We use hedonic techniques to show that water quality has a significant effect on property
values along the Chesapeake Bay. We calculate the potential benefits from an illustrative
(but limited) water quality improvement, and we calculate an upper bound to the benefits
from a more widespread improvement. Many environmental hedonic studies have almost
entirely ignored the potential for omitted variables bias—the possibility that pollution
sources, in addition to emitting undesirable substances, are likely to be unpleasant …