Property Value Impacts and Risks Perceptions: A Hedonic Analysis of Anniston, Alabama
Type of DegreeThesis
Agricultural Economics and Rural Sociology
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The city of Anniston, and to a larger extent Calhoun County, Alabama, has been affected by two major types of environmental disamenities: polychlorinated biphenyls (PCBs) released into the soils and waterways, and the emission of toxic particles from the Chemical Weapon Incinerator. The Solutia facility in Anniston is one of the two chemical facilities to have produced PCBs in the United States. During its early operational history, the plant disposed of hazardous waste in an unlined landfill on-site. Runoff from the landfill flowed into drainage ditches exiting the plant, contaminating nearby and downstream communities. On the other side of town, only 6 miles west from the Solutia plant lies the Anniston Army Depot. In 1996, the U.S. Army announced publicly the construction of a chemical incinerator at the Depot to dispose of its decaying chemical weapons. In this study, I explore property value impacts of these disamenities by estimating hedonic price models on an extensive and unique set of data collected from the county. The compiled data contains 9,655 housing records that were geo-coded to allow geographic information system (GIS) techniques to be used in addition to the hedonic technique. In addition, a survey was conducted of individuals buying a house in Calhoun County since January 1993. To analyze the data, a hedonic price model is applied to calculate percent change in property values for the residents of Calhoun County. Residents’ welfare, measured by property value gains and losses, is assessed for time periods, corresponding to different stages of operation at the two major hazardous facilities in West Anniston. Both Solutia’s chemical plant and the U.S. Army Depot are continuously being scrutinized by the community and federal and local agencies. The results show that both environmental disamenities have a significant negative impact on the real estate market but the PCBs magnitude is greater than the chemical incinerator’s. These findings are confirmed by the risk perception model, which incorporates risk perception levels of residents from the mail survey. A total of 730 usable surveys were used in the risk perception model. The conclusions are that risk perception varies with exposure to disamenities. Surveyed residents are more concerned about the risk of a possible natural disaster affecting the safety of stored chemical weapons than a possible terrorist attack on the military facility. Higher perceived risks of a natural disaster are correlated with lower house values but this price impact is reduced as distance to the incinerator is increased.