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The effects of air quality on housing prices: Evidence from the Aliso Canyon gas leak

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  • Choi, Anna
  • Kim, Pureum
  • Park, Abraham

Abstract

Causal studies on the effect of air quality on house prices, specifically focusing on a large metropolitan area, are rare and difficult to obtain because of potential endogeneity from residential sorting. In this study, we use the Aliso Canyon gas leak as a natural experiment to examine the effect of air quality on housing prices of Los Angeles City. Using a spatial difference-in-differences model, we estimate that houses within the 5-mile radius of the gas well experienced a 8.6% discount in price during the leak, and an additional 13.1% discount after the well was sealed and the air quality was restored. The decrease in price lasted beyond 18 months, with houses closer to the leak suffering higher discounts. We conclude that air quality degradation has a direct and longer term negative impact on house prices.

Suggested Citation

  • Choi, Anna & Kim, Pureum & Park, Abraham, 2023. "The effects of air quality on housing prices: Evidence from the Aliso Canyon gas leak," Journal of Housing Economics, Elsevier, vol. 62(C).
    • Handle: RePEc:eee:jhouse:v:62:y:2023:i:c:s1051137723000530
    DOI: 10.1016/j.jhe.2023.101966
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