Environmental Liability and Redevelopment of Old Industrial Land

Hilary Sigman

NBER Working Paper No. 15017
Issued in May 2009
NBER Program(s):Environment and Energy Program, Law and Economics Program, Public Economics Program

Many communities are concerned about the reuse of potentially contaminated land ("brownfields") and believe that environmental liability is a hindrance to redevelopment. However, with land price adjustments, liability might not impede the reuse of this land. Existing literature has found price reductions in response to liability, but few studies have looked for an effect on vacancies. This paper studies variations in state liability rules -- specifically, strict liability and joint and several liability -- that affect the level and distribution of expected private cleanup costs. It explores the effects of this variation on industrial land prices and vacancy rates and on reported brownfields in a panel of cities across the United States. In the estimated equations, joint and several liability reduces land prices and increases vacancy rates in central cities. Neither a price nor quantity effect is estimated from strict liability. The results suggest that liability is at least partly capitalized, but does still deter redevelopment.

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Document Object Identifier (DOI): 10.3386/w15017

Published: Hilary Sigman, 2010. "Environmental Liability and Redevelopment of Old Industrial Land," Journal of Law & Economics, University of Chicago Press, vol. 53(2), pages 289-306, 05. citation courtesy of

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