Effects of Socio-Economic and Input-Related Factors on Polluting Plants' Location Decisions

Abstract

Many environmental justice studies argue that firms choose to locate waste sites or polluting plants disproportionately in minority or poor communities. However, it is not uncommon for these studies to match site or plant location to contemporaneous socioeconomic characteristics instead of to characteristics at the time of siting. While this may provide important information on disproportionate impacts currently faced by these communities, it does not describe the relationship at the time of siting. Also, variables that are important to a plant's location decision – i.e., production and transportation costs – are often not included. Without controlling for such variables, it is difficult to evaluate the relative importance of socioeconomic characteristics in a firm's initial location decision. This paper examines the role of community socioeconomic characteristics at the time of siting in the location decisions of manufacturing plants while controlling for other location-relevant factors such as input costs.When plant location is matched to current socioeconomic characteristics, results are consistent with what the environmental justice literature predicts: race is significant and positively related to plant location, while income is significant and negatively related to plant location. When plant location is matched to socioeconomic characteristics at the time of siting, empirical results suggest that race is no longer significant, though income is still significant and negatively related to plant location. Poverty rates are sometimes significant but act as a deterrent to plant location. Variables traditionally considered in the firm location literature – such as land and labor costs, the quality of labor, and distance to rail – are significant. The presence of pre-existing TRI plants in a neighborhood and average plant size are also significant.

Brownfields Remediation: Impact on Local Residential Property Tax Revenue

“…This assumption may not hold if cleanup leads to neighbourhood turnover and changes in marginal willingness to pay for cleanup, which is suggested by recent research (Banzhaf and McCormick, 2007;Wolverton, 2009). This motivates HMT (2017) to specify a double-difference matching nearest neighbour estimation that does not rely on stability of the hedonic price function overtime.…”

Chicago residents’ perceptions of air quality: objective pollution, the built environment, and neighborhood stigma theory

“…Substantial race/ethnic disparities in pollution exposures nationally persist even after controlling for economic factors (Crowder & Downey, 2010; Mohai & Saha, 2007), although the extent and nature of environmental inequalities vary by metropolitan area and region (Downey, 2007; Downey & Crowder, 2011) as well as exposure type. Race/ethnic differences in exposures probably have origins both in real estate valuation and in more explicit environmental racism, such as facility siting decisions and political processes (Saha & Mohai, 2005; Wolverton, 2009). Another factor that plays a role in generating social differences in exposures is differential residential mobility with respect to pollution sources (Crowder & Downey, 2010), but it is not known how households may evaluate environmental quality when choosing where to live.…”

Management of Hazardous Waste and Contaminated Land

“…By contrast, Pastor et al (2001) look at high-capacity TSDs in Los Angeles and find that minorities in general are disproportionately exposed to these facilities at the time of siting. Wolverton (2009) examines TRI facility locations in Texas using a conditional logit model and finds that racial composition is not a significant determinant of new plant location, although the likelihood that a plant chooses a particular location falls as the income of the community rises.…”

“…Studies also have mixed conclusions about whether minority shares increase after siting, with some studies finding they do not (Been & Gupta 1997, Pastor et al 2001) and others finding they do (Lambert & Boerner 1997, Wolverton 2009). …”