The Effect of the Nengda Incineration Plant on Residential Property Values in Hangzhou, China

Incineration plants and derelict industrial sites can have a number of adverse effects on the local environment and social welfare, including diminution of property values. Although many incineration plants exist in China, there has been relatively little research done to estimate the negative externality affects there. In this paper, we examine the effects of the Nengda municipal incineration plant in Hangzhou city on residential property values. We employ a hedonic pricing model to examine the sales of over 500 residential condominium units in over 20 multifamily buildings within ten kilometers of the incineration plants over a one-year-period including 2014. The results show that proximate properties show decreases in initial listing price of up to 25.9%, declining monotonically until the effect is gone at three kilometers from the incinerator. These results are comparable to similar situations in the United States and Canada.