The Effects of Refineries on Neighborhood Property Values

Capitalization of negative neighborhood externalities may be affected over time by household sorting, events that attain public notoriety and the relative proximity of adjacent parcels to the externality. Using a 1,999-observation database spanning thirteen years all three of these issues are empirically investigated for two petrochemical refineries. As expected, evidence of sorting, short-term event effects and nearby proximity are all found to be contributors to capitalization. The extent of nearby buffering land areas also appears to contribute to reducing capitalization.