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Pricing Radioactive Pollutants: Evidence from the Swedish Housing Market

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  • Fredrik Hansson

    (Singapore University of Technology and Design (SUTD))

Abstract

This paper studies if information on radiation from uranium and radon is capitalized into housing prices and tests if homeowners sort vertically to avoid increased ground-level radiation. Using detailed measurements on the level of radiation, I estimate housing price elasticities with respect to radiation among both single-family detached homes and apartments in multi-story buildings. The results for the single-family homes show that both uranium in the bedrock and indoor radon levels are negatively correlated with the housing price. While the estimates for the single-family homes might be biased due to omitted geographical variables that are correlated with the level of radiation, the capitalization of radiation among apartments in multi-story buildings can be estimated using only within-building variation in the level of radiation. I use building-fixed effects to test for the existence of a vertical pollution price component to the vertical rent curve. Radon gas is heavier than average indoor air and higher concentrations are mostly found on lower floors in areas with high uranium concentrations in the bedrock. Theory predicts that apartments on higher floors will be priced higher relative to the first floor in more polluted areas. The results show that vertical price difference between the first floor and the fifth floor or above is on average 0.7 percent higher due to the uranium in the bedrock while the price effect for the indoor radon measurements is close to zero.

Suggested Citation

  • Fredrik Hansson, 2024. "Pricing Radioactive Pollutants: Evidence from the Swedish Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 69(4), pages 585-620, November.
    • Handle: RePEc:kap:jrefec:v:69:y:2024:i:4:d:10.1007_s11146-021-09885-7
    DOI: 10.1007/s11146-021-09885-7
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