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What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks

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  • Dennis Guignet

Abstract

Hedonic property value models are widely used, but are susceptible to omitted variable bias and potentially invalid conjectures regarding the assumed measure of environmental quality. This paper focuses on an application where both are of particular concern: leaking underground storage tanks. I estimate a hedonic model using quasi-experimental and spatial econometric techniques. Similar to previous studies, I examine how house prices vary with distance to the disamenity. This approach yields little evidence that prices are adversely impacted. However, to better measure risks, I utilize home-specific data on correspondence from environmental regulators, and find a 9-12% depreciation when households are well-informed.

Suggested Citation

  • Dennis Guignet, 2012. "What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks," NCEE Working Paper Series 201201, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Mar 2012.
    • Handle: RePEc:nev:wpaper:wp201201
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    File URL: https://www.epa.gov/environmental-economics/working-paper-what-do-property-values-really-tell-us-hedonic-study
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    Cited by:

    1. Jenkins, Robin R. & Guignet, Dennis & Walsh, Patrick J., 2014. "Prevention, Cleanup, and Reuse Benefits From the Federal UST Program," National Center for Environmental Economics-NCEE Working Papers 280921, United States Environmental Protection Agency (EPA).
    2. Evan Herrnstadt & Richard L. Sweeney, 2017. "What Lies Beneath: Pipeline Awareness and Aversion," NBER Working Papers 23858, National Bureau of Economic Research, Inc.
    3. Ludo Peeters & Eloi Schreurs & Steven Passel, 2017. "Heterogeneous Impact of Soil Contamination on Farmland Prices in the Belgian Campine Region: Evidence from Unconditional Quantile Regressions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(1), pages 135-168, January.
    4. Munro, Kirstin & Tolley, George, 2018. "Property values and tax rates near spent nuclear fuel storage," Energy Policy, Elsevier, vol. 123(C), pages 433-442.
    5. Klemick, Heather & Mason, Henry & Sullivan, Karen, 2020. "Superfund cleanups and children’s lead exposure," Journal of Environmental Economics and Management, Elsevier, vol. 100(C).
    6. Dennis Guignet & Rachel Northcutt & Patrick J. Walsh, 2015. "The Property Value Impacts of Groundwater Contamination: Agricultural Runoff and Private Wells," NCEE Working Paper Series 201505, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Nov 2015.
    7. Ti-Ching Peng & Ying-Hui Chiang, 2015. "The non-linearity of hospitals' proximity on property prices: experiences from Taipei, Taiwan," Journal of Property Research, Taylor & Francis Journals, vol. 32(4), pages 341-361, December.
    8. Guignet, Dennis & Jenkins, Robin & Ranson, Matthew & Walsh, Patrick J., 2018. "Contamination and incomplete information: Bounding implicit prices using high-profile leaks," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 259-282.
    9. Raimi, Daniel & Barone, Aurora & Carley, Sanya & Foster, David & Grubert, Emily & Haggerty, Julia & Higdon, Jake & Kearney, Michael & Konisky, David & Michael, Jennifer & Michaud, Gilbert & Nabahe, Sa, 2021. "Policy Options to Enable an Equitable Energy Transition," RFF Reports 21-09, Resources for the Future.
    10. Raimi, Daniel, 2020. "Environmental Remediation and Infrastructure Policies Supporting Workers and Communities in Transition," RFF Reports 20-11, Resources for the Future.
    11. Guignet, Dennis B. & Martinez-Cruz, Adan L., 2018. "The impacts of underground petroleum releases on a homeowner's decision to sell: A difference-in-differences approach," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 11-24.
    12. Moeltner, Klaus & Blinn, Christine E. & Holmes, Thomas P., 2017. "Forest pests and home values: The importance of accuracy in damage assessment and geocoding of properties," Journal of Forest Economics, Elsevier, vol. 26(C), pages 46-55.
    13. Steven B Caudill & Ermanno Affuso & Ming Yang, 2015. "Registered sex offenders and house prices: An hedonic analysis," Urban Studies, Urban Studies Journal Limited, vol. 52(13), pages 2425-2440, October.
    14. 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).
    15. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2012. "Shale Gas Development and Property Values: Differences Across Drinking Water Sources," Working Papers 12-14, Duke University, Department of Economics.
    16. Cheung, Ron & Wetherell, Daniel & Whitaker, Stephan, 2018. "Induced earthquakes and housing markets: Evidence from Oklahoma," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 153-166.
    17. Jellicoe, Michaela & Delgado, Michael S., 2015. "Quantifying the Effects of Underground Natural Gas Storage on Nearby Residents," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(2), pages 1-24, August.
    18. Boslett, Andrew & Guilfoos, Todd & Lang, Corey, 2016. "Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium," Journal of Environmental Economics and Management, Elsevier, vol. 77(C), pages 14-30.
    19. Walsh, Patrick & Mui, Preston, 2017. "Contaminated sites and information in hedonic models: An analysis of a NJ property disclosure law," Resource and Energy Economics, Elsevier, vol. 50(C), pages 1-14.

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    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

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