The Effect of Ethanol Plants on Residential Property Values: Evidence from Michigan
Since the mid 1990s, ethanol production has increased at an exponential rate. While politicians and the industry have praised the positive effects of ethanol facilities, it is important to explore the potential negative impacts. This study examines one negative effect that is not yet fully understood: the impact ethanol plants have on the value of residential property located near a new ethanol facility. To meet this objective, sales data for residential properties sold between 1999 and 2009 from two ethanol communities in Michigan and the hedonic method are used to evaluate the impact on property values over time and across homes in each community. Conclusions confirm that ethanol plants may have large negative effects, depressing the value of homes as much as 18% and as far as two miles away. However, these results may not be universal as conditions, tastes, and preferences differ across space and time.
Volume (Year): 41 (2011)
Issue (Month): 2 ()
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