Cleaning Up the Rust Belt: Housing Market Impacts of Removing Legacy Pollutants

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See all articles by Alecia Cassidy

Alecia Cassidy

University of Alabama, Department of Economics, Finance, and Legal Studies

Robyn Meeks

University of Michigan at Ann Arbor

Michael R. Moore

University of Michigan at Ann Arbor - School for Environment and Sustainability

Date Written: September 18, 2020

Abstract

The Great Lakes and their tributaries make up the largest freshwater system on the planet, providing drinking water and recreational value to millions of people. Yet manufacturing plants have left a legacy of toxic pollutants in the region, creating the stigma of the "Rust Belt." In 1987, the Area of Concern (AOC) Program designated 31 areas in the region as having hazardous water quality. Over 700 million federal dollars have been spent since 2004 on grants to clean up the areas. Our paper is the first to provide causal estimates of the program's impact on local housing markets. We find negative and statistically significant effects of AOC designation, indicating that consumers value clean water and incorporate information about water quality into their housing purchases. We develop two estimators to bound the effects of remediation grants on housing prices. Our estimates imply that the benefits of remediation grants range from $16.9 billion to $25.6 billion, greatly exceeding grant costs.

Keywords: Housing, water quality, remediation grants, hedonic valuation, Areas of Concern, Great Lakes Restoration Initiative.

JEL Classification: Q51, Q53, Q58, R21, R28

Suggested Citation

Cassidy, Alecia and Meeks, Robyn and Moore, Michael R., Cleaning Up the Rust Belt: Housing Market Impacts of Removing Legacy Pollutants (September 18, 2020). Available at SSRN: https://ssrn.com/abstract=

Alecia Cassidy (Contact Author)

University of Alabama, Department of Economics, Finance, and Legal Studies ( email )

200 Alston Hall, Box 870224, 361 Stadium Drive
Tuscaloosa, AL AL 35487
United States

HOME PAGE: http://https://sites.google.com/site/aleciawcassidy/

Robyn Meeks

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

Michael R. Moore

University of Michigan at Ann Arbor - School for Environment and Sustainability

440 Church Street
Dana Building
Ann Arbor, MI 48109
United States
(734)647-4337 (Phone)

HOME PAGE: http://https://sites.google.com/a/umich.edu/michael-moore/

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