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House Values and Proximity to a Landfill: A Quantile Regression Framework

Author

Listed:
  • Mario du Preez

    (Department of Economics, Nelson Mandela Metropolitan University, Port Elizabeth, 6001, South Africa.)

  • Mehmet Balcilar

    (Department of Economics, Eastern Mediterranean University, Famagusta, Northern Cyprus , via Mersin 10, Turkey)

  • Aarifah Razak

    (Department of Economics, University of Pretoria)

  • Steven F. Koch

    (Department of Economics, University of Pretoria)

  • Rangan Gupta

    (Department of Economics, University of Pretoria)

Abstract

This paper explores the quantile treatment effects of proximity to a landfill site on housing values in the Nelson Mandela Bay Metropole (NMBM), South Africa, extending the research by Du Preez and Lottering (2009) who found a negative relationship to exist between proximity to a landfill site and mean housing values. Quantile regression analysis is used to account for the different implicit price functions that ‘wealthier’ and ‘poorer’ representative agents face. The results corroborate the findings of Du Preez and Lottering (2009) and further identify the negative relationship to be most pronounced at the lowest and highest quantiles of the house values distribution. Specifically, house values increase by an average of ZAR19 or US$1.81 (0.2 percent) for every 100 meters further away from the landfill site. At the lowest quantile (5 percent) house values increase by only 0.11 percent with every 100 meters of distance from the landfill site while at the highest quantile (95 percent), house values increase by 0,21 percent. This clearly demonstrates that ‘wealthier’ representative agents stand to gain more by being situated further away from landfill sites than ‘poorer’ representative agents. The suitability of the quantile treatment approach is confirmed by way of the Koenker and Xiao (2002) Location- Scale-Shift test statistics.

Suggested Citation

  • Mario du Preez & Mehmet Balcilar & Aarifah Razak & Steven F. Koch & Rangan Gupta, 2014. "House Values and Proximity to a Landfill: A Quantile Regression Framework," Working Papers 201442, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201442
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    References listed on IDEAS

    as
    1. Havlicek, Joseph & Richardson, Robert & Davies, Lloyd, 1971. "Measuring The Impacts Of Solid Waste Disposal Site Location On Property Values," 1971 Annual Meeting, August 15-18, Carbondale, Illinois 284441, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Hite, Diane & Chern, Wen & Hitzhusen, Fred & Randall, Alan, 2001. "Property-Value Impacts of an Environmental Disamenity: The Case of Landfills," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 185-202, March-May.
    3. Diane Hite, 1998. "Information and Bargaining in Markets for Environmental Quality," Land Economics, University of Wisconsin Press, vol. 74(3), pages 303-316.
    4. Jong Seok Lim & Paul Missios, 2007. "Does size really matter? Landfill scale impacts on property values," Applied Economics Letters, Taylor & Francis Journals, vol. 14(10), pages 719-723.
    5. Richard C. Ready, 2010. "Do Landfills Always Depress Nearby Property Values?," Journal of Real Estate Research, American Real Estate Society, vol. 32(3), pages 321-340.
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    JEL classification:

    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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