IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v49y2014icp93-107.html
   My bibliography  Save this article

The impact of hazardous industrial facilities on housing prices: A comparison of parametric and semiparametric hedonic price models

Author

Listed:
  • Grislain-Letrémy, Céline
  • Katossky, Arthur

Abstract

The willingness of households to pay for prevention against industrial risks can be revealed by real estate markets. By using very rich microdata, we study housing prices in the vicinity of hazardous industries near three important French cities. We show that the impact of hazardous plants on the housing values strongly differs among these three areas, even if the areas all surround chemical and petrochemical industries. We compare the results from both standard parametric and more flexible, semiparametric models of hedonic property. We show that the parametric model might structurally lead to important biases in the estimated value of the impact of hazardous plants on housing values.

Suggested Citation

  • Grislain-Letrémy, Céline & Katossky, Arthur, 2014. "The impact of hazardous industrial facilities on housing prices: A comparison of parametric and semiparametric hedonic price models," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 93-107.
  • Handle: RePEc:eee:regeco:v:49:y:2014:i:c:p:93-107
    DOI: 10.1016/j.regsciurbeco.2014.09.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046214000994
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Daniel P. McMillen, 2010. "Issues In Spatial Data Analysis," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 119-141.
    2. Christophe Bontemps & Michel Simioni & Yves Surry, 2008. "Semiparametric hedonic price models: assessing the effects of agricultural nonpoint source pollution," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(6), pages 825-842.
    3. Farber, Stephen, 1998. "Undesirable facilities and property values: a summary of empirical studies," Ecological Economics, Elsevier, vol. 24(1), pages 1-14, January.
    4. Daniel P. McMillen & Christian L. Redfearn, 2010. "Estimation And Hypothesis Testing For Nonparametric Hedonic House Price Functions," Journal of Regional Science, Wiley Blackwell, vol. 50(3), pages 712-733.
    5. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    6. David M. Harrison & Greg T. Smersh & Arthur L. Schwartz, Jr, 2001. "Environmental Determinants of Housing Prices: The Impact of Flood Zone Status," Journal of Real Estate Research, American Real Estate Society, vol. 21(1/2), pages 3-20.
    7. Anglin, Paul M & Gencay, Ramazan, 1996. "Semiparametric Estimation of a Hedonic Price Function," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(6), pages 633-648, Nov.-Dec..
    8. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    9. 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.
    10. Carroll, Thomas M. & Clauretie, Terrence M. & Jensen, Jeff & Waddoups, Margaret, 1996. "The Economic Impact of a Transient Hazard on Property Values: The 1988 PEPCON Explosion in Henderson, Nevada," The Journal of Real Estate Finance and Economics, Springer, vol. 13(2), pages 143-167, September.
    11. 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.
    12. Gamper-Rabindran, Shanti & Timmins, Christopher, 2013. "Does cleanup of hazardous waste sites raise housing values? Evidence of spatially localized benefits," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 345-360.
    13. Boxall, Peter C. & Chan, Wing H. & McMillan, Melville L., 2005. "The impact of oil and natural gas facilities on rural residential property values: a spatial hedonic analysis," Resource and Energy Economics, Elsevier, vol. 27(3), pages 248-269, October.
    14. repec:dau:papers:123456789/6486 is not listed on IDEAS
    15. Lucas W. Davis, 2011. "The Effect of Power Plants on Local Housing Values and Rents," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1391-1402, November.
    16. 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.
    17. Patrick C. Flower & Wade R. Ragas, 1994. "The Effects of Refineries on Neighborhood Property Values," Journal of Real Estate Research, American Real Estate Society, vol. 9(3), pages 319-338.
    18. Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82.
    19. McMillen, Daniel P & Thorsnes, Paul, 2003. "The Aroma of Tacoma: Time-Varying Average Derivatives and the Effect of a Superfund Site on House Prices," Journal of Business & Economic Statistics, American Statistical Association, vol. 21(2), pages 237-246, April.
    20. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2013. "Do Housing Prices Reflect Environmental Health Risks? Evidence from More than 1600 Toxic Plant Openings and Closings," NBER Working Papers 18700, National Bureau of Economic Research, Inc.
    21. Bartik, Timothy J, 1987. "The Estimation of Demand Parameters in Hedonic Price Models," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 81-88, February.
    22. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    23. Kuminoff, Nicolai V. & Parmeter, Christopher F. & Pope, Jaren C., 2010. "Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities?," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 145-160, November.
    24. Sunding, David L. & Swoboda, Aaron M., 2010. "Hedonic analysis with locally weighted regression: An application to the shadow cost of housing regulation in Southern California," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 550-573, November.
    25. Muriel Travers & Emmanuel Bonnet & Morgane Chevé & Gildas Appéré, 2009. "Risques industriels et zone naturelle estuarienne : une analyse hédoniste spatiale," Economie & Prévision, La Documentation Française, vol. 0(4), pages 135-158.
    26. Peter C. Boxall, Wing H. Chan, and Melville L. McMillan, 2005. "The Impact of Oil and Natural Gas Facilities on Rural Residential Property," Working Papers eg0039, Wilfrid Laurier University, Department of Economics, revised 2005.
    27. Kiel, Katherine A. & Williams, Michael, 2007. "The impact of Superfund sites on local property values: Are all sites the same?," Journal of Urban Economics, Elsevier, vol. 61(1), pages 170-192, January.
    28. Clark David E. & Nieves Leslie A., 1994. "An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values," Journal of Environmental Economics and Management, Elsevier, vol. 27(3), pages 235-253, November.
    29. Redfearn, Christian L., 2009. "How informative are average effects? Hedonic regression and amenity capitalization in complex urban housing markets," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 297-306, May.
    30. Ted Gayer & James T. Hamilton & W. Kip Viscusi, 2000. "Private Values Of Risk Tradeoffs At Superfund Sites: Housing Market Evidence On Learning About Risk," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 439-451, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Modica, Marco, 2017. "Does the construction of biogas plants affect local property values?," Economics Letters, Elsevier, vol. 159(C), pages 169-172.
    2. repec:gam:jsusta:v:10:y:2018:i:2:p:341-:d:129186 is not listed on IDEAS

    More about this item

    Keywords

    Hedonic analysis; Conditionally parametric regression; Urban housing markets; Industrial risk;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:49:y:2014:i:c:p:93-107. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/regec .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.