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Estimation of Perceived Risk and Its Effect on Property Values

  • Jill J. McCluskey
  • Gordon C. Rausser

A dynamic, discrete-time model is estimated in order to analyze the evolution of perceived risk around a hazardous waste site and its effect on property values. Residential property values are modeled as a function of housing attributes and perceived risk from a nearby hazardous waste site using an hedonic-price framework. Perceived risk enters the model as a state equation, which includes a media coverage variable. Results indicate that media coverage and high prior risk perception increase current perceived risk. Increased perceived risk surrounding the hazardous waste site, in turn, lowers property values.

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File URL: http://le.uwpress.org/cgi/reprint/77/1/42
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 77 (2001)
Issue (Month): 1 ()
Pages: 42-55

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Handle: RePEc:uwp:landec:v:77:y:2001:i:1:p:42-55
Contact details of provider: Web page: http://le.uwpress.org/

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