The impact of mining and smelting activities on property values: a study of Mount Isa city, Queensland, Australia

Abstract

Much publicity has been given to the problem of high levels of environmental contaminants, most notably high blood lead concentration levels among children in the city of Mount Isa because of mining and smelting activities. The health impacts from mining‐related pollutants are now well documented. This includes published research being discussed in an editorial of the Medical Journal of Australia (see Munksgaard et al. 2010). On the other hand, negative impacts on property prices, although mentioned, have not been examined to date. This study rectifies this research gap. This study uses a hedonic property price approach to examine the impact of mining‐ and smelting‐related pollution on nearby property prices. The hypothesis is that those properties closer to the lead and copper smelters have lower property (house) prices than those farther away. The results of the study show that the marginal willingness to pay to be farther from the pollution source is AUS $13 947 per kilometre within the 4 km radius selected. The study has several policy implications, which are discussed briefly. We used ordinary least squares, geographically weighted regression, spatial error and spatial autoregressive or spatial lag models for this analysis.