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The Effect of Ethanol Plants on Residential Property Values: Evidence from Michigan

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  • Hodge, Timothy R.

Abstract

Since the mid 1990s, ethanol production has increased at an exponential rate. While politicians and the industry have praised the positive effects of ethanol facilities, it is important to explore the potential negative impacts. This study examines one negative effect that is not yet fully understood: the impact ethanol plants have on the value of residential property located near a new ethanol facility. To meet this objective, sales data for residential properties sold between 1999 and 2009 from two ethanol communities in Michigan and the hedonic method are used to evaluate the impact on property values over time and across homes in each community. Conclusions confirm that ethanol plants may have large negative effects, depressing the value of homes as much as 18% and as far as two miles away. However, these results may not be universal as conditions, tastes, and preferences differ across space and time.

Suggested Citation

  • Hodge, Timothy R., 2011. "The Effect of Ethanol Plants on Residential Property Values: Evidence from Michigan," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 41(2), pages 1-20.
    • Handle: RePEc:ags:jrapmc:133348
    DOI: 10.22004/ag.econ.133348
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    2. Rivera, Nathaly M. & Loveridge, Scott, 2022. "Coal-to-gas fuel switching and its effects on housing prices," Energy Economics, Elsevier, vol. 106(C).
    3. Liu, Bing & Hudson, Darren & Farmer, Michael, 2015. "The Impact of a Sorghum-Based Ethanol Plant on Local Cotton Acreage: A Spatial Approach," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229799, Southern Agricultural Economics Association.
    4. Pender, John L. & Marre, Alexander W. & Reeder, Richard J., 2012. "Rural Wealth Creation Concepts, Strategies, and Measures," Economic Research Report 121860, United States Department of Agriculture, Economic Research Service.
    5. John L. Pender & Jeremy G. Weber & Jason P. Brown, 2014. "Sustainable Rural Development and Wealth Creation," Economic Development Quarterly, , vol. 28(1), pages 73-86, February.
    6. Guoying Deng & Manuel A. Hernandez & Shu Xu, 2020. "When Power Plants Leave Town: Environmental Quality and the Housing Market in China," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(4), pages 751-780, December.

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