Do Housing Values Respond to Underground Storage Tank Releases? Evidence from High-Profile Cases across the United States

Underground storage tanks (USTs) containing petroleum and hazardous substances are ubiquitous. Accidental releases of these substances can present risks to local residents and the environment. The purpose of this paper is to develop monetized estimates of the benefits of preventing and cleaning up UST releases, as reflected in house values. We focus on 17 of the most high-profile UST releases in the United States with release discovery and other milestone events occurring at different points between 1985 and 2013. These data are the broadest analyzed for property value impacts of UST releases, as previous hedonic studies of USTs focused only on a single county, city, or subset of counties within a state. We employ a two-step methodology in which (i) site specific hedonic regressions are estimated using a difference-in-differences approach, and then (ii) an internal meta-analysis of the resulting estimates is conducted. The spatial and temporal variation among the 17 sites improves our identification of the treatment effects by reducing local idiosyncratic biases; thus providing greater confidence to a causal interpretation of the estimated average price effects. The results suggest significant heterogeneity in the price effects across sites, but on average reveal a 3% to 6% depreciation upon the discovery of a high profile release, and a similar appreciation after cleanup. These average effects diminish with distance, extending out to 2 or 3km from the site.