Monday, May 22, 2023

The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study

Industrial chemical accidents involving fires, explosions, or toxic vapors impose external costs on nearby communities. We examine changes in residential property values using nationwide data on chemical facilities, accidents, and residential transactions within a spatial difference-in-differences framework. Dennis Guignet, Robin R. Jenkins, Christoph Nolte, and James Belke find that accidents with direct offsite impacts lower home values within 5.75 km by 2-3%, an effect that remains for at least 15 years. We estimate an average loss of $5,350 per home, which translates to a $39.5 billion loss to communities around the 661 facilities where an offsite impact accident occurred. They assess the assumptions needed for a formal welfare interpretation and conclude these results roughly approximate losses experienced by nearby residents.

Trichloroisocyanuric Acid Reaction, Decomposition and Toxic Gas Release at Bio-Lab, Inc.
Westlake, LA | August 27, 2020

by Dennis Guignet, Robin R. Jenkins, Christoph Nolte, and James Belke
U.S. Environmental Protection Agency (EPA) Environmental Economics Working Paper Series
Paper Number: 2023-01; Document Date: 02/2023

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