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Environmental Liability and Redevelopment of Old Industrial Land

  • Hilary Sigman

    ()

    (Rutgers University)

Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules --- specifically, strict liability and joint and several liability --- that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment.

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Paper provided by Rutgers University, Department of Economics in its series Departmental Working Papers with number 200609.

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Length: 20 pages
Date of creation: 18 Aug 2006
Date of revision:
Handle: RePEc:rut:rutres:200609
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  1. Tom H. Tietenberg, 1989. "Indivisible Toxic Torts: The Economics of Joint and Several Liability," Land Economics, University of Wisconsin Press, vol. 65(4), pages 305-319.
  2. Austin, David & Alberini, Anna, 2001. "Accidents Waiting to Happen: Liability Policy and Toxic Pollution Releases," Discussion Papers dp-01-06, Resources For the Future.
  3. William Harbaugh & Arik Levinson & David Wilson, 2000. "Reexamining the Empirical Evidence for an Environmental Kuznets Curve," Working Papers gueconwpa~00-00-07, Georgetown University, Department of Economics.
  4. Alberini, Anna & Austin, David, 1999. "On and Off the Liability Bandwagon: Explaining State Adoptions of Strict Liability in Hazardous Waste Programs," Journal of Regulatory Economics, Springer, vol. 15(1), pages 41-63, January.
  5. Austin, David & Alberini, Anna, 1998. "Strict Liability as a Deterrent in Toxic Waste Management: Empirical Evidence from Accident and Spill Data," Discussion Papers dp-98-16, Resources For the Future.
  6. Segerson Kathleen, 1993. "Liability Transfers: An Economic Assessment of Buyer and Lender Liability," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages S46-S63, July.
  7. Arik Levinson, 1999. "An Industry-Adjusted Index of State Environmental Compliance Costs," Working Papers gueconwpa~00-00-08, Georgetown University, Department of Economics.
  8. Wernstedt, Kris & Alberini, Anna & Heberle, Lauren & Meyer, Peter, 2004. "The Brownfields Phenomenon: Much Ado about Something or the Timing of the Shrewd?," Discussion Papers dp-04-46, Resources For the Future.
  9. Nijkamp, Peter & Rodenburg, Caroline A. & Wagtendonk, Alfred J., 2002. "Success factors for sustainable urban brownfield development: A comparative case study approach to polluted sites," Ecological Economics, Elsevier, vol. 40(2), pages 235-252, February.
  10. Levinson, Arik, 1996. "Environmental regulations and manufacturers' location choices: Evidence from the Census of Manufactures," Journal of Public Economics, Elsevier, vol. 62(1-2), pages 5-29, October.
  11. Alberini, Anna & Longo, Alberto & Tonin, Stefania & Trombetta, Francesco & Turvani, Margherita, 2005. "The role of liability, regulation and economic incentives in brownfield remediation and redevelopment: evidence from surveys of developers," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 327-351, July.
  12. Howard F. Chang & Hilary Sigman, 2005. "The Effect of Joint and Several Liability Under Superfund on Brownfields," NBER Working Papers 11667, National Bureau of Economic Research, Inc.
  13. Boyd, James & Harrington, Winston & Macauley, Molly K, 1996. "The Effects of Environmental Liability on Industrial Real Estate Development," The Journal of Real Estate Finance and Economics, Springer, vol. 12(1), pages 37-58, January.
  14. Chang, Howard F & Sigman, Hilary, 2000. "Incentives to Settle under Joint and Several Liability: An Empirical Analysis of Superfund Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 29(1), pages 205-36, January.
  15. Kathleen Segerson, 1994. "Property Transfers and Environmental Pollution: Incentive Effects of Alternative Policies," Land Economics, University of Wisconsin Press, vol. 70(3), pages 261-272.
  16. Carlo Carraro & Gilbert E. Metcalf, 2000. "Behavioral and Distributional Effects of Environmental Policy Introduction," NBER Working Papers 7648, National Bureau of Economic Research, Inc.
  17. Kris Wernstedt & Peter B. Meyer & Anna Alberini, 2006. "Attracting private investment to contaminated properties: The value of public interventions," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 25(2), pages 247-369.
  18. Thomas O. Jackson, 2002. "Environmental Contamination and Industrial Real Estate Prices," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 179-200.
  19. Stafford, Sarah L, 2003. "Assessing the Effectiveness of State Regulation and Enforcement of Hazardous Waste," Journal of Regulatory Economics, Springer, vol. 23(1), pages 27-41, January.
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