Environmental Risk Perceptions and Market Valuation

Texas A&M Research Foundation, College Station TX

Investigators

Abstract

The advent of spent nuclear fuel shipments from over 100 temporary storage sites across the country to a proposed permanent geologic repository at Yucca Mountain, Nevada, would involve thousands of shipments or highly radioactive materials. Both stakeholders and scholars have raised concerns that these shipments will stigmatize properties along the transport routes, imposing costs on residents and landowners. This study will employ experience with an existing spent fuel shipping program in South Carolina to empirically test for the magnitude and longevity of stigma impacts on property values from highly publicized spent fuel shipments. Using as a point of departure our earlier research that found the South Carolina shipments to reduce residential property values adjacent to the route by approximately 3%, this study will include a large geographic sample and decade-long time series analysis to refine estimates of the impact (including the gradient of that impact) on prices, and the temporal stability of that impact. The project will develop a consistent Bayesian framework to empirically evaluate the formation of risk perceptions and the manner in which risk perceptions translate into market determined real estate prices. This framework will provide the basis for estimating hedonic models in order to understand how individuals form and update beliefs about the risk of personal harm due to low probability events. A combination of market and survey data will be used to assess the impact of risk perceptions about the transportation of spent fuel through both urban and rural areas on home prices in those areas. The public policy implications of the study are significant in that the transport routes under consideration for shipment of spent fuel from generator sites to the proposed Yucca Mountain, Nevada repository would funnel shipments through large urban areas in which the potential property value impact is enormous. Opponents of the Yucca Mountain repository have argued that these potential losses should be considered in the evaluation of transport routes and, indeed, in deciding how to manage spent fuel more generally. Yet the magnitudes of these potential losses remain largely speculative. This study will provide more definitive information about (a) whether the negative impact of the shipments of property values persists over time under normal operating conditions and (b) the shape of the gradient in the price reductions along the route.