The Effect of Voluntary Brownfields Programs on Nearby Property Values: Evidence from Illinois
Resources for the Future DP 12-35
48 Pages Posted: 22 Aug 2012
Date Written: August 16, 2012
Brownfields are properties for which redevelopment is hampered by known or suspected contamination and by concerns about associated liability. Because failing to redevelop brownfields may negatively affect welfare and the environment, a number of states have created voluntary programs to reduce liability risks and encourage redevelopment of brownfields. For clean or remediated properties, the state certifies that owners of such sites are not subject to federal or state liability under certain conditions. Certification could increase nearby property values because of decreased contamination risk and amenities associated with redeveloping the brownfield. This paper focuses on the Site Remediation Program in Illinois, and estimates the effect of brownfields certification on nearby property values. Employing several strategies to account for unobserved and time-varying variables that may be correlated with certification, I find that certification of a brownfield 0.25 miles away raises property values by about one percent. In aggregate, the program has increased nearby property values by about two percent.
Keywords: hedonic regression, contamination, voluntary cleanup programs
JEL Classification: R30, Q53
Suggested Citation: Suggested Citation