Academic journal article Journal of Regional Analysis & Policy

The Impact of Brownfields on Residential Property Values in Cincinnati, Ohio: A Spatial Hedonic Approach

Academic journal article Journal of Regional Analysis & Policy

The Impact of Brownfields on Residential Property Values in Cincinnati, Ohio: A Spatial Hedonic Approach

Article excerpt

Abstract. This paper empirically assesses the impact brownfield sites have on market values of single-family residential properties. Using three different hedonic model specifications, Ordinary Least Squares and Spatial Autoregressive and Spatial Error Models, this study shows that properties located less than 1,000 feet from a brownfield site experience a significant depreciation in property values. As expected, spatial dependence among real estate property values is present, meaning that the two spatial hedonic model specifications are superior to the Ordinary Least Squares specification. The study contributes to the relevant real estate and urban economics literature by determining the negative impact brownfield sites have on the value of single-family residential properties in our study region in Cincinnati, Ohio, by explicitly accounting for the phenomenon of spatial dependence in the dependent variable and by addressing the declining influence of brownfield sites on property values in a nonlinear relationship.

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1. Introduction

Brownfield sites (or simply brownfields) are abandoned, idled, or underused real properties that are currently or were formerly employed for industrial or commercial purposes and whose expansion, redevelopment, or reuse may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant (Braswell, 1999; Bacot and O'Dell, 2006; US EPA, 2009, among others). Contaminated properties yield little revenue for local governments. They are unsafe for ecosystems and human health and impair the neighborhoods that contain them, both socially and aesthetically. In addition, they negatively impact the housing prices of residential properties that are located in close proximity (Bromberg and Spiesman, 2006).

It comes as no surprise that a large number of studies have strived to understand the benefits of brownfield redevelopment. Attoh-Okine and Gibbons (2001), Amekudzi et al. (2003), and Barnett (2006), for instance, focused on the revitalization of inner city neighborhoods through housing, jobs, and tax revenues resulting from brownfield redevelopment. In an environmentally-oriented regional level study, Alberini et al. (2005) argued that redeveloping brownfields helps to reduce the harmful effects of the site's groundwater, water, soil, and/or air pollution on ecological systems as well as on human health1. Akinmoladun and Lewis (1998) and Attoh- Okine and Gibbons (2001) emphasize the importance of brownfield redevelopment for combating the negative environmental effects of urban sprawl. Amekudzi et al. (2003) studied the effects of infill development to address urban sprawl. Gist (1999), Amekudzi et al. (2003), and Bacot and O'Dell (2006) focused on the impacts that redevelopment of contaminated properties has on neighborhoods and their citizens.

In this study, we use the spatial hedonic pricing framework to empirically estimate the impacts brownfield sites have on the market values of single- family residential properties. The applied hedonic pricing model, based on the work by Lancaster (1966) and Rosen (1974), is the appropriate method to estimate the marginal implicit prices of individually selected housing characteristics, such as structural, neighborhood, and locational characteristics2. In other words, we determine housing prices as a function of a set of utility-bearing intrinsic properties and estimate people's price sensitivity as to these intrinsic characteristics. Based on the relevant brownfield literature, we expect that close proximity to potentially contaminated sites will depreciate housing prices.

Though the idea to study the impact of brown- fields on neighboring property prices is not new, recent studies by Kaufman and Cloutier (2006), Lon- go and Alberini (2006), and De Sousa et al. (2009) all chose an aspatial hedonic pricing framework, ignoring the possibility for spatial dependence. …

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