Incomplete Information and Adverse Impacts of Environmental Cleanup

We use the hedonic method to examine the external effects of Rhode Island's voluntary brownfield program. We hypothesize that housing price impacts are a combination of valuation of environmental improvement and response to information disclosure initiated by remediation. The results indicate that housing prices decline after nearby remediation, suggesting incomplete information about the presence of risk. Further, we find empirical evidence that price impacts and the degree of incomplete information are different across neighborhoods. Specifically, low-housing-value neighborhoods experience price declines following remediation, while high-value neighborhoods experience price increases, leading to an overall regressive impact.