IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v226y2023ics0047272723001615.html
   My bibliography  Save this article

Cleaning up the Great Lakes: Housing market impacts of removing legacy pollutants

Author

Listed:
  • Cassidy, Alecia
  • Meeks, Robyn C.
  • Moore, Michael R.

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 left a legacy of toxic pollutants in the region, tarnishing it as part of the “Rust Belt.” In 1987, the Area of Concern (AOC) Program designated 30 areas in the region as having hazardous water quality. Almost 1.23 billion federal dollars have been spent since 2004 on grants to clean up the areas. Our paper provides causal estimates of the program’s impact on local housing markets. We find negative effects of AOC designation on housing prices, indicating that consumers value clean water and incorporate information about water quality into their housing purchases. Grants exert positive effects on housing prices, confirming the valuation of water quality. The grants’ estimated benefits exceed their costs.

Suggested Citation

  • Cassidy, Alecia & Meeks, Robyn C. & Moore, Michael R., 2023. "Cleaning up the Great Lakes: Housing market impacts of removing legacy pollutants," Journal of Public Economics, Elsevier, vol. 226(C).
    • Handle: RePEc:eee:pubeco:v:226:y:2023:i:c:s0047272723001615
    DOI: 10.1016/j.jpubeco.2023.104979
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272723001615
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jpubeco.2023.104979?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jill J. McCluskey & Gordon C. Rausser, 2003. "Stigmatized Asset Value: Is It Temporary or Long-Term?," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 276-285, May.
    2. Kevin Haninger & Lala Ma & Christopher Timmins, 2017. "The Value of Brownfield Remediation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(1), pages 197-241.
    3. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    4. Mastromonaco, Ralph, 2015. "Do environmental right-to-know laws affect markets? Capitalization of information in the toxic release inventory," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 54-70.
    5. David A. Keiser & Joseph S. Shapiro, 2019. "US Water Pollution Regulation over the Past Half Century: Burning Waters to Crystal Springs?," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 51-75, Fall.
    6. James J. Heckman & Hidehiko Ichimura & Petra E. Todd, 1997. "Matching As An Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 64(4), pages 605-654.
    7. Kent Messer & William Schulze & Katherine Hackett & Trudy Cameron & Gary McClelland, 2006. "Can Stigma Explain Large Property Value Losses? The Psychology and Economics of Superfund," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(3), pages 299-324, March.
    8. Flynn, Patrick & Smith, Tucker, 2022. "Rivers, lakes and revenue streams: The heterogeneous effects of Clean Water Act grants on local spending," Journal of Public Economics, Elsevier, vol. 212(C).
    9. Michael Greenstone & Justin Gallagher, 2008. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(3), pages 951-1003.
    10. Gamper-Rabindran, Shanti & Timmins, Christopher, 2013. "Does cleanup of hazardous waste sites raise housing values? Evidence of spatially localized benefits," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 345-360.
    11. David A Keiser & Joseph S Shapiro, 2019. "Consequences of the Clean Water Act and the Demand for Water Quality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(1), pages 349-396.
    12. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    13. Felix Oberholzer-Gee & Miki Mitsunari, 2006. "Information regulation: Do the victims of externalities pay attention?," Journal of Regulatory Economics, Springer, vol. 30(2), pages 141-158, August.
    14. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    15. Gardner, George, 2021. "Economic Benefits of Remediating the Ashtabula River Area of Concern," 2021 Annual Meeting, August 1-3, Austin, Texas 312656, Agricultural and Applied Economics Association.
    16. Linda T. M. Bui & Christopher J. Mayer, 2003. "Regulation and Capitalization of Environmental Amenities: Evidence from the Toxic Release Inventory in Massachusetts," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 693-708, August.
    17. Gary H. McClelland & William D. Schulze & Brian Hurd, 1990. "The Effect of Risk Beliefs on Property Values: A Case Study of a Hazardous Waste Site," Risk Analysis, John Wiley & Sons, vol. 10(4), pages 485-497, December.
    18. David A. Keiser & Catherine L. Kling & Joseph S. Shapiro, 2019. "The low but uncertain measured benefits of US water quality policy," Proceedings of the National Academy of Sciences, Proceedings of the National Academy of Sciences, vol. 116(12), pages 5262-5269, March.
    19. Larry Dale & James C. Murdoch & Mark A. Thayer & Paul A. Waddell, 1999. "Do Property Values Rebound from Environmental Stigmas? Evidence from Dallas," Land Economics, University of Wisconsin Press, vol. 75(2), pages 311-326.
    20. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    21. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
    22. Albouy, David & Christensen, Peter & Sarmiento-Barbieri, Ignacio, 2020. "Unlocking amenities: Estimating public good complementarity," Journal of Public Economics, Elsevier, vol. 182(C).
    23. Sheila M. Olmstead, 2010. "The Economics of Water Quality," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 4(1), pages 44-62, Winter.
    24. Michael Greenstone, 2017. "The Continuing Impact of Sherwin Rosen’s “Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition”," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1891-1902.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kathrine Graevenitz & Daniel Römer & Alexander Rohlf, 2018. "The Effect of Emission Information on Housing Prices: Quasi-Experimental Evidence from the European Pollutant Release and Transfer Register," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 23-74, January.
    2. Guignet, Dennis & Jenkins, Robin R. & Nolte, Christoph & Belke, James, 2023. "The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study," Journal of Housing Economics, Elsevier, vol. 62(C).
    3. H. Spencer Banzhaf, 2021. "Difference-in-Differences Hedonics," Journal of Political Economy, University of Chicago Press, vol. 129(8), pages 2385-2414.
    4. Phaneuf, Daniel J. & Liu, Xiangping, 2016. "Disentangling property value impacts of environmental contamination from locally undesirable land uses: Implications for measuring post-cleanup stigmaAuthor-Name: Taylor, Laura O," Journal of Urban Economics, Elsevier, vol. 93(C), pages 85-98.
    5. Guignet, Dennis & Jenkins, Robin & Ranson, Matthew & Walsh, Patrick J., 2018. "Contamination and incomplete information: Bounding implicit prices using high-profile leaks," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 259-282.
    6. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Centre for Economic Performance, LSE.
    7. Xun Fan & Mengdi Liu & Bing Zhang & Weicheng Zhang, 2024. "The Green Premium: Environmental Regulation, Environmental Risk and Property Value," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(5), pages 1061-1096, May.
    8. Albouy, David & Christensen, Peter & Sarmiento-Barbieri, Ignacio, 2020. "Unlocking amenities: Estimating public good complementarity," Journal of Public Economics, Elsevier, vol. 182(C).
    9. Tanaka, Shinsuke & Zabel, Jeffrey, 2018. "Valuing nuclear energy risk: Evidence from the impact of the Fukushima crisis on U.S. house prices," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 411-426.
    10. Taylor, Laura O. & Phaneuf, Daniel J. & Liu, Xiangping, 2016. "Disentangling Property Value Impacts of Environmental Contamination from Locally Undesirable Land Uses: Implications for Measuring Post-Cleanup Stigma," CEnREP Working Papers 264975, North Carolina State University, Department of Agricultural and Resource Economics.
    11. Cheng Cheng & Walter J. Mayer & Yanling Mayer, 2018. "The Effect Of Legalizing Retail Marijuana On Housing Values: Evidence From Colorado," Economic Inquiry, Western Economic Association International, vol. 56(3), pages 1585-1601, July.
    12. Wang, Xiaohan & Yang, Mengjun, 2024. "The effect of soil pollution information disclosure on housing prices," China Economic Review, Elsevier, vol. 83(C).
    13. Moore, Michael R. & Doubek, Jonathan P. & Xu, Hui & Cardinale, Bradley J., 2020. "Hedonic Price Estimates of Lake Water Quality: Valued Attribute, Instrumental Variables, and Ecological-Economic Benefits," Ecological Economics, Elsevier, vol. 176(C).
    14. Marcus, Michelle & Mueller, Rosie, 2024. "Unregulated contaminants in drinking water: Evidence from PFAS and housing prices," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    15. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    16. Jeremy G. Moulton & Nicholas J. Sanders & Scott A. Wentland, 2024. "Toxic Assets: How the Housing Market Responds to Environmental Information Shocks," Land Economics, University of Wisconsin Press, vol. 100(1), pages 66-88.
    17. Mei, Yingdan & Qiu, Jixiang & Wu, Jialu & Meng, Lina, 2021. "Do residents care about urban dumps? Evidence from individual housing transaction data," Land Use Policy, Elsevier, vol. 109(C).
    18. Ren, Qianping & West, Jeremy, 2023. "Cleaner waters and urbanization," Journal of Environmental Economics and Management, Elsevier, vol. 122(C).
    19. Patrick Gourley, 2019. "Social Stigma and Asset Value," Southern Economic Journal, John Wiley & Sons, vol. 85(3), pages 919-938, January.
    20. Walsh, Patrick & Mui, Preston, 2017. "Contaminated sites and information in hedonic models: An analysis of a NJ property disclosure law," Resource and Energy Economics, Elsevier, vol. 50(C), pages 1-14.

    More about this item

    Keywords

    Federal grants; Hedonic valuation; Housing; Water quality; Areas of Concern; Great Lakes Restoration Initiative;
    All these keywords.

    JEL classification:

    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:226:y:2023:i:c:s0047272723001615. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.