Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings

Regulatory oversight of toxic emissions from industrial plants and understanding about these emissions’ impacts are in their infancy. Applying a research design based on the openings and closings of 1,600 industrial plants to rich data on housing markets and infant health, we find that: toxic air emissions affect air quality only within 1 mile of the plant; plant openings lead to 11 percent declines in housing values within 0.5 mile or a loss of about $4.25 million for these households; and a plant’s operation is associated with a roughly 3 percent increase in the probability of low birthweight within 1 mile. (JEL I12, L60, Q52, Q53, Q58, R23, R31) Industrial plants that emit toxic pollutants are ubiquitous in the United States today, and many lie in close proximity to major population centers. These plants emit nearly 4 billion pounds of toxic pollutants in the United States annually, including 80,000 different chemical compounds. 1 Whereas criteria air pollutants like particulate matter have been regulated for decades, regulation of airborne toxic pollutants remains in its infancy. The nascent state of regulation of these emissions is controversial because, on the one hand, most of the chemicals emitted have never undergone any form of toxicity testing (US Department of Health and Human Services 2010) 2 , and, on the other hand, they are widely believed to cause cancer, birth defects, and damage to the brain and reproductive systems (Centers