How regulation on environmental information disclosure affects brownfield prices in China: a difference-in-differences (DID) analysis

Studies have shown that brownfields are often sold at a discounted price to compensate for anticipated clean-up costs and potential liability risk. However, such a hypothesis has not been tested in the Chinese context, largely due to a lack of information about land contamination and the absence of regulations regarding brownfields. Over the past decade, Chinese cities’ gradual introduction of redevelopment policies for former industrial sites has increased public awareness regarding land contamination. In Shanghai, the land market has responded to regulations on mandatory environmental information disclosure at land auctions. Using Shanghai land transaction data from 2007 to 2019, we examine the temporal response of land markets to environmental policy changes by employing several difference-in-differences regression models. The results show that brownfield parcels had been sold for prices 18% lower than greenfields, and that such discounts tend to become more significant after at least three years of policy implementation.