been around for a while. It is administered by the National Oceanic and Atmospheric Administration, NOAA, a federal agency. And it's a recreational angler survey that its, has been conducted over many years. And so in this data set we're actually able to observe where anglers decide to recreate and where they come from over a longer period of time. So so we didn't conduct the survey ourselves, it was an existing survey. And this survey has been used by previous researchers to to understand recreational behavior of individuals. The other caveat is that economists have developed a fairly large literature looking at these kinds of survey based data on where people decide to recreate and go for recreational fishing trips, in particular, and use that information also to understand the value of water quality. So the theory behind this these kinds of analyses, and they're typically referred to as recreational demand studies, they, this information of where the anglers come from, is really important. Because the idea is that if there is a great place to go fishing, people are going to come from farther away, in order to go fishing there. Right, right. And, you know, one of the key attributes of a great fishing day is that the water is very clean. So you know, that's sort of the, the basis behind these kinds of recreational demand studies. And again, the where the value of the water quality improvement comes from is trying to understand how much or more are people willing to give up in order to go to a fishing site with improved water quality, right, and what they are giving up is time. It takes more time to get to that location that's farther away, but we were able to observe that people are willing to give up this additional time in order to go to a cleaner fishing site. Gas as well, right, you know, especially these days, you incur more costs in gas and wear and tear on your vehicle, and so on in order to access these sites. And so they're the costs to travel that you sort of trade off between. So those travel costs and the improved value, the higher value that you place, in fishing at these improved water quality sites. And so that's a separate methodology. And again, it's been used by economists in the past, again, to place a value in water quality, but those sets of studies never tied that understanding of recreational behavior to property prices. So the innovation behind the theory that we kind of rely on to do the data driven study in this in this article that Sheila, Jiameng, and I worked on was to look at properties again, and their sale prices, but also tie these properties to the recreational behavior of people who live in the general area of these properties. So then we're able to capture not only the value of improved water quality, and water bodies that are very close to homes, but also improvements in water quality and fishing sites that are typically visited by residents in the vicinity of those homes.
Wow. So it's a far more sophisticated kind of spatial analysis in that sense, in that it's capturing not just the physical physically proximate stuff, but the places where people in a community might talk to one another and say, Oh, hey, you know, it's fairly easy to go from here to there. You know, you have you have this, this, this fishing area, within, you know, reasonable, I guess, driving distance, right, or what people might consider to be reasonable driving distance. And so that's another perk of living in this area. So go ahead, and, you know, increase the value or the price of your home when you sell it by a little bit, I guess. Right. Yeah. This is an attractive place for for the recreational amenities that are not just right next to you, but in the area, right.
Yeah. So yeah, the bottom line is we're, we we've implemented a strategy and this research to be able to quantify different dimensions of the benefits of water quality that we can observe being capitalized into the value of homes. And again, if you think about, you know, significant improvements, kind of at the regional level and water quality in places like Chesapeake Bay, but also our study site in this article, Tampa Bay, you would expect that housing markets will react to a certain extent to you know, the significant improvements in water quality, which is the better place to live because it's a better place to have water based recreation.
Yeah, and I mean, this has a policy dimension to in some sense, right. I mean, if I were to go to my local, you know, city council or something, I might be able to point to this and say, Look, you know, prioritize the, you know, regional water quality, because this is going to have a material benefit, you know, for everyone potentially, in an area, right. Is that, does that seem like a reasonable conclusion to draw from this?
Yeah, I think you hit the nail on the head there, and, you know, it's the reason why we really excited about the results from this research is that it is highly policy relevant. And, you know, economists, a good chunk of what they do is to try to place dollar values on these kinds of things that are very hard to value, like improvements in water quality. And the reason why is not not just for the sake of putting attaching dollar values to things, but there are policy implications, right. And it is, in many cases, very costly to implement these regional improvements in water quality, you have to retrofit wastewater treatment plants, you might have to subsidize reductions in pollution from agricultural operations. These things cost money, right. And so when it comes to understanding whether those costs were worth it for society, it's good to have monetized estimates of the benefits of having incurred those costs, right. And then that is what this paper does. And you know, by capturing more than one dimension of the societal benefits of water quality, we do find that the benefits are larger than just purely hedonic studies that don't account for, explicitly account for recreational behavior and water bodies that are farther away. We do we do find larger benefit estimates. And so we're hoping that this could contribute to the body of evidence that increasingly shows that these investments in improved ambient water quality were were worth it, were cost effective.
Yeah, well, it sounds like the study itself was well worth it. And I wanted to ask you very briefly. So what's next for this topic? What are you going to be doing in the future, if anything, on the subject of water quality?
Yeah, so we hope to be able to get some additional funding in order to replicate the study in other regions. So this published article, the data were sourced from the Tampa Bay area. So we were looking at property sales in the three counties in the Tampa Bay region, and recreational behavior of people who live in that region. We expect the approach to be illuminating for other regions as well, but perhaps in different ways, right. So one of the alternative regions were hoping to study as Long Island Sound. And so different kinds of housing markets, different kinds of water quality benefits, right. A different history to the benefits of water quality there. And then we're also hoping to look at Puget Sound on the West Coast. And then sort of the Galveston Bay Area in Texas. So, you know, going from Florida, right, to three completely different regions, and try to see if this method can illuminate and lead to more generalizable lessons about the benefits of water quality improvements across the country.
Wow, that's really exciting. And good luck to you as you continue to work on this project and expand your findings, hopefully, to this diverse set of of settings and places. Before we let you go, Dr. Kuwayama, First of all, thank you so much for agreeing to take the time to talk to us today. I have one last question for you that I always ask everyone who comes on Rectrieiving the Social Sciences, and that is if you have any words of advice, very briefly, for any students out there who are hoping to go pro one day in the social sciences?
Oh, yeah, that's a great question. My advice would be something that kind of goes back to what I was saying at the beginning about the benefits of a liberal arts education. I think, some of the most meaningful and innovative research that we can do in the social sciences now is interdisciplinary. And so you know, typically, as a student you will focus on you know, there'll be in a particular department in a particular program that's driven by a particular set of disciplines, sets of tools and methodologies, and theories. But I think it's, there's a lot of really interesting work to be done that, you know, takes that body of knowledge that you're being trained in, and applying it to an issue, a problem, a question, you know, a puzzle that a different discipline is trying to grapple with. And yeah and so I would encourage students to read outside their comfort zone a bit, or these days there's a lot more that you can do than read, right, you can listen to podcasts (laughs, yeah, sure),you can watch you know videos on YouTube and things like that. But yeah, I think A) there's, it'll be easier to find a marging along which you can contribute as a social scientist to existing body of knowledge. And then you know, if you can find something that is, you know, again outside your discipline, but you can be passionate about it's also gives you some momentum and some energy to pursue the work which is also important in, in in success as a social scientist.
Great advice, a fascinating study. Dr. Kuwayama, thank you again, so much for being here and for describing your research a little bit with us today.
Now it's time for Campus Connection, a part of the podcast where once again, we connect today's feature to the work of others on UMBC's campus. Today, our production assistant Sophia has chosen a very relevant piece that proposes a new wave in water research. See what I did there? Anyway, what have you got for us today, Sophia?
In today's featured segment, Dr. Kuwayama mentioned that nearby water quality and access to waterfront recreation can have an effect on the value of real estate. Coincidentally, the research of Dr. Alan Yeakley, the Chair of UMBC's Geography and Environmental Systems Department, and the subject of this week's installment of Campus Connections elaborates on just that. Dr. Yeakley's 2019 paper, "Urban Stream Restoration Projects: Do Project Phase, Distance, and Type Effect Nearby Property Sales?" examines over 200 restoration projects that took place in the Johnson Creek watershed in Oregon between 1990 and 2014. The study's goal was to answer the titular question: Did these projects affect the selling prices of nearby homes? as well as determining how the results varied based on different factors, including distance from the project site and the types of restorations being performed. The study found that stormwater, floodplain, and revegetation projects had a positive impact on nearby prices, while wetland projects had a primarily negative impact. The paper attributed this to a dominant damaged goods effect, or the negative perception of wetlands in general. The research of Dr. Yeakley and Dr. Kuwayama shows that there is more to a home's value than the plot it was built on, and that there's more to water quality than simply what's under the surface.
Awesome work is always, Sophia, and thanks for highlighting such an intriguing study. Until next time, stay cool, stay hydrated, and I hope you get a chance to spend some quality time recreating with loved ones. Oh, and even while you're boating or fishing or surfing a wave, don't forget to keep questioning.
Retrieving the Social Sciences is a production of the UMBC Center for Social Science Scholarship. Our director is Dr. Christine Mallinson, our associate director is Dr. Felipe Filomeno, and our production intern is Jefferson Rivas. Our theme music was composed and recorded by D'Juan Moreland. Find out more about CS3 at socialscience.umbc.edu and make sure to follow us on Twitter, Facebook, Instagram, and YouTube, where you can find full video recordings of recent UMBC events. Until next time, keep questioning.
