Abstract
Property‐value guarantees (PVGs) by the proponent of a waste facility may be an effective tool to compensate nearby property owners if the facility impacts property values adversely. A review of the theory, and of 13 empirical property‐value studies, shows inconsistent results. For a thorough test, physicalimpact analyses and property‐value‐differential analyses are carried out at two typical waste facilities, a landfill and an incinerator. However, no significant effects of observed physical impacts on property sales prices are shown to be present. The insignificant results are possibly caused by the violation of three crucial assumptions: Buyers are usually not perfectly informed about facility impacts; buyers may be less sensitive to the impacts; offsetting property‐value increases may occur due to development in the host community. Further, sellers may prefer to hold out, refuse to sell, or wait longer to sell for a better price. Property‐value decreases are, therefore, inaccurate indicators for facility impacts or host community opposition. Hence, if property‐value guarantees are effective in gaining the acceptance of the host community, it is because they address fears about facility impacts rather than compensate for objectively measurable property‐value losses.
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