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A hedonic analysis of the impact of LUST sites on house prices

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  • Zabel, Jeffrey E.
  • Guignet, Dennis

Abstract

Petroleum from leaking underground storage tanks (LUSTs) can contaminate local soil and surface and groundwater. This can pose health risks to the surrounding population. Focusing on single family home sales from 1996 to 2007 in three Maryland Counties, we use a hedonic house price model and a difference–in-difference approach to estimate the willingness to pay to clean up the LUST sites. Particular attention is given to how property values are affected by leak and cleanup activity at a LUST site, the severity of contamination, the presence of a primary exposure pathway (i.e., private groundwater wells), and publicity surrounding a LUST site. The results suggest that although the typical LUST may not significantly affect nearby property values, more publicized (and more severe) sites can decrease surrounding home values by more than 10%.

Suggested Citation

  • Zabel, Jeffrey E. & Guignet, Dennis, 2012. "A hedonic analysis of the impact of LUST sites on house prices," Resource and Energy Economics, Elsevier, vol. 34(4), pages 549-564.
  • Handle: RePEc:eee:resene:v:34:y:2012:i:4:p:549-564
    DOI: 10.1016/j.reseneeco.2012.05.006
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    References listed on IDEAS

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    1. Farber, Stephen, 1998. "Undesirable facilities and property values: a summary of empirical studies," Ecological Economics, Elsevier, vol. 24(1), pages 1-14, January.
    2. Timothy J. Bartik, 2008. "Measuring the Benefits of Amenity Improvements in Hedonic Price Models," Book chapters authored by Upjohn Institute researchers,in: Richard E. Just & Darrell L. Hueth & Andrew Schmitz (ed.), Applied Welfare Economics, pages 643-654 W.E. Upjohn Institute for Employment Research.
    3. Robert A. Simons & William Bowen & Arthur Sementell, 1997. "The Effect of Underground Storage Tanks on Residential Property Values in Cuyahoga County, Ohio," Journal of Real Estate Research, American Real Estate Society, vol. 14(1), pages 29-42.
    4. 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.
    5. 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..
    6. Katherine A. Kiel, 1995. "Measuring the Impact of the Discovery and Cleaning of Identified Hazardous Waste Sites on House Values," Land Economics, University of Wisconsin Press, vol. 71(4), pages 428-435.
    7. Gayer, Ted & Kip Viscusi, W., 2002. "Housing price responses to newspaper publicity of hazardous waste sites," Resource and Energy Economics, Elsevier, vol. 24(1-2), pages 33-51, February.
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    Cited by:

    1. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    2. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Spatial Economics Research Centre, LSE.
    3. Mani Nepal, "undated". "Where gathering firewood matters: Proximity and forest management effects in hedonic pricing models for rural Nepal," Working papers 113, The South Asian Network for Development and Environmental Economics.
    4. Chia-Nung Li & Chien-Wen Lo & Wei-Chiang Su & Tsung-Yu Lai, 2015. "A Study on Soil and Groundwater Pollution Remediation of the Surrounding Real Estate Prices and Tax Revenue Impact," Sustainability, MDPI, Open Access Journal, vol. 7(11), pages 1-13, November.
    5. Linn, Joshua, 2013. "The effect of voluntary brownfields programs on nearby property values: Evidence from Illinois," Journal of Urban Economics, Elsevier, vol. 78(C), pages 1-18.
    6. Balthrop, Andrew T. & Hawley, Zackary, 2017. "I can hear my neighbors' fracking: The effect of natural gas production on housing values in Tarrant County, TX," Energy Economics, Elsevier, vol. 61(C), pages 351-362.
    7. repec:eee:regeco:v:69:y:2018:i:c:p:11-24 is not listed on IDEAS
    8. Ben Hoen & Jason Brown & Thomas Jackson & Mark Thayer & Ryan Wiser & Peter Cappers, 2015. "Spatial Hedonic Analysis of the Effects of US Wind Energy Facilities on Surrounding Property Values," The Journal of Real Estate Finance and Economics, Springer, vol. 51(1), pages 22-51, July.
    9. repec:eee:jeeman:v:88:y:2018:i:c:p:259-282 is not listed on IDEAS
    10. repec:jre:issued:v:38:n:4:2016:p:473_504 is not listed on IDEAS
    11. Guignet, Dennis, 2012. "The impacts of pollution and exposure pathways on home values: A stated preference analysis," Ecological Economics, Elsevier, vol. 82(C), pages 53-63.
    12. 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.
    13. repec:eee:regeco:v:69:y:2018:i:c:p:153-166 is not listed on IDEAS
    14. repec:eee:resene:v:50:y:2017:i:c:p:1-14 is not listed on IDEAS

    More about this item

    Keywords

    LUST; Hedonic analysis; Groundwater contamination; Remediation benefits;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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