Riparian Buffers and Hedonic Prices: A Quasi-Experimental Analysis of Residential Property Values in the Neuse River Basin

Riparian buffers, the strips of vegetation along banks of rivers and streams, have been proposed as a key instrument to protect water quality in the United States. Riparian buffers impose a restriction on the use of private property limiting harvest and development, but buffers can also provide for aesthetic and recreational benefits that may accrue to property owners. With data from the Neuse River Basin in North Carolina, this study attempts to provide empirical evidence on the effect of a mandatory buffer rule on the value of riparian properties. Spatial autoregressive hedonic models are estimated within a quasi-experimental framework using the imposition of the buffer rule as the treatment and nonriparian properties as a control group. Results indicate that a riparian property generally commands a high premium. We find no evidence, however, that the mandatory buffer rule has had a significant impact on riparian property values when compared with the control group.