Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program

59 Pages Posted: 7 Nov 2005 Last revised: 14 Oct 2013

See all articles by Michael Greenstone

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Justin Gallagher

Case Western Reserve University - Weatherhead School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2008

Abstract

This paper uses the housing market to develop estimates of the local welfare impacts of Superfund sponsored clean-ups of hazardous waste sites. We show that if consumers value the clean-ups, then the hedonic model predicts that they will lead to increases in local housing prices and new home construction, as well as the migration of individuals that place a high value on environmental quality to the areas near the improved sites. We compare housing market outcomes in the areas surrounding the first 400 hazardous waste sites chosen for Superfund clean-ups to the areas surrounding the 290 sites that narrowly missed qualifying for these clean-ups. We find that Superfund clean-ups are associated with economically small and statistically indistinguishable from zero local changes in residential property values, property rental rates, housing supply, total population, and the types of individuals living near the sites. These findings are robust to a series of specification checks, including the application of a regression discontinuity design based on knowledge of the selection rule. Overall, the preferred estimates suggest that the local benefits of Superfund clean-ups are small and appear to be substantially lower than the $43 million mean cost of Superfund clean-ups.

Keywords: Valuation of environmental goods, Hazardous waste sites, Environmental regulation, Regression discontinuity, Superfound, Externalities

JEL Classification: H4, Q51, Q53, R5, R2, I18

Suggested Citation

Greenstone, Michael and Gallagher, Justin, Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program (January 30, 2008). MIT Department of Economics Working Paper No. 05-27; FEEM Working Paper No. 149.05. Available at SSRN: https://ssrn.com/abstract=840207 or http://dx.doi.org/10.2139/ssrn.840207

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics

1126 East 59th Street
Chicago, IL 60637
United States

Becker Friedman Institute for Economics ( email )

Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Justin Gallagher

Case Western Reserve University - Weatherhead School of Management ( email )

364 PBL Building
Cleveland, OH 44106
United States

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