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The Impact of Hazardous Industrial Facilities on Housing Prices : A Comparison of Parametric and Semiparametric Hedonic Price Models

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  • Céline Grislain-Letrémy

    (INSEE, CREST, Université Paris-Dauphine)

  • Arthur Katossky

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 and in the variations of this impact with respect to the distance from the plants

Suggested Citation

  • Céline Grislain-Letrémy & Arthur Katossky, 2014. "The Impact of Hazardous Industrial Facilities on Housing Prices : A Comparison of Parametric and Semiparametric Hedonic Price Models," Working Papers 2014-13, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2014-13
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    2. Loïc Lévi & Jean Jacques Nowak & Sylvain Petit & Hakim Hammadou, 2022. "Industrial legacy and hotel pricing: An application of spatial hedonic pricing analysis in Nord-Pas-de-Calais, France," Tourism Economics, , vol. 28(4), pages 870-898, June.
    3. Haiyong Zhang & Xinyu Wang, 2018. "The impact of structural adjustment on housing prices in China," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 32(1), pages 108-119, May.
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    5. Liu, Yanan & Tang, Yugang, 2021. "Epidemic shocks and housing price responses: Evidence from China's urban residential communities," Regional Science and Urban Economics, Elsevier, vol. 89(C).
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    7. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    8. Richard H. Rijnks & Stephen Sheppard, 2018. "Occupant Well-Being and House Values," Department of Economics Working Papers 2018-05, Department of Economics, Williams College.
    9. Chuanwang Sun & Xiaochun Meng & Shuijun Peng, 2017. "Effects of Waste-to-Energy Plants on China’s Urbanization: Evidence from a Hedonic Price Analysis in Shenzhen," Sustainability, MDPI, vol. 9(3), pages 1-18, March.
    10. Fan Liu & Min Min & Ke Zhao & Weiyan Hu, 2020. "Spatial-Temporal Variation in the Impacts of Urban Infrastructure on Housing Prices in Wuhan, China," Sustainability, MDPI, vol. 12(3), pages 1-18, February.
    11. Modica, Marco, 2017. "Does the construction of biogas plants affect local property values?," Economics Letters, Elsevier, vol. 159(C), pages 169-172.
    12. Pengyu Ren & Yuanli Li & Kairui You, 2021. "Residents’ Demands for Urban Retail: Heterogeneity in Housing Structure Characteristics, Price Quantile, and Space," Land, MDPI, vol. 10(12), pages 1-17, December.
    13. Zambrano-Monserrate, Manuel A. & Ruano, María Alejandra & Yoong-Parraga, Cristina & Silva, Carlos A., 2021. "Urban green spaces and housing prices in developing countries: A Two-stage quantile spatial regression analysis," Forest Policy and Economics, Elsevier, vol. 125(C).
    14. Hamilton, Timothy L. & Eynan, Amit, 2023. "Siting noxious facilities: Efficiency and majority rule decisions," European Journal of Operational Research, Elsevier, vol. 308(3), pages 1344-1354.
    15. Potrawa, Tomasz & Tetereva, Anastasija, 2022. "How much is the view from the window worth? Machine learning-driven hedonic pricing model of the real estate market," Journal of Business Research, Elsevier, vol. 144(C), pages 50-65.
    16. Guignet, Dennis & Jenkins, Robin R. & Nolte, Christoph & Belke, James, 2023. "The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study," Journal of Housing Economics, Elsevier, vol. 62(C).
    17. Touseef Hussain & Jaffar Abbas & Zou Wei & Mohammad Nurunnabi, 2019. "The Effect of Sustainable Urban Planning and Slum Disamenity on The Value of Neighboring Residential Property: Application of The Hedonic Pricing Model in Rent Price Appraisal," Sustainability, MDPI, vol. 11(4), pages 1-20, February.
    18. Rita Yi Man Li & Herru Ching Yu Li, 2018. "Have Housing Prices Gone with the Smelly Wind? Big Data Analysis on Landfill in Hong Kong," Sustainability, MDPI, vol. 10(2), pages 1-19, January.

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    More about this item

    Keywords

    hedonic analysis; locally weighted regression; urban housing markets; industrial risk;
    All these keywords.

    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

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