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

Author

Listed:
  • Dennis B. Guignet
  • Adan L. Martinez-Cruz

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

  • Dennis B. Guignet & Adan L. Martinez-Cruz, 2016. "The Impacts of Underground Petroleum Releases on a Homeowner's Decision to Sell: A Difference-in-Differences Approach," NCEE Working Paper Series 201603, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Jun 2016.
    • Handle: RePEc:nev:wpaper:wp201603
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    File URL: https://www.epa.gov/environmental-economics/working-paper-impacts-underground-petroleum-releases-homeowners-decision
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    2. Guignet, Dennis & Morgan, O. Ashton & Landry, Craig E. & Whitehead, John C. & Anderson, William P., 2024. "Sea-level rise, groundwater quality, and the impacts on coastal homeowners’ decisions to sell," Journal of Housing Economics, Elsevier, vol. 66(C).
    3. Taisuke Sadayuki, 2020. "The externality of a mortality incident within an apartment building: cases of homicide, suicide and fire deaths," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 21-38, January.
    4. Wen‐Chi Liao & Yilan Luo & Yajie Sun, 2022. "Information shock of disaster and hazard: Impact of Kaohsiung gas explosions and risk disclosure on the equalizing difference in the housing market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(6), pages 1492-1531, November.
    5. Irwin, Nicholas & Wolf, David, 2022. "Time is money: Water quality's impact on home liquidity and property values," Ecological Economics, Elsevier, vol. 199(C).
    6. Cheng, Nieyan & Li, Minghao & Liu, Pengfei & Luo, Qianfeng & Tang, Chuan & Zhang, Wendong, 2024. "Pipeline incidents and property values," Journal of Environmental Economics and Management, Elsevier, vol. 127(C).

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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
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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