Spatial Discontinuities in Water Rights: Estimating Household Willingness-to-Pay for Unmetered Irrigation Water

House prices capture the value households place on environmental attributes and amenities. Access to an unlimited water right for irrigating lawns in an arid region is a prized environmental amenity. The distribution of this amenity varies across space, and often houses with these water rights are located in neighborhoods that differ substantially from other neighborhoods. This study aims to disentangle these neighborhood differences to identify the value that households place on unmetered water rights for lawn irrigation. Identification relies on a regression discontinuity design exploiting the variation in unmetered water access that occurs based on historical land use and geographic features. By examining houses on the border of the water rights zones, the analysis isolates houses that only differ by their access to unmetered irrigation water, thereby eliminating potentially correlated variation with this access, such as differences in socioeconomic attributes, local tax rates, school quality, and environmental amenities. The findings indicate that households are willing to pay a premium of 2% for access to unmetered irrigation water. This premium is not driven by factors such as lawn greenness or the curb appeal from more heavily irrigated landscapes.