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

Dennis Guignet, Robin R. Jenkins, Christoph Nolte and James Belke

No 348917, National Center for Environmental Economics-NCEE Working Papers from United States Environmental Protection Agency (EPA)

Abstract: 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. We 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. We assess the assumptions needed for a formal welfare interpretation and conclude these results roughly approximate losses experienced by nearby residents.

Keywords: Environmental; Economics; and; Policy (search for similar items in EconPapers)
Pages: 75
Date: 2025-01
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Persistent link: https://EconPapers.repec.org/RePEc:ags:nceewp:348917

DOI: 10.22004/ag.econ.348917

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