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The Impact of Environmental Contamination on Condo Prices: A Hybrid Repeat‐Sale/Hedonic Approach
Author(s) -
Case Bradford,
Colwell Peter F.,
Leishman Chris,
Watkins Craig
Publication year - 2006
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/j.1540-6229.2006.00160.x
Subject(s) - externality , contamination , groundwater contamination , economics , groundwater , natural resource economics , agricultural economics , environmental science , microeconomics , ecology , engineering , geotechnical engineering , aquifer , biology
We extend the literature on the impact of externalities using an approach based on a hybrid of hedonic and repeat‐sales methods. The externality in question is groundwater contamination in Scottsdale, Arizona. The use of condominium sales allows us to assume that major physical characteristics remain unchanged, but location parameters may be altered by urban growth and development as well as contamination. We find an economically significant discount for properties located in the contaminated area. Interestingly, it does not appear until several years after the contamination becomes publicly known, and it seems to have disappeared before the end of the study period.