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Stigma: The Psychology and Economics of Superfund (2004)

Paper Number: EE-0486

Document Date: 07/01/2004

Author(s):  Schulze, William; Messer, Kent; Hackett, Katherine; Cameron, Trudy; Crawford, Graham; McClelland, Gary

Subject Area(s): Economic Analysis, Superfund, Psychology, Stigma, Benefits Analysis, Hedonic Property Valuation

Keywords:  Economic Analysis, Superfund, Psychology, Stigma, Benefits Analysis, Hedonic Property Valuation

Abstract: 

This study documents the long-term impacts of Superfund cleanup on property values in communities neighboring prominent Superfund sites. To understand the impacts, one must integrate the psychology of risk perceptions and stigma with the economics of property values that capture those perceptions. The research specifically examines the sale prices of nearly 35,000 homes for up to a thirty-year period near six very large Superfund sites. To the authors' knowledge, no property value studies have examined sites in multiple areas with large property value losses over the length of time used here. The results they obtain for these very large sites are both surprising and inconsistent with most prior work. The principal result is it that, when cleanup is delayed for ten, fifteen, and even up to twenty years, the discounted present value of the cleanup is mostly lost, most likely because sites are stigmatized and the homes in the surrounding communities are shunned. The psychological model developed suggests that, for very large sites, expedited cleanup and simplifying the process to reduce the number of stigmatizing events that attract attention to sites would reduce property losses.

This study documents the long-term impacts of Superfund cleanup on property values in communities neighboring prominent Superfund sites. To understand the impacts, one must integrate the psychology of risk perceptions and stigma with the economics of property values that capture those perceptions. The research specifically examines the sale prices of nearly 35,000 homes for up to a thirty-year period near six very large Superfund sites. To the authors' knowledge, no property value studies have examined sites in multiple areas with large property value losses over the length of time used here. The results they obtain for these very large sites are both surprising and inconsistent with most prior work. The principal result is it that, when cleanup is delayed for ten, fifteen, and even up to twenty years, the discounted present value of the cleanup is mostly lost, most likely because sites are stigmatized and the homes in the surrounding communities are shunned. The psychological model developed suggests that, for very large sites, expedited cleanup and simplifying the process to reduce the number of stigmatizing events that attract attention to sites would reduce property losses.

This paper is part of the  Environmental Economics Research Inventory.

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  • Stigma: The Psychology and Economics of Superfund - Main Report (2004) (PDF)(241 pp, 4 MB, 07/01/2004, EE-0486 pt1)
    Study documents the long-term impacts of Superfund cleanup on property values in communities neighboring prominent Superfund sites. The research specifically examines the sale prices of nearly 35,000 homes for up to a thirty-year period near six very large Superfund sites. The psychological model developed suggests that, for very large sites, expedited cleanup and simplifying the process to reduce the number of stigmatizing events that attract attention to sites would reduce property losses.
  • Stigma: The Psychology and Economics of Superfund - Appendices (2004) (PDF)(141 pp, 2 MB, 07/01/2004, EE-0486 pt2)
    Appendics to main report on impacts of Superfund cleanup on property values in communities neighboring prominent Superfund sites