Measuring the Impacts of Solid Waste Disposal Site Location on Property Values

Abstract

T HE large and growing quantity of solid wastes poses an increasingly complex disposal problem for rural and urban areas. One important effect of the location of disposal sites is the external effect on adjacent property values. This paper attempts to estimate external effects on property prices resulting from the location of landfill types of solid waste disposal sites. This has important implications for public policy on site location and possible compensation to internalize the resultant external effects. A single equation linear regression model for price estimation is hypothesized. The data sample is 182 observations of single-unit house sales over the period 1962-1970 in the neighborhoods around five solid waste disposal sites in Fort Wayne, Indiana. Date and price of sale, as well as location of the property and detailed information about dwelling characteristics, were obtained. Three general categories of predetermined variables are used: (1) Physical attributes of residential property-size of house and lot, number of bathrooms and bedrooms, age of house, amount of encumbrance and ownership-tenant occupancy (the key features of the quantity and quality of living service provided by a piece of residential property); (2) year of sale-the best available measure of the general level of cost of housing; (3) factors representing amenities and disamenities associated with solid waste disposal sites and neighborhood characteristics. Based on a diffusion phenomenon, the impacts of solid waste disposal sites on residential property prices were measured by distance from the nearest disposal site and the absolute degrees that the resiential property is away from downwind (prevailing) of the disposal site. Zero-one variables were used to represent differences among disposal sites. The predetermined variables in the linear model explained approximately 78 percent of the variation in residential property prices. Coefficients of the physical attribute variables were all s g ificantly different from zero at the .05 level and all had the hypothesized sign except the number of bedrooms. The distance and angle v riables are key policy variables in the model. Both coefficients were positive as hypothesized, suggesting that a premium is placed on being a g eater distance away and being away from downwind of disposal sites. The estimated coefficients indicate that on the average the price of residential property increases 61 cents per foot of distance and $10.30 per degree away from downwind of a disposal site. This first attempt to measure external effects f solid waste disposal sites on adjacent property values has important implications for community development and policy. The empirical results suggest magnitudes of costs imposed and indicate the nature of their distribution around solid waste disposal sites. In decisions concerning disposal site location, external social cost and benefit are an integral and possibly major factor. Further research is therefore warranted in refining the model and its variables to more accuately measure these effects.