The Value of Environmental Monitoring: Evidence from the Housing Market

Abstract

Governments allocate substantial resources to regulate the environmental consequences of industrial activity, while little is known about the economic value associated with such oversight. We fill this gap by documenting a 1.1% increase in US housing values following the establishment of a nearby monitoring station. This positive price effect is attributable to improvements in air quality as we demonstrate a 46.7% reduction in toxic emissions and a 2.6% decrease in the number of industrial facilities in the area subject to additional monitoring. Conservative estimates suggest that the value of new monitoring stations exceeds $52 billion.