Does an invasive aquatic plant influence lakefront property values? Revisiting the impact of Eurasian watermilfoil using an event study analysis

Abstract

Invasive aquatic plants are associated with substantial economic costs. In North America, a large number of lakes have been invaded by Eurasian watermilfoil (EWM; Myriophyllum spicatum), a species widely reported to reduce lakefront property values by 1–40%. We reassessed the impact of EWM on property values using a causal identification strategy based on an eventstudy framework. This reassessment relied on more than 11,000 lakefront real estate transactions conducted in Québec (Canada) between 2000 and 2023. We tested the hypothesis that EWM exerted a significant negative effect on property values and that this effect was further amplified following media coverage of the invasion. Contrary to findings from studies conducted in the United States, we did not detect a robust or statistically significant effect of EWM on lakefront house prices. Likewise, we did not find a significant price response associated with either the initial detection of EWM or its first mention in a local newspaper. Differences may be explained by limitations in previous studies that relied on hedonic price models without an explicit causal identification strategy. In addition, the potential effect of EWM on prices may be attenuated by strong demand for lakefront properties combined with highly constrained housing supply. Overall, our findings suggest that the effect of invasive aquatic plants on property values reflects a complex buyer–seller decision-making process, particularly in settings where other amenities remain highly attractive to prospective buyers.

Keywords: Eurasian watermilfoil, Event study analysis, Hedonic pricing model, invasive species, lake, Property value.