An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values

Since the early work of Rosen, Roback, and more recently Blomquist, Berger, and Hoehn, economists have recognized that local environmental amenities influence wage rates and property values jointly. Moreover, local differentials in these prices can be used to implicitly value local amenities. Unfortunately, much of the empirical work on noxious facilities has focused on a narrow range of facility types, often within a single city. Generally, distance from the facility is used to proxy exposure to the disamenity, although it is possible that the mere existence of a noxious facility in a region has an impact on local residents. We employ an intercity hedonic model to measure the joint property value and wage effects of a broad range of noxious facilities. Using Public Use Microdata from the 1980 United States Census, we show that property values and / or wages are significantly influenced by the existence of noxious facilities. Calculated implicit prices reveal that local residents are most averse to the presence of petrochemical refineries and nuclear power plants.