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Are Superfund sites super bad for housing prices?

Print | Comments () Posted by Beth Daley August 5, 2008 07:49 PM

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By Beth Daley, Globe Staff

Say the word Superfund when buying a house and well, people tend to get nervous.

Known as some of the most hazardous and dangerous waste sites in the United States, I’ve known people who didn't buy homes near them, fearful that toxic substances could be leaking into the nearby air or water to harm them. Think Civil Action.

Woburn contaminated site, 1980 (Globe photo)

So you’d probably think that if a Superfund site got cleaned up, housing prices would rise accordingly.

Not so, according to new research by Massachusetts Institute of Technology environmental economist Michael Greenstone who co-wrote a paper this month in the Quarterly Journal of Economics.

Greenstone compared neighborhoods around Superfund sites to neighborhoods surrounding toxic sites where Superfund cleanups did not take place and found that house prices and rental rates did not increase when a site was cleaned. In addition, the population of the neighborhoods and rate of new home construction near cleaned Superfund sites remained at pre-cleanup levels.

About two-thirds of 1,600 sites eligible for Superfund money around the country have undergone some kind of clean-up since the program began in1980, according to Greenstone. So far, about $43 million has been spent per site on average and another estimated $30 billion is needed to clean up the remaining sites, he notes. The average cleanup takes 12-13 years to complete.

“The lengthy interventions are disruptive and very expensive,’’ said Greenstone. “The housing market’s clear message is that the cleanups are not worth it to the people living near these sites.”

Greenstone’s point is that given how many environmental problems the world faces, from climate change to air pollution, why waste so much money on something that does not appear to improve people’s lives. If cleaned up sites don’t cause higher housing prices, why do it?

Of course, some would argue that a cleanup’s value is in improving public health and the environment – not housing prices. Others may say that a Superfund site’s reputation may last longer than the pollution does, but that is not a reason not to clean it up.

What do you think?

tags . Economics, Civil Action, Greenstone, MIT, Superfund