Externality effects of small-scale hazardous waste sites: evidence from urban commercial property markets

Studies have found that severely contaminated properties, such as those on the U.S. EPAʹs National Priority List (NPL), reduce the value of nearby single-family homes. However, the vast majority of hazardous waste sites (HWS) are not so severely contaminated as those on the NPL. We also know little about HWS effects on other land-uses such as commercial and industrial properties, which may be of greater interest since these properties are more likely to be located near contaminated sites. Using data for Atlanta, Georgia, HWS are found to negatively affect the market value of nearby commercial and industrial properties. Although none of the HWS in this study are on the NPL, their impacts are estimated to be quite substantial in magnitude. Estimates of the total value losses caused by many of the sites are sufficiently large relative to the cost of remediation to justify tax-increment financing as a clean-up option.