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Toxic Assets: How the Housing Market Responds to Environmental Information Shocks

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  • Nicholas J. Sanders

    ()
    (Department of Economics, The College of William and Mary)

Abstract

In 1998, a number of polluting industries, including fossil fuel power plants, were added to the list of firms publicly reporting pollution releases in the Toxics Release Inventory (TRI). This caused a large increase in reported toxic pollution, and a corresponding decrease in median housing prices of 2-3 percent in impacted areas. Contrary to prior findings that TRI information does not influence household actions, I find the additional TRI data caused households to revise priors on ambient pollution levels. This implies that, even with market-based environmental regulation, there remains a role for government as provider of information on environmental conditions.

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Bibliographic Info

Paper provided by Department of Economics, College of William and Mary in its series Working Papers with number 128.

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Length: 53 pages
Date of creation: 11 Dec 2012
Date of revision:
Handle: RePEc:cwm:wpaper:128

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Keywords: pollution; hedonic estimation; Toxics Release Inventory;

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  1. Shanti Gamper-Rabindran & Ralph Mastromonaco & Christopher Timmins, 2011. "Valuing the Benefits of Superfund Site Remediation: Three Approaches to Measuring Localized Externalities," NBER Working Papers 16655, National Bureau of Economic Research, Inc.
  2. Janet Currie & Johannes F. Schmieder, 2008. "Fetal Exposure to Toxic Releases and Infant Health," NBER Working Papers 14352, National Bureau of Economic Research, Inc.
  3. Michael Greenstone & Justin Gallagher, 2005. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," NBER Working Papers 11790, National Bureau of Economic Research, Inc.
  4. Mark Atlas, 2007. "TRI to Communicate: Public Knowledge of the Federal Toxics Release Inventory," Social Science Quarterly, Southwestern Social Science Association, vol. 88(2), pages 555-572.
  5. Hamilton James T., 1995. "Pollution as News: Media and Stock Market Reactions to the Toxics Release Inventory Data," Journal of Environmental Economics and Management, Elsevier, vol. 28(1), pages 98-113, January.
  6. Janet Currie, 2011. "Inequality at Birth: Some Causes and Consequences," NBER Working Papers 16798, National Bureau of Economic Research, Inc.
  7. Linda T.M. Bui & Christopher J. Mayer, . "Regulation and Capitalization of Environmental Amenities: Evidence from the Toxic Release Inventory in Massachusetts," Zell/Lurie Center Working Papers 348, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  8. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
  9. Jon P. Nelson, 1981. "Three Mile Island and Residential Property Values: Empirical Analysis and Policy Implications," Land Economics, University of Wisconsin Press, vol. 57(3), pages 363-372.
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  12. Khanna, Madhu & Quimio, Wilma Rose H. & Bojilova, Dora, 1998. "Toxics Release Information: A Policy Tool for Environmental Protection," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 243-266, November.
  13. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  14. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-63, June.
  15. Felix Oberholzer-Gee & Miki Mitsunari, 2006. "Information regulation: Do the victims of externalities pay attention?," Journal of Regulatory Economics, Springer, vol. 30(2), pages 141-158, 08.
  16. Joshua Graff Zivin & Matthew Neidell & Wolfram Schlenker, 2011. "Water Quality Violations and Avoidance Behavior: Evidence from Bottled Water Consumption," American Economic Review, American Economic Association, vol. 101(3), pages 448-53, May.
  17. Neidell, Matthew J., 2004. "Air pollution, health, and socio-economic status: the effect of outdoor air quality on childhood asthma," Journal of Health Economics, Elsevier, vol. 23(6), pages 1209-1236, November.
  18. Ted Gayer & James T. Hamilton & W. Kip Viscusi, 2000. "Private Values Of Risk Tradeoffs At Superfund Sites: Housing Market Evidence On Learning About Risk," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 439-451, August.
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Cited by:
  1. Alexander Fink & Thomas Stratmann, 2013. "U.S. housing prices and the Fukushima nuclear accident: To update, or not to update, that is the question," ICER Working Papers 04-2013, ICER - International Centre for Economic Research.

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