External costs of harmful algal blooms using hedonic valuation: The impact of karenia brevis on Southwest Florida

We use a hedonic valuation method to measure the costs of harmful algal blooms to properties in Southwest Florida. Persistent blooms of “red tide” have lasted for over months at a time and can render the appeal of the Gulf Coast useless, usually a valuable amenity to property prices in the area. We study property prices over a sixteen-year period during which, four major blooms plagued the coast. We find property prices within five miles of the coast decline about 10% during a persistent bloom. Property prices also decrease more, in a non-linear fashion as blooms persist for additional months. Our estimate of local costs, although the first of its kind for this region and this type of algae, is similar to those found elsewhere in the literature for different algae across the country. Our results show the importance of mitigation, as counties face tight budgets and must realize the full external costs of these blooms.