PFAS contamination disclosures and declining residential land prices in polluted areas of Japan

Residential land prices are highly sensitive to new information, particularly when pollution disclosures highlight potential health risks. Following the 2020 disclosure of nationwide government survey results, extensive contamination from per- and polyfluoroalkyl substances, or PFAS, commonly known as “forever chemicals,” was revealed, leading to intensified media coverage and heightened public awareness. This study applies a staggered difference-in-differences approach to quantify the impact of PFAS pollution disclosures on Japanese residential land prices. Using property-level panel data from the Land Market Value Publication, we compare treated properties to control properties within varying distance radii. In the 5 km radius analysis, statistically significant average post-treatment declines range from approximately 1.3% when Tokyo is excluded to 2.4% when Osaka and Okinawa, which had received PFAS-related disclosures earlier, are also excluded. Across the distance-buffer specifications, dynamic event-study effects reach approximately 4.4–6.4% by the fourth year after disclosure. Notably, significant price declines emerged only after media coverage intensified around 2023, highlighting the critical role of information salience in translating environmental disclosures into market responses. A heterogeneity analysis suggests that high-value properties tend to exhibit larger and earlier price responses, consistent with buyers in higher-value market segments being more sensitive to environmental risk information. These findings indicate that pollution disclosures can reduce residential asset values, underscoring the economic costs of environmental information disclosure and the need for complementary policy measures to mitigate capitalized losses borne by affected property owners.