The property value impacts of industrial chemical accidents

Using hedonic methods, we examine how chemical accidents at industrial facilities impact home values. The study focuses on facilities regulated by the U.S. Environmental Protection Agency's Risk Management Plan (RMP) program, which is in place to reduce the risk of harm to offsite populations from accidental chemical fires, explosions, and releases of toxic vapors. RMP facility and accident data were linked to residential transactions in Michigan, Ohio, and Pennsylvania. To facilitate causal inference, alternative difference-in-differences and triple differences models are estimated, where we compare homes near and far, and before and after, an accident; as well as homes near facilities where an accident did and did not occur. We find that the typical accident does not generally affect home values, but accidents resulting in offsite injuries, property damage, evacuations, or shelter-in-place orders lead to a 5% to 8% decrease in the value of homes within five kilometers; suggesting an average loss of $12,000 to $20,000. The benefits of policies that help avoid these impacts are particularly relevant from an environmental justice standpoint. Proximity to an RMP facility, irrespective of any incidents, is associated with significantly lower home values. Existing inequities are exacerbated by chemical accidents that impact offsite populations.