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Do environmental right-to-know laws affect markets? Capitalization of information in the toxic release inventory

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  • Mastromonaco, Ralph

Abstract

This paper investigates how information contained in the U.S. Environmental Protection Agency's Toxic Release Inventory (TRI) program, one of the largest environmental right-to-know programs, affects prices in the housing market. I use a strengthening of the reporting requirements for the chemical lead in 2001 as exogenous variation to test for housing price changes near existing firms who must now report. Using a difference-in-differences specification, I find that listing an existing firm in the Toxic Release Inventory lowers housing prices up to 11% within approximately 1 mile. The results suggest that housing market participants do capitalize into prices at least some information conveyed by the TRI program.

Suggested Citation

  • Mastromonaco, Ralph, 2015. "Do environmental right-to-know laws affect markets? Capitalization of information in the toxic release inventory," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 54-70.
  • Handle: RePEc:eee:jeeman:v:71:y:2015:i:c:p:54-70
    DOI: 10.1016/j.jeem.2015.02.004
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    References listed on IDEAS

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    1. Kohlhase, Janet E., 1991. "The impact of toxic waste sites on housing values," Journal of Urban Economics, Elsevier, vol. 30(1), pages 1-26, July.
    2. Michael Greenstone & Justin Gallagher, 2008. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 951-1003.
    3. Gamper-Rabindran, Shanti, 2006. "Did the EPA's voluntary industrial toxics program reduce emissions? A GIS analysis of distributional impacts and by-media analysis of substitution," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 391-410, July.
    4. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    5. Shanti Gamper-Rabindran & Ralph Mastromonaco & Christopher Timmins, 2011. "Valuing the Benefits of Superfund Site Remediation: Three Approaches to Measuring Localized Externalities," NBER Working Papers 16655, National Bureau of Economic Research, Inc.
    6. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    7. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    8. Hallstrom, Daniel G. & Smith, V. Kerry, 2005. "Market responses to hurricanes," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 541-561, November.
    9. Linda Bui, 2005. "Public Disclosure of Private Information as a Tool for Regulating Environmental Emissions: Firm-Level Responses by Petroleum Refineries to the Toxics Release Inventory," Working Papers 05-13, Center for Economic Studies, U.S. Census Bureau.
    10. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-863, June.
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    Citations

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    Cited by:

    1. Nicholas J. Sanders, 2012. "Toxic Assets: How the Housing Market Responds to Environmental Information Shocks," Working Papers 128, Department of Economics, College of William and Mary.
    2. repec:gam:jsusta:v:10:y:2018:i:4:p:1114-:d:140098 is not listed on IDEAS
    3. Evan Herrnstadt & Richard L. Sweeney, 2017. "What Lies Beneath: Pipeline Awareness and Aversion," NBER Working Papers 23858, National Bureau of Economic Research, Inc.
    4. Billings, Stephen B. & Schnepel, Kevin T., 2017. "The value of a healthy home: Lead paint remediation and housing values," Journal of Public Economics, Elsevier, vol. 153(C), pages 69-81.
    5. Georgic, Will C. & Klaiber, Allen, 2018. "Identifying the Costs to Homeowners of Eliminating NFIP Subsidies," 2018 Annual Meeting, August 5-7, Washington, D.C. 274444, Agricultural and Applied Economics Association.
    6. repec:kap:enreec:v:69:y:2018:i:1:d:10.1007_s10640-016-0065-8 is not listed on IDEAS
    7. Grant Jacobsen, 2016. "Who Wins in an Energy Boom? Evidence from Wage Rates and Housing," Upjohn Working Papers and Journal Articles 17-271, W.E. Upjohn Institute for Employment Research.
    8. Phaneuf, Daniel J. & Liu, Xiangping, 2016. "Disentangling property value impacts of environmental contamination from locally undesirable land uses: Implications for measuring post-cleanup stigmaAuthor-Name: Taylor, Laura O," Journal of Urban Economics, Elsevier, vol. 93(C), pages 85-98.

    More about this item

    Keywords

    Right-to-know laws; Toxic release inventory; Quasi-experimental; Difference-in-differences; Environmental quality; Hedonics; Risk perceptions;

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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