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Working Paper: A Hedonic Analysis of the Impact of LUST Sites on House Prices in Frederick, Baltimore, and Baltimore City Counties

Paper Number: 2010-01

Document Date: 01/2010

Author(s): Jeffrey Zabel and Dennis Guignet

Subject Area(s): Economic Damages/Benefits; Valuation Methods

Keywords: lust; hedonic analysis; groundwater contamination; remediation benefits

Abstract: Petroleum from leaking underground storage tanks (LUSTs) can contaminate local soil, and surface and groundwater. In some cases this can pose health risks to the surrounding population. Focusing on single family home sales from 1996-2007 in three Maryland counties, we use a hedonic house price model to estimate the willingness to pay to live father away from LUST sites. Particular attention is given to how property values are affected by leak and cleanup activity at a LUST site, the severity of contamination, the presence of a primary exposure path (i.e., private groundwater wells), and publicity surrounding a LUST site. The results suggest that although the typical LUST site may not significantly affect nearby property values, more publicized (and more contaminated sites) can impact surrounding home values by more than 10%.

Published: Zabel, Jeffrey E., and Dennis Guignet. 2012. "A hedonic analysis of the impact of LUST sites on house prices," Resource and Energy Economics 34(4): 549-564.

This paper is part of the Environmental Economics Working Paper Series.

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