Environmental externalities of urban river pollution and restoration: A hedonic analysis in Guangzhou (China)

The degradation of urban river ecosystems presents a serious threat to sustainable urban development. Consequently, extensive efforts have been devoted to the ecological restoration of urban rivers worldwide. This study evaluates the environmental externalities associated with water pollution and river restoration in Guangzhou in southern China. A basic hedonic pricing model is applied to test hypotheses using a sample of 968 apartment transaction records during July-December 2013. Results show that river restoration could reverse negative externalities of polluted watercourses to positive externalities, especially for those apartments located on the 10th floor or lower. Water quality improvement from polluted non-recreational water (Grade V or worse) to non-body contact recreational water (Grade IV) could increase apartment values by 0.9%. River restoration (including river bank greening and water quality improvement) could increase property values by 4.61%, demonstrating a preference of Guangzhou residents for greening riverscapes. This study could hopefully provide a scientific basis for urban river governance for communities and decision-makers, and serve as a reference case to elucidate human preferences about river restoration in rapidly developing countries.