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The impact of clandestine methamphetamine labs on property values: Discovery, decontamination and stigma

Bern C. Dealy, Brady P. Horn and Robert Berrens

Journal of Urban Economics, 2017, vol. 99, issue C, 161-172

Abstract: While a large literature addresses the societal cost of substance abuse across a number of domains, little is known about the impact of substance abuse on property values. This study uses unique data from Linn County, Oregon and a spatial, difference-in-difference identification strategy to test the impact of the discovery and the subsequent decontamination of clandestine methamphetamine (meth) laboratories (labs) on property values. Results suggest that even though meth labs are typically found in less-desirable neighborhoods with lower home prices, the discovery of a lab causes the price of nearby homes to drop by approximately six and a half percent. Further, the decontamination of homes used as meth labs results in an increase in property values by approximately five percent. Overall, these results suggest that beyond the potential direct benefits of reducing domestic meth production (e.g., reductions in crime, child abuse), disrupting domestic meth production has another important benefit in mitigating negative effects on property values. Also, state laws mandating the decontamination of meth labs and corresponding decontamination programs may yield significant positive net benefits. Finally, the fact that meth lab decontamination does not fully offsets the impact of discovery (homes recover about 75%) suggests a potential stigma effect associated with meth lab discovery.

Keywords: Substance abuse; Methamphetamine; Crime; Hedonic pricing model; Property values (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:eee:juecon:v:99:y:2017:i:c:p:161-172