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Mercantile Value Reduction: Accounting for Stigma on Contaminated Land in Germany

Stephan Bartke () and Reimund Schwarze

ERES from European Real Estate Society (ERES)

Abstract: The clean-up and re-use of contaminated land is a risky endeavour for many reasons. The clean-up may be incomplete so that some pollution goes undetected. Some substances in the ground may be unknown to be pollutants at the time of the clean-up process but turn out to be such later on. Areas may be completely clean but yet suffer a depressed market value because of ëstigmaí, i.e. the psychological fear that some negative impact or remaining cost may appear even though a proper site clean-up had been conducted. The phenomenon of stigma on contaminated land has been widely debated in the United States but received little scholarly attention in Europe ñ despite the fact that accounting for stigma is a legally approved best practice of appraisal in European countries. This paper surveys the German approach for the accounting of stigma on contaminated land and proposes a risk scoring method of accounting based on a survey among German appraisers and a study of sales practices of the Brandenburgische Boden GmbH ñ an East German property conversion company in charge of revitalising 22000 ha of lands formerly used by the Russian army in Germany.

JEL-codes: R3 (search for similar items in EconPapers)
Date: 2009-01-01
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Handle: RePEc:arz:wpaper:eres2009_353