Can Red Pay for Blue? Methods to Estimate the Added Value of Water in Residential Environments

As a result of climate changes, more land is now needed in the Netherlands for water retention in towns and the countryside. Recently, this perceived need has resulted in new forms of water management and spatial planning strategies. Multi-functional land use is an option such as housing in combination with retention lakes. Some argue that the market potential is high and that water has an added value in residential environments. This added value could be used to compensate for non-profitable investments such as the creation of lakes. The key question is how to value this amenity. It is argued that non-economists often assume that a valuation is just a technique. The authors challenge this by presenting an overview of economic perspectives as well as techniques. A literature review reveals the main valuation perspectives and suggests estimated added values of 10‐15% for the seashore, 5‐10% for river locations (streams), and 5% for lakes.