The Valuation of Contaminated Land

Abstract

This paper presents a Monte Carlo based method for explicitly accounting for uncertainty in the valuation of contaminated property. Environmental risk is being quantified by the scientific methods described in this paper. Financial risk is also quantifiable by these techniques. A 1993 Supreme Court case known as Daubert has changed the admission requirements for scientific evidence by expert witnesses. Hoyt (1997) notes that it is "imperative that real estate appraisers who testify be sure that their scientific evidence will stand up to the scrutiny of Daubert of their testimony may be rejected." A scientific method of quantifying the unique financial risk of this type of asset is used for the valuation of contaminated land.