Modeling the Effects of Refinery Emissions on Residential Property Values

Abstract

We examined the effects of refinery air pollution on house prices near Houston, Texas. The affected area was identified through AERMOD air modeling of past releases of sulfur dioxide, a proxy for respiratory risk. A total of 3,964 residential MLS sales from 2006 to 2011 were used to populate an OLS model, a spatial model, and a spatial model with an additional endogenous variable. The findings indicate that air pollution has a significant negative 6%–8% loss on house prices. For one year, the negative effect is shown to generally diminish with distance up to about two miles from the refinery.