At BCS, many of our projects aim to sustain and improve water quality in a community. Whether that’s through a septic elimination campaign or regional sewer district oversight for our clients, we want to be part of the solution to improve Indiana’s water quality. Does the investment in water quality pay off?
Key points in this article:
- In the past, studies have shown a positive correlation between water quality and property values. (Read our concise summary with commentary from 2018.)
- A recent study shows how harmful bacterial blooms from polluted water negatively affect property values across the United States.
- Water quality in a Tax Increment Financing (TIF) district adjacent to or including a water way should be included in the economic development strategy.
Cyanobacterial harmful algal blooms (cyanoHABs) are an environmental and economic issue, affecting residential property values. By analyzing nearly two decades of property sales data near US inland lakes and satellite-derived measures of cyanoHAB frequency in over 2000 large lakes from 2008 to 2011, researchers have estimated the economic costs associated with these blooms. The study reveals that a 10-percentage point increase in the annual occurrence of cyanoHABs can reduce average home values for near-shore properties by 3.5% in the Upper Midwest, 3.8% in the South, 3.3% in the Southeast, and 4.3% in the Northeast.
| Region | Harmful Algal Bloom Impact | Reduction of Property Value |
| Upper Midwest | -3.5% | $7,000 |
| South | -3.8% | $7,600 |
| Southeast | -3.3% | $6,600 |
| Northeast | -4.3% | $8,600 |
Property value assumed to be $200,000 before the 10% increase in blooms in this table.
Source: Zhang, J., Phaneuf, D. J., & Schaeffer, B. A. (2022). Property values and cyanobacterial algal blooms: Evidence from satellite monitoring of inland lakes. Ecological Economics, 107481. https://doi.org/10.1016/j.ecolecon.2022.107481
As reported in Gateway at the end of 2023, Indiana TIF districts totaled 1,372 with over $41.6 billion in incremental assessed value. That is, there has been a reported tax base increase of assessed real estate property values in all of those TIF districts. Poor water quality may reduce the effectiveness of those economic development efforts, limiting the return on investment (ROI) for those local government units such as redevelopment commissions (RDCs). For example, a big bet on a new riverfront district may not pay off as planned if water quality is an issue.
Conclusion
Investment in water quality tends to pay off for communities when considered as part of the whole economic development strategy. Savvy economic development directors and elected officials should seriously consider the downside potential of harmful algal blooms happening in their local and regional water ways, especially near TIF districts. The examples shared in this article are presented for illustrative purposes only. Reach out to BCS today so we can help with your economic development plans and water quality improvement efforts.