Contamination and Incomplete Information:: Bounding Implicit Prices using High-Profile Leaks.

Incomplete information can lead households to underprice environmental disamenities in the housing market. To bound true implicit prices, researchers sometimes turn to high-profile cases involving significant media and community attention. However, prior research also finds that high-profile cases can lead to "stigma" effects that may confound interpretation of implicit prices. This study compares these opposing effects at the highest profile underground storage tank releases across the United States over the last thirty years. We utilize covariate matching and estimate difference-in-differences hedonic regressions at each site, and then conduct a cross-site meta-analysis to estimate the average treatment effects. We find an average housing price depreciation of 2% to 6% upon discovery of a release, which is an upper bound on the implicit price of contamination at more typical sites. Following cleanup, we find a housing price appreciation of a similar magnitude, suggesting that even in high-profile cases, surrounding neighborhoods do not experience persistent stigma.