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Thursday, August 24th, 2017

Study: $51M losses for lake property

Algal blooms take toll on values

By Sydney Albert

A lakefront property overlooking Grand Lake is for sale. A recent Ohio State Uni. . .

CELINA - Properties within one-third of a mile of Grand Lake have lost an estimated total of $51 million in value since the first state-issued water advisories were posted in 2009 due to toxic blue-green algal blooms, according to a recent Ohio State University study.
In what authors David Wolf and Allen Klaiber believe is the first study of its kind, data from the housing market were used to estimate the potential housing price losses associated with the toxic algae. Wolf and Klaiber gathered data from properties around Grand Lake, Lake Loramie, Indian Lake and Buckeye Lake and found that overall, house sale prices declined between 11 and 17 percent when microcystin concentration levels surpassed the no-drinking threshold set by the World Health Organization. Prices for properties directly adjacent to the lakes fell by more than 22 percent.
Microcystin is an algal toxin that can harm the liver and cause gastrointestinal symptoms and rashes.
The study says that, given the ongoing efforts to mitigate algal blooms, policymakers must have cost estimates associated with the blooms to better weigh cost-benefit decision making. The Ohio Environmental Protection Agency, for instance, has spent more than $26 million chemically treating and dredging Grand Lake, an amount equal to only about half the estimated housing value losses in the area.
"Part of our enthusiasm for this research is that our findings, to our knowledge, are the first to document real-world costs to homeowners associated with harmful algal blooms," Wolf wrote in an email to the newspaper. "As policymakers grapple with where, when and how to improve water quality, we hope this research will form an important component of their evaluation of potential policy responses."
Going into the project, he and Klaiber expected many of the effects on housing prices to be restricted to properties located along the shoreline, Wolf wrote.
"We were surprised to find such a large effect even for non-adjacent homes," he wrote.
Information was collected from county auditor websites, and only single-family homes were studied. In addition, Wolf and Klaiber tried to account for different variables that could affect housing prices, including seasonal variations in the housing market. Houses with "extreme physical characteristics" were eliminated from the study to prevent outliers, as were houses that were sold more than twice during the same year to prevent potential house flippers from affecting the data.
Of the lakes in the study, Grand Lake and Buckeye Lake were said to be the "dirtiest." The average microcystin concentration levels for both lakes were well above the no-drinking threshold set by the WHO, with Grand Lake's average microcystin level exceeding the WHO's no-contact threshold.
Sales prices were linked to the level of microcystin in the lake around the time the house was sold to accurately measure the effects of algal blooms on the prices. The study estimated the average loss per house around Grand Lake to be $17,335.
The study as a whole also found that even when microcystin levels changed after reaching the no-drinking threshold, housing values didn't rebound, which the study states may be due to residents' perception of the risks of the algal blooms.
"Our conclusion is that homeowners will get the biggest 'bang for their buck' if policies are undertaken that either completely remove algae or prevent algae levels from becoming perceptible in the first place," Wolf wrote. "In the case of Grand Lake, for example, we find little evidence that homeowners are (willing to pay) for policies that move water-quality levels from being very poor to poor. Instead the biggest gains come from moving from a state with some algae to a state with no algae."
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