Hedonic price functions were estimated to determine the impact of degraded water quality on the value of seasonal homes adjacent to St. Albans Bay on Lake Champlain in northern Vermont. A rating of water quality and a zero-one location variable were used as alternative specifications of water quality. Degraded water quality of the bay had depressed adjacent property values by $4,500 on the average, or about 20 percent, compared with similar nearby properties on the larger but cleaner lake.