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

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Author Info
Michael Greenstone (Massachusetts Institute of Technology, Brookings Institution, and NBER)
Justin Gallagher (University of California at Berkeley)

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Abstract

This paper uses the housing market to develop estimates of the local welfare impacts of Superfund-sponsored cleanups of hazardous waste sites. We show that if consumers value the cleanups, 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 cleanups to the areas surrounding the 290 sites that narrowly missed qualifying for these cleanups. We find that Superfund cleanups are associated with economically small and statistically insignificant changes in residential property values, property rental rates, housing supply, total population, and 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 cleanups are small and appear to be substantially lower than the $43 million mean cost of Superfund cleanups. (c) 2008 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..

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Publisher Info
Article provided by MIT Press in its journal Quarterly Journal of Economics.

Volume (Year): 123 (2008)
Issue (Month): 3 (August)
Pages: 951-1003
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Handle: RePEc:tpr:qjecon:v:123:y:2008:i:3:p:951-1003

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Greenstone & Olivier Deschenes, 2006. "The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random Fluctuations in Weather," Working Papers 2006.6, Fondazione Eni Enrico Mattei. [Downloadable!]
    Other versions:
  2. Trudy Ann Cameron & Ian McConnaha, 2005. "Evidence of Environmental Migration: Housing values alone may not capture the full effects of local environmental disamenities," University of Oregon Economics Department Working Papers 2005-7, University of Oregon Economics Department, revised 01 Jan 2005. [Downloadable!]
  3. Olivier Deschenes & Michael Greenstone, 2004. "The Economic Impacts of Climate Change: Evidence from Agricultural Profits and Random," NBER Working Papers 10663, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. Jon H. Fiva & Lars J. Kirkebøen, 2008. "Does the Housing Market React to New Information on School Quality?," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  5. Michael Greenstone & Ted Gayer, 2007. "Quasi-Experimental and Experimental Approaches to Environmental Economics," Working Papers 0713, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research. [Downloadable!]
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