Toxic Assets: How the Housing Market Responds to Environmental Information Shocks

Jeremy G. Moulton, Nicholas J. Sanders and Scott A. Wentland

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Abstract

Employing national microdata from Zillow, we examine how United States housing markets respond to expanded information on local pollution stemming from a 1998 reporting change to the Toxics Release Inventory (TRI). Using both a difference-in-differences and a regression discontinuity in time design, we find news coverage of the new TRI data lowered sales prices of homes near the largest reporting polluters, but only within a tight geographic distance. Effects are isolated to homes within 0.5 miles of facilities reporting the largest amount of emissions (>100 tons). This price capitalization implies public information on local polluters shifted private market behavior, suggesting a role for government as provider of information.

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