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Toxic Assets: How the Housing Market Responds to Environmental Information Shocks

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  • Nicholas J. Sanders

    (Department of Economics, The College of William and Mary)

Abstract

In 1998, a number of polluting industries, including fossil fuel power plants, were added to the list of firms publicly reporting pollution releases in the Toxics Release Inventory (TRI). This caused a large increase in reported toxic pollution, and a corresponding decrease in median housing prices of 2-3 percent in impacted areas. Contrary to prior findings that TRI information does not influence household actions, I find the additional TRI data caused households to revise priors on ambient pollution levels. This implies that, even with market-based environmental regulation, there remains a role for government as provider of information on environmental conditions.

Suggested Citation

  • Nicholas J. Sanders, 2012. "Toxic Assets: How the Housing Market Responds to Environmental Information Shocks," Working Papers 128, Department of Economics, College of William and Mary.
    • Handle: RePEc:cwm:wpaper:128
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    File URL: http://economics.wm.edu/wp/cwm_wp128.pdf
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    References listed on IDEAS

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    2. Jeremy G. Weber & J. Wesley Burnett & Irene M. Xiarchos, 2016. "Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(3), pages 587-614, June.
    3. Billings, Stephen B. & Schnepel, Kevin T., 2017. "The value of a healthy home: Lead paint remediation and housing values," Journal of Public Economics, Elsevier, vol. 153(C), pages 69-81.
    4. Modica, Marco, 2017. "Does the construction of biogas plants affect local property values?," Economics Letters, Elsevier, vol. 159(C), pages 169-172.
    5. Alexander Fink & Thomas Stratmann, 2013. "U.S. housing prices and the Fukushima nuclear accident: To update, or not to update, that is the question," ICER Working Papers 04-2013, ICER - International Centre for Economic Research.
    6. Du, Xinming, 2023. "Competing with clean air: Pollution disclosure and college desirability," Ecological Economics, Elsevier, vol. 204(PA).
    7. Tu, Meng & Zhang, Bing & Xu, Jianhua & Lu, Fangwen, 2020. "Mass media, information and demand for environmental quality: Evidence from the “Under the Dome”," Journal of Development Economics, Elsevier, vol. 143(C).
    8. Fink, Alexander & Stratmann, Thomas, 2015. "U.S. housing prices and the Fukushima nuclear accident," Journal of Economic Behavior & Organization, Elsevier, vol. 117(C), pages 309-326.
    9. Gibbons, Stephen & Heblich, Stephan & Timmins, Christopher, 2021. "Market tremors: Shale gas exploration, earthquakes, and their impact on house prices," Journal of Urban Economics, Elsevier, vol. 122(C).

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    More about this item

    Keywords

    pollution; hedonic estimation; Toxics Release Inventory;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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