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Contaminated sites and information in hedonic models: An analysis of a NJ property disclosure law

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  • Walsh, Patrick
  • Mui, Preston
Abstract
This paper explores the impact of information on the hedonic valuation of proximity to contaminated sites. The analysis exploits the passage of a 2004 New Jersey property disclosure law to identify an external change in information. The law required real estate sellers to disclose information about nearby contaminated sites. After presenting a model of the impact of disamenity information on home prices, we use several econometric variations to test hypotheses about the effects of additional information. Results indicate that the impact on home prices near contaminated sites depended on the baseline information about contamination. Homes prices near widely-known contaminated sites did not see a change after the disclosure law. However, homes near sites that were less well-known before the disclosure did see a drop in price as home buyers were given new information. Our results have several important implications on the assumptions of the hedonic model and could be used to formulate more effective disclosure laws in the future.

Suggested Citation

  • Walsh, Patrick & Mui, Preston, 2017. "Contaminated sites and information in hedonic models: An analysis of a NJ property disclosure law," Resource and Energy Economics, Elsevier, vol. 50(C), pages 1-14.
    • Handle: RePEc:eee:resene:v:50:y:2017:i:c:p:1-14
    DOI: 10.1016/j.reseneeco.2017.06.005
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    2. Burton, Kati & Maas, Alexander & Lee, Katherine, 2022. "A Case Study in Contamination: Persistent Home Value Losses Associated with the Elk River Spill," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 47(3), September.
    3. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    4. Wang, Xiaohan & Yang, Mengjun, 2024. "The effect of soil pollution information disclosure on housing prices," China Economic Review, Elsevier, vol. 83(C).
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    6. Guignet, Dennis & Jenkins, Robin & Ranson, Matthew & Walsh, Patrick J., 2018. "Contamination and incomplete information: Bounding implicit prices using high-profile leaks," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 259-282.
    7. Gong, Cynthia M. & Lizieri, Colin & Bao, Helen X.H., 2019. "“Smarter information, smarter consumers”? Insights into the housing market," Journal of Business Research, Elsevier, vol. 97(C), pages 51-64.
    8. Rita Yi Man Li & Herru Ching Yu Li, 2018. "Have Housing Prices Gone with the Smelly Wind? Big Data Analysis on Landfill in Hong Kong," Sustainability, MDPI, vol. 10(2), pages 1-19, January.
    9. Taisuke Sadayuki, 2020. "The externality of a mortality incident within an apartment building: cases of homicide, suicide and fire deaths," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 22(1), pages 21-38, January.
    10. Zambrano-Monserrate, Manuel A. & Ruano, María Alejandra, 2019. "Does environmental noise affect housing rental prices in developing countries? Evidence from Ecuador," Land Use Policy, Elsevier, vol. 87(C).
    11. Athnos, April, 2020. "What Lies Beneath? An Analysis of “Time of Sale” Well and Septic Inspection Failures," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304619, Agricultural and Applied Economics Association.
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    More about this item

    Keywords

    Hedonic analysis; Property prices; Land Contamination; Environmental valuation;
    All these keywords.

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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