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A hedonic analysis of the impact of LUST sites on house prices

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  • Zabel, Jeffrey E.
  • Guignet, Dennis

Abstract

Petroleum from leaking underground storage tanks (LUSTs) can contaminate local soil and surface and groundwater. This can pose health risks to the surrounding population. Focusing on single family home sales from 1996 to 2007 in three Maryland Counties, we use a hedonic house price model and a difference–in-difference approach to estimate the willingness to pay to clean up the LUST sites. Particular attention is given to how property values are affected by leak and cleanup activity at a LUST site, the severity of contamination, the presence of a primary exposure pathway (i.e., private groundwater wells), and publicity surrounding a LUST site. The results suggest that although the typical LUST may not significantly affect nearby property values, more publicized (and more severe) sites can decrease surrounding home values by more than 10%.

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Bibliographic Info

Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 4 ()
Pages: 549-564

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Handle: RePEc:eee:resene:v:34:y:2012:i:4:p:549-564

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Web page: http://www.elsevier.com/locate/inca/505569

Related research

Keywords: LUST; Hedonic analysis; Groundwater contamination; Remediation benefits;

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References

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  1. Gayer, Ted & Kip Viscusi, W., 2002. "Housing price responses to newspaper publicity of hazardous waste sites," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 33-51, February.
  2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  3. Robert A. Simons & William Bowen & Arthur Sementell, 1997. "The Effect of Underground Storage Tanks on Residential Property Values in Cuyahoga County, Ohio," Journal of Real Estate Research, American Real Estate Society, vol. 14(1), pages 29-42.
  4. Timothy J. Bartik, 1988. "Measuring the Benefits of Amenity Improvements in Hedonic Price Models," Land Economics, University of Wisconsin Press, vol. 64(2), pages 172-183.
  5. Katherine A. Kiel, 1995. "Measuring the Impact of the Discovery and Cleaning of Identified Hazardous Waste Sites on House Values," Land Economics, University of Wisconsin Press, vol. 71(4), pages 428-435.
  6. Farber, Stephen, 1998. "Undesirable facilities and property values: a summary of empirical studies," Ecological Economics, Elsevier, vol. 24(1), pages 1-14, January.
  7. Kohlhase, Janet E., 1991. "The impact of toxic waste sites on housing values," Journal of Urban Economics, Elsevier, vol. 30(1), pages 1-26, July.
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Cited by:
  1. Linn, Joshua, 2013. "The effect of voluntary brownfields programs on nearby property values: Evidence from Illinois," Journal of Urban Economics, Elsevier, vol. 78(C), pages 1-18.
  2. Muehlenbachs, Lucija & Spiller, Elisheba & Timmins, Christopher, 2013. "The Housing Market Impacts of Shale Gas Development," Discussion Papers dp-13-39, Resources For the Future.
  3. Dennis Guignet, 2013. "What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks," Land Economics, University of Wisconsin Press, vol. 89(2), pages 211-226.

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