Economic benefits of remediating the White Lake and Muskegon Lake Areas of Concern

Abstract

This study uses hedonic modeling to estimate the property value benefits of remediation in the White Lake and Muskegon Lake, MI Areas of Concern (AOC). Both sites had long histories of industrial contamination; in the case of White Lake, this included tannery waste, and in the case of Muskegon Lake, this included oil spills. Several remediation projects in White Lake led to its delisting as an AOC in 2014. In contrast, remediation in Muskegon Lake is ongoing and this study focuses on the benefits of several projects that removed contaminated sediment and debris by 2018. Spatial Difference-in-Difference (DiD) approaches are used after Euclidean distance-based matching to estimate benefits, comparing housing price differences pre- and post-remediation between homes near the AOC (the treated group) and homes further away (the control group). Results reveal that without remediation homes near the White Lake AOC lose 12.4 percent of their value, with remediation mitigating losses to 4.5 percent. This implies a 64 percent recovery of housing values which amounts to $5.3 million in total benefits. Similarly, homes near the Muskegon Lake AOC lose 10.3 percent of their value with remediation reducing losses to 3.3 percent. This implies a 68 percent recovery of housing values and $11.2 million in total benefits. These findings reveal the property value benefits that can result from remediated AOCs.