Effect of Air Quality on Housing Prices: Evidence From the Aliso Canyon Gas Leak

Anna Choi, Pureum Kim and Abraham Park

ERES from European Real Estate Society (ERES)

Abstract: Causal studies on the effect of air quality on house prices, specifically focusing on a large metropolitan area, are rare and difficult to obtain because of potential endogeneity from residential sorting. In this study, we use the Aliso Canyon gas leak as a natural experiment to examine the effect of air quality on housing prices of Los Angeles City. Using a spatial difference-in-differences model, we estimate that houses within the 5-mile radius of the gas well experienced a 3% discount in price during the leak, and an additional 4.4% discount after the well was sealed and the air quality was restored. The decrease in price lasted beyond 18 months, with houses closer to the leak suffering higher discounts. We conclude that air quality degradation has a direct and longer term negative impact on house prices.

Keywords: Air Quality; gas leak; Housing Price (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2022-01-01
New Economics Papers: this item is included in nep-ene, nep-env and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:2022_71

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