Determining Market Perceptions on Contamination of Residential Property Buyers using Contingent Valuation Surveys

Abstract

This study reports on the results of several residential contingent valuation (CV) studies conducted throughout the US. Over the past several years CV has often been used to illustrate potential residential buyer bid prices for contaminated real property. The data set for this study contains 1,115 telephone interviews and examines the consistency of the results for residential property affected by a Leaking Underground Storage Tank (LUST) in different markets in eight states, controlling for income, age, education, local market type, and other demographic factors. Negative discounts associated with a LUST for marginal bidders in the top half of the market were quite consistent across states, varying from ?25% to ?33%, with an average of ?31%,. Using ANOVA indicates that bidding patterns from six of the seven states were statistically similar. Male bidders, those over 40 years of age and those with no high school degree were more likely to bid, while those with higher incomes and those bidding on certain, rather than suspected contamination, were less likely to bid. Local market type did not appear to affect bid outcomes. Using the marginal bidder approach, the CV results benchmark reasonably closely to, but still higher than, revealed preference outcomes for residential LUST sites in Ohio.