Economic Effects of Environmental Crises: Evidence from Flint, Michigan

Abstract

In April 2014, Flint, Michigan switched its drinking water supply from the Detroit water system to the Flint River as a temporary means to save $5M. Over eighteen months, it was revealed that the switch exposed residents to dangerous levels of lead, culminating in an emergency declaration in October 2015. This paper examines the impact of this crisis on the Flint housing market. The value of Flint's housing stock has fallen by $480M despite over $400M in government spending to remediate the crisis. Home prices remain depressed through August 2019, sixteen months after the water was declared safe for consumption.

Keywords: drinking water, pollution, lead, Flint, crisis, averting behavior, hedonics

JEL Classification: H12, H41, Q51, Q52, Q58, R31