Who Benefits from Hazardous Waste Cleanups? Evidence from the Housing Market

Abstract

The Resource Conservation and Recovery Act (RCRA) manages cleanup of hazardous waste releases at over 3,500 sites across the US, which covers approximately 17.5% of all developed land in the country. This paper evaluates the national housing market impacts of cleanups performed under RCRA and estimates the program's impacts on neighborhood change. We find that cleanups near residential properties yield significant, yet localized, increases in home prices, and that impacts are concentrated in the lower deciles of the price distribution. Importantly, we find no evidence of sorting along socio-demographic dimensions in response to cleanup. Our findings suggest that cleanup benefits accrue to the residents who are the original “hosts” of pollution and could correct pre-existing disparities in exposure to land-based contamination.

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This paper evaluates the housing market impacts of cleanups conducted under the Resource Conservation and Recovery Act (RCRA). We find that the positive environmental impacts from RCRA cleanups are reflected in the housing market, indicating that people are aware of cleanups and value the water quality improvements documented in Cassidy et al. (2020). The price increases that we find are driven by cleanups concentrated among the lowest price deciles of the census tract in which the RCRA facility is located: Prices increase by 11% for the 1st decile of the price distribution, and we detect no evidence of a price increase for the 9th decile. This indicates cleanups raise housing values of the poorest segments of the population, which are likely to face other disadvantageous circumstances in life and are typically more vulnerable to the deleterious effects of pollution (see, e.g. Apelberg, Buckley and White, 2005). 

Furthermore, we find that the benefits of cleanups accrued to those living closest to the sites and, notably, do not find that cleanups induced re-sorting. This is consistent with the localized price impacts that we find, but somewhat surprising given how expansive RCRA cleanups were and the recent literature that has highlighted the potential for policies to worsen underlying inequities (Hausman and Stolper, 2020; Bakkensen and Ma, 2020). Ultimately, whether environmental cleanups lead to neighborhood turnover is an empirical question that has far-reaching consequences for whether a policy would exacerbate pre-existing socio-economic disparities.

The Valley of the Drums, a toxic waste dump in northern Bullitt County, Kentucky
https://en.wikipedia.org/wiki/Hazardous_waste#/media/File:Valleyofdrums.jpg

by Alecia W. Cassidy, Elaine L. Hill & Lala Ma
National Bureau of Economic Research (NBER) www.NBER.org
Working Paper 30661; Issue Date November 2022

https://www.nber.org/papers/w30661