The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study.

• Industrial chemical accidents can impose external costs on nearby communities. • We conduct a nationwide hedonic analysis of how accidents impact home values. • Accidents leading to offsite impacts result in a 2-3% reduction in home values. • This price effect extends 5.75 km, and translates to a $5,350 loss per home. • The results can inform policies intended to reduce accident risks and severity. Industrial chemical accidents involving fires, explosions, or toxic vapors impose external costs on nearby communities. We examine changes in residential property values using nationwide data on chemical facilities, accidents, and residential transactions within a spatial difference-in-differences framework. We find that accidents with direct offsite impacts lower home values within 5.75 km by 2-3%, an effect that remains for about 10 to 12 years, on average. We estimate an average loss of $5,350 per home, which translates to a $39.5 billion loss to communities around the 661 facilities where an offsite impact accident occurred. We assess the assumptions needed for a formal welfare interpretation and conclude that these results roughly approximate losses experienced by nearby residents. [ABSTRACT FROM AUTHOR]