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Environmental Liability and Redevelopment of Old Industrial Land

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  • Hilary Sigman

Abstract

Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules -- specifically, strict liability and joint and several liability -- that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15017.

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Date of creation: May 2009
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Publication status: published as Hilary Sigman, 2010. "Environmental Liability and Redevelopment of Old Industrial Land," Journal of Law & Economics, University of Chicago Press, vol. 53(2), pages 289-306, 05.
Handle: RePEc:nbr:nberwo:15017

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  1. Thomas O. Jackson, 2002. "Environmental Contamination and Industrial Real Estate Prices," Journal of Real Estate Research, American Real Estate Society, American Real Estate Society, vol. 23(1/2), pages 179-200.
  2. Tom H. Tietenberg, 1989. "Indivisible Toxic Torts: The Economics of Joint and Several Liability," Land Economics, University of Wisconsin Press, vol. 65(4), pages 305-319.
  3. Austin, David & Alberini, Anna, 1997. "On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs," Discussion Papers, Resources For the Future dp-98-08, Resources For the Future.
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  5. William Harbaugh & Arik Levinson & David Wilson, 2000. "Reexamining the Empirical Evidence for an Environmental Kuznets Curve," Working Papers, Georgetown University, Department of Economics gueconwpa~00-00-07, Georgetown University, Department of Economics.
  6. Howard F. Chang & Hilary Sigman, 2005. "The Effect of Joint and Several Liability Under Superfund on Brownfields," NBER Working Papers 11667, National Bureau of Economic Research, Inc.
  7. Austin, David & Alberini, Anna, 1998. "Strict Liability as a Deterrent in Toxic Waste Management: Empirical Evidence from Accident and Spill Data," Discussion Papers, Resources For the Future dp-98-16, Resources For the Future.
  8. Anna Alberini & David Austin, 2002. "Accidents Waiting to Happen: Liability Policy and Toxic Pollution Releases," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 729-741, November.
  9. Chang, Howard F & Sigman, Hilary, 2000. "Incentives to Settle under Joint and Several Liability: An Empirical Analysis of Superfund Litigation," The Journal of Legal Studies, University of Chicago Press, University of Chicago Press, vol. 29(1), pages 205-36, January.
  10. Stafford, Sarah L, 2003. "Assessing the Effectiveness of State Regulation and Enforcement of Hazardous Waste," Journal of Regulatory Economics, Springer, Springer, vol. 23(1), pages 27-41, January.
  11. Alberini, Anna & Longo, Alberto & Tonin, Stefania & Trombetta, Francesco & Turvani, Margherita, 2005. "The role of liability, regulation and economic incentives in brownfield remediation and redevelopment: evidence from surveys of developers," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 35(4), pages 327-351, July.
  12. Wernstedt, Kris & Alberini, Anna & Heberle, Lauren & Meyer, Peter, 2004. "The Brownfields Phenomenon: Much Ado about Something or the Timing of the Shrewd?," Discussion Papers, Resources For the Future dp-04-46, Resources For the Future.
  13. Kris Wernstedt & Peter B. Meyer & Anna Alberini, 2006. "Attracting private investment to contaminated properties: The value of public interventions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(2), pages 247-369.
  14. Kathleen Segerson, 1994. "Property Transfers and Environmental Pollution: Incentive Effects of Alternative Policies," Land Economics, University of Wisconsin Press, vol. 70(3), pages 261-272.
  15. Nijkamp, Peter & Rodenburg, Caroline A. & Wagtendonk, Alfred J., 2002. "Success factors for sustainable urban brownfield development: A comparative case study approach to polluted sites," Ecological Economics, Elsevier, Elsevier, vol. 40(2), pages 235-252, February.
  16. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, Elsevier, vol. 62(1-2), pages 5-29, October.
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Cited by:
  1. Anna Alberini, 2007. "Determinants And Effects On Property Values Of Participation In Voluntary Cleanup Programs: The Case Of Colorado," Contemporary Economic Policy, Western Economic Association International, Western Economic Association International, vol. 25(3), pages 415-432, 07.
  2. Alessio D'Amato & Massimiliano Mazzanti & Francesco Nicolli & Mariangela Zoli, 2014. "Illegal Waste Disposal, Territorial Enforcement and Policy. Evidence from regional data," SEEDS Working Papers, SEEDS, Sustainability Environmental Economics and Dynamics Studies 0314, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Feb 2014.
  3. Robin R. Jenkins & Elizabeth Kopits & David Simpson, 2006. "Measuring the Social Benefits of EPA Land Cleanup and Reuse Programs," NCEE Working Paper Series, National Center for Environmental Economics, U.S. Environmental Protection Agency 200603, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Sep 2006.
  4. Linn, Joshua, 2012. "The Effect of Voluntary Brownfields Programs on Nearby Property Values: Evidence from Illinois," Discussion Papers, Resources For the Future dp-12-35, Resources For the Future.
  5. Howard F. Chang & Hilary Sigman, 2005. "The Effect of Joint and Several Liability Under Superfund on Brownfields," NBER Working Papers 11667, National Bureau of Economic Research, Inc.
  6. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
  7. Endres, Alfred & Friehe, Tim, 2011. "Incentives to diffuse advanced abatement technology under environmental liability law," Journal of Environmental Economics and Management, Elsevier, vol. 62(1), pages 30-40, July.
  8. Todd K. BenDor & Sara S. Metcalf & Mark Paich, 2011. "The Dynamics of Brownfield Redevelopment," Sustainability, MDPI, Open Access Journal, vol. 3(6), pages 914-936, June.
  9. Telle, Kjetil, 2013. "Monitoring and enforcement of environmental regulations," Journal of Public Economics, Elsevier, Elsevier, vol. 99(C), pages 24-34.
  10. Kjetil Telle, 2012. "Monitoring and enforcement of environmental regulations. Lessons from a natural field experiment in Norway," Discussion Papers, Research Department of Statistics Norway 680, Research Department of Statistics Norway.
  11. Jeffrey Zabel, 2007. "The Impact of Imperfect Information on the Transactions of Contaminated Properties," NCEE Working Paper Series, National Center for Environmental Economics, U.S. Environmental Protection Agency 200703, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jan 2007.

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