What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks
AbstractHedonic property value models are widely used, but are susceptible to omitted variable bias and potentially invalid conjectures regarding the assumed measure of environmental quality. This paper focuses on an application where both are of particular concern: leaking underground storage tanks. I estimate a hedonic model using quasi-experimental and spatial econometric techniques. Similar to previous studies, I examine how house prices vary with distance to the disamenity. This approach yields little evidence that prices are adversely impacted. However, to better measure risks, I utilize home-specific data on correspondence from environmental regulators, and find a 9-12% depreciation when households are well-informed.
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Bibliographic InfoPaper provided by National Center for Environmental Economics, U.S. Environmental Protection Agency in its series NCEE Working Paper Series with number 201201.
Length: 58 pages
Date of creation: Mar 2012
Date of revision: Mar 2012
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hedonic analysis; housing prices; leaking underground storage tanks; LUST; contaminated sites; groundwater contamination; remediation benefits;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-25 (All new papers)
- NEP-ENV-2012-06-25 (Environmental Economics)
- NEP-URE-2012-06-25 (Urban & Real Estate Economics)
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