A comparison of noxious facilities` impacts for home owners versus renters

Abstract

The siting of noxious facilities, such as hazardous waste facilities, is often vigorously opposed by local residents. As a result, one would expect people`s residential and employment choices to reflect a desire to avoid proximity to such facilities. Ibis behavior would in turn affect labor and housing prices. One technique that has been employed to implicitly value impacts of noxious facilities is the intercity hedonic approach, which examines the wage and land rent differentials among cities that result from environmental amenities and disamenities. However, most of the research focus has been on the behavioral response of home owners as opposed to renters. Since these two groups of residents vary on numerous dimensions such as marital status, age, sex, and personal mobility, it would not be surprising to find different marginal valuations of local site characteristics. We use 1980 Census data to derive separate estimates for owners and renters of the implicit value placed on eight different types of noxious facilities. Although the magnitude of the responses of renters and owners to noxious facilities and other environmental characteristics varies, the signs are generally consistent. The differences in values between owners and renters are not primarily due to differential mobility or sociodemographic factors. Controlling those factors decreases the differences between renters` and owners` implicit valuations by less than 10%. Unmeasured differences in characteristics between the two groups, such as tastes, risk aversion, or commitment to the community, must account for the remaining difference in valuations. These findings suggest that policymakers should separately consider the responses of owners and renters when estimating noxious facility impacts.