Can Stigma Explain Large Property Value Losses? The Psychology and Economics of Superfund

Abstract

This research documents the long term impacts of delayed cleanup on property values in communities neighboring prominent Superfund sites. The research examines the sale prices of nearly 34,000 homes near sites in three metropolitan areas for up to a 30-year period. To our knowledge, no other property value studies have examined sites in multiple areas with large property value losses over the length of time used here. The results are both surprising and inconsistent with most prior work. The principal result is that, when cleanup is delayed for 10, 15, and even up to 20 years, the discounted present value of the cleanup is mostly lost. A possible explanation for these property value losses is that the sites are stigmatized and the homes in the surrounding communities are shunned. The results suggest that expedited cleanup and minimizing the number of stigmatizing events would reduce these losses. Copyright Springer 2006hedonic models, property values, stigma, superfund,

Evidence of the Dual Nature of Property Value Recovery Following Environmental Remediation

“…As a consequence, the asymmetric nature of neighborhood tipping could potentially prevent a complete reversal of the full negative price effect. Such a possibility is consistent with the conclusions of both Ketkar (1992) and Messer et al . (2006) that immediate cleanup is important to assure full property value recovery, even though neither link it to changes in demographics and the inertia of reverse tipping.…”

Cleaning Up Without Clearing Out? A Spatial Assessment of Environmental Gentrification

“…Similarly, land values near Superfund sites are likely to decrease during the actual cleanup phase but increase subsequently (McCluskey and Rausser 2003). However, this result may be affected by the salience of the site, as Messer et al (2006) show that values do not necessarily increase following Superfund cleanup and suggest that this may be because of the negative publicity that these types of sites receive. However, for less salient sites, McMillen and Thorsnes (2003) observed that simply closing a hazardous facility led to an increase in adjacent land values, even if a thorough cleanup did not take place; moderate improvements in environmental quality or even the perception of environmental improvement may be sufficient to encourage enough residential sorting to increase the demand for land in these areas.…”

Waste Sites and Property Values: A Meta-Analysis

“…In a similar spirit, Smith and Desvousges (1986) found that 77% of survey respondents in Boston were unwilling to live within 5 miles of a nuclear power plant compared to 67% for landfills and 52% for coal-fired electric generating plants. We make no attempt to distinguish the specific mechanisms underlying the external impacts, which might range from quantifiable physical impacts (Gayer et al 2000) to stigmatization (Dale et al 1999;Messer et al 2006). Whatever the means, we hypothesize that the market discounts proximity to all waste sites, but different types of waste sites have distinctive effects.…”