Impacts of an Urban Environmental Event on Housing Prices: Evidence from the Hangzhou Pesticide Plant Incident
Publication: Journal of Urban Planning and Development
Volume 146, Issue 2
Abstract
Environmental pollution incidents affect urban residents and the natural environment. This article employs hedonic price models and a difference-in-difference (DID) approach to examine how widely in space an environmental incident affects housing prices and how great this effect is over several time periods. Using the well-known 2014 Hangzhou Pesticide Plant (HPP) pollution cleanup incident as an example, this research confirms the following: (1) This pesticide plant incident depreciated house prices within 3 km by 2.955%, that is by 41,712 yuan, at the 5% significance level. (2) The devaluation persisted even after the removal of the pollution. Our results suggest that environmental events can devaluate nearby properties beyond the extent of the actual pollution by imposing a “quasi-stigma” (negative perception) on these houses. This effect can be persistent and hard to overturn and arises from perceived disamenitities, taints on the properties.
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Published In
Journal of Urban Planning and Development
Volume 146 • Issue 2 • June 2020
Copyright
© 2020 American Society of Civil Engineers.
History
Received: Feb 20, 2019
Accepted: Sep 5, 2019
Published online: Apr 8, 2020
Published in print: Jun 1, 2020
Discussion open until: Sep 8, 2020
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