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The Impacts of Underground Petroleum Releases on a Homeowner’s Decision to Sell: A Difference-in-Differences Approach

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  • Guignet, Dennis B.
  • Martinez-Cruz, Adan L.

Abstract

Actual and perceived damages from environmental disamenities may disrupt a household’s otherwise optimal decision of when to sell their home. This study examines this relatively under-investigated topic with an empirical application to petroleum releases from leaking underground storage tanks, like those commonly found at gas stations. The ubiquity and relative homogeneity of this potential disamenity facilitates a difference-in-differences methodology. The results reveal that the optimal timing of home sales is impacted by leak and cleanup events at these disamenities; leading to both selling sooner and delaying a sale, depending on the event, presence of the primary exposure pathway, and the quality of the home. The implications of these results are discussed.

Suggested Citation

  • Guignet, Dennis B. & Martinez-Cruz, Adan L., 2016. "The Impacts of Underground Petroleum Releases on a Homeowner’s Decision to Sell: A Difference-in-Differences Approach," National Center for Environmental Economics-NCEE Working Papers 280933, United States Environmental Protection Agency (EPA).
    • Handle: RePEc:ags:nceewp:280933
    DOI: 10.22004/ag.econ.280933
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    Keywords

    Environmental Economics and Policy; Resource/Energy Economics and Policy;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • 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
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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