Welfare Impacts of an Environmental Disamenity: A Survival Model Approach
21 Pages Posted: 17 Feb 2006
Date Written: February 12, 2006
A survival model of days until sale of a house is used to measure the welfare impact of a nearby environmental disamenity. The model controls for housing and neighborhood characteristics, isolating the effect of landfills on nearby transactions. I hypothesize that sellers may have more difficulty selling homes near landfills, resulting in potentially significant increases in opportunity cost of holding a property. Hedonic models, which have been widely used to measure welfare losses associated with a disamenity cannot capture the impacts I investigate. In a property level comparison, I find that the same house 5 miles from a landfill, as compared to 1 mile, is on the market an extra 24.7 days, incurring an average welfare loss of $473.44.
Keywords: Environmental Economics, Survival Models, House Prices
JEL Classification: A13, Q29, R15, R22
Suggested Citation: Suggested Citation