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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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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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    References listed on IDEAS

    as
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    More about this item

    Keywords

    housing market; property transaction; discrete time duration model; underground storage tank; groundwater contamination;

    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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