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Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program

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Author Info
Michael Greenstone
Justin Gallagher

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Abstract

This paper uses the housing market to develop estimates of the local welfare impacts of Superfund sponsored clean-ups of hazardous waste sites. We show that if consumers value the clean-ups, then the hedonic model predicts that they will lead to increases in local housing prices and new home construction, as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites. We compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for Superfund clean-ups to the areas surrounding the 290 sites that narrowly missed qualifying for these clean-ups. We find that Superfund clean-ups are associated with economically small and statistically indistinguishable from zero local changes in residential property values, property rental rates, housing supply, total population, and the types of individuals living near the sites. These findings are robust to a series of specification checks, including the application of a quasi-experimental regression discontinuity design based on knowledge of the selection rule. Overall, the preferred estimates suggest that the local benefits of Superfund clean-ups are small and appear to be substantially lower than the $43 million mean cost of Superfund clean-ups.

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Paper provided by Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research in its series Working Papers with number 0620.

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Date of creation: Sep 2006
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Handle: RePEc:mee:wpaper:0620

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Greenstone & Olivier Deschenes, 2006. "The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather," Working Papers 2006.6, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  2. Trudy Ann Cameron & Ian McConnaha, 2005. "Evidence of Environmental Migration: Housing values alone may not capture the full effects of local environmental disamenities," University of Oregon Economics Department Working Papers 2005-7, University of Oregon Economics Department, revised 01 Jan 2005. [Downloadable!]
  3. Olivier Deschenes & Michael Greenstone, 2004. "The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random," NBER Working Papers 10663, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. David S. Lee & Thomas Lemieux, 2009. "Regression Discontinuity Designs in Economics," NBER Working Papers 14723, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  5. Jon H. Fiva & Lars J. Kirkebøen, 2008. "Does the Housing Market React to New Information on School Quality?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  6. Stefan Boes & Stephan Nüesch, 2009. "New Flight Regimes and Exposure to Aircraft Noise: Identifying Housing Price Effects Using a Ratio-of-Ratios Approach," Working Papers 0906, University of Zurich, Socioeconomic Institute. [Downloadable!]
  7. H. Allen Klaiber & V. Kerry Smith, 2009. "Evaluating Rubin's Causal Model for Measuring the Capitalization of Environmental Amenities," NBER Working Papers 14957, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Byron F. Lutz, 2009. "Fiscal amenities, school finance reform and the supply side of the Tiebout market," Finance and Economics Discussion Series 2009-18, Board of Governors of the Federal Reserve System (U.S.). [Downloadable!]
  9. Michael Greenstone & Ted Gayer, 2007. "Quasi-Experimental and Experimental Approaches to Environmental Economics," Working Papers 0713, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
    Other versions:
  10. Lucas W. Davis, 2008. "The Effect of Power Plants on Local Housing Values and Rents: Evidence from Restricted Census Microdata," Working Papers 0809, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
  11. Krupka, Douglas J. & Noonan, Douglas S., 2009. "Neighborhood Dynamics and the Housing Price Effects of Spatially Targeted Economic Development Policy," IZA Discussion Papers 4308, Institute for the Study of Labor (IZA). [Downloadable!]
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