Discussion Paper

The Effect of Voluntary Brownfields Programs on Nearby Property Values: Evidence from Illinois

Aug 16, 2012 | Joshua Linn


Brownfields are properties for which redevelopment is hampered by known or suspected contamination and by concerns about associated liability. Because failing to redevelop brownfields may negatively affect welfare and the environment, a number of states have created voluntary programs to reduce liability risks and encourage redevelopment of brownfields. For clean or remediated properties, the state certifies that owners of such sites are not subject to federal or state liability under certain conditions. Certification could increase nearby property values because of decreased contamination risk and amenities associated with redeveloping the brownfield. This paper focuses on the Site Remediation Program in Illinois, and estimates the effect of brownfields certification on nearby property values. Employing several strategies to account for unobserved and time-varying variables that may be correlated with certification, I find that certification of a brownfield 0.25 miles away raises property values by about one percent. In aggregate, the program has increased nearby property values by about two percent.

Several states have enacted voluntary cleanup programs for brownfields—sites for which redevelopment is hindered because of possible threats to human health and the environment—to mitigate the potential negative environmental and social welfare effects that can result from neglecting such properties. Theoretically, these certification programs correct a market failure that causes insufficient redevelopment and reduces property values. Despite theoretical arguments, empirical research has found mixed evidence on the benefits of such programs.

Most previous studies have focused attention on the effects of cleanup and certification on the values of brownfields properties themselves. RFF Fellow Joshua Linn, in a new discussion paper, takes a broader view and estimates the effects of brownfields certification programs on nearby residential property values. He examines the Site Remediation Program in Illinois, finding that the program has increased property values by about two percent and that the effect appears to be stronger for low-price houses.