This paper presents a model for the evaluation of environmental and urban improvements on the islands of the Venetian lagoon. The model simulates the changes in residential real estate values using a value function integrated in a geographical database which provides spatial distributions of values changes. The fairly weak market signals, fragmented demand and strong externalities, and the scarcity of market data available do not permit the use of econometric models for value appraisal. Appropriate hedonic-hierarchical value functions are calibrated on the basis of a set of indicators of the characteristics of the buildings and the location. Some applications of the model are illustrated simulating two scenarios of future interventions which are actually being discussed or realised and involving the island of Murano, Burano and S. Erasmo in the Venice Lagoon. The interventions considered are: subway beyond the lagoon connecting Murano with Venice and the mainland, and the solution of "high water" problems on Murano, Burano and S. Erasmo.

A 1985 historical study of a group of villages and one small town, that lie in the lagoons surrounding Venice.

It is universally recognised that Venice and its lagoon are of such value that they constitute an international public good that must be preserved for humanity as a whole. But such an ambitious task requires a diversified, sustainable set of economic activities, mostly focused on the production of services and non-material goods. This complex issue is analyzed using different approaches, with a discussion of the case of Venice as an example of some of the most relevant problems concerning the relation between the environment and development in the contemporary world: the trade-off between preserving an ecosystem and considering it as an economic resource; the evolution of different urban growth scenarios and the preservation of a physical habitat; the role of immaterial production in urban economic development; the nature of tourism as a sustainable activity, considered from both from the environmental and cultural angles; the institutional aspect of governing a process of sustainable urban development. Readership: A unique resource for environmental and urban managers, policy analysts, students of sustainable development, and anyone else interested in the social and economic implications of preserving one of the most loved and celebrated cities in the world.