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The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study

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  • Guignet, Dennis
  • Jenkins, Robin R.
  • Nolte, Christoph
  • Belke, James

Abstract

Industrial chemical accidents involving fires, explosions, or toxic vapors impose external costs on nearby communities. We examine changes in residential property values using nationwide data on chemical facilities, accidents, and residential transactions within a spatial difference-in-differences framework. We find that accidents with direct offsite impacts lower home values within 5.75 km by 2-3%, an effect that remains for about 10 to 12 years, on average. We estimate an average loss of $5,350 per home, which translates to a $39.5 billion loss to communities around the 661 facilities where an offsite impact accident occurred. We assess the assumptions needed for a formal welfare interpretation and conclude that these results roughly approximate losses experienced by nearby residents.

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  • 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).
    • Handle: RePEc:eee:jhouse:v:62:y:2023:i:c:s1051137723000414
    DOI: 10.1016/j.jhe.2023.101954
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    1. Zabel, Jeffrey & Phaneuf, Daniel J. & Krause, Andy, 2023. "Introduction to the Special Issue Property Value Analysis using ZTRAX: Applications under the Approaching Sunset," Journal of Housing Economics, Elsevier, vol. 62(C).

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