How do changes in property values and local real estate taxes fit into this discussion?
In addition to the “expenditures impact,” an environmental improvement project can affect the value of real estate in a local region and therefore alter the tax base and level of real estate taxes collected. Like the increased market activity that generates more revenue to local businesses and jobs to local inhabitants, increased tax revenues may be a strong incentive for a community to support an environmental project. However, like the “expenditures impact” of a project, these tax revenues do not measure the value of the project from a societal prospective (that is, it would not be a component of benefits in a cost-benefit analysis). There is, however, a component of these changes in real estate values that does measure part of the economic value of the project: the increase in the property value itself. If the project makes a lake or region more desirable to live in, then people will be willing to pay more for homes in the area than they would be in lieu of the project. This increas
