More than 30 years ago, factories began closing across the Great Lakes region, the largest freshwater system on the planet, leaving behind wastes such as polychlorinated biphenyls (PCBs), commonly used as coolants and insulating fluids, and polybrominated diphenyl ethers (PBDEs), commonly used as flame retardants. These pollutants got into the water, the soil, the wildlife, and even the people surrounding the areas, causing health issues like infertility, birth defects, cancer, and neuro-behavioral disorders. Efforts to clean up the affected Great Lakes areas have been ongoing since then.
The United States Environmental Protection Agency’s Great Lakes Areas of Concern program, or AOCs, established in 1987, was primarily informational. It identified the Great Lakes areas most affected by environmental degradation—42 total, with 30 in U.S. waters—and directed the United States and Canada to clean them up, but there was no legal mechanism to require cleanup, or any federal dollars provided for that reason. So the initial AOC designation mainly served to stigmatize these areas.
In 2002, however, the EPA’s Great Lakes Legacy Act authorized $50 million a year in federal monies for cleanup, and in 2010, the Great Lakes Restoration Initiative authorized just over $100 million a year between 2011 and 2019, with an additional $1 billion earmarked for 2022-2026. Both of these established grants programs to fund cleanup projects ranging from shoreline restoration to restoration of fish passage, from biophysical assessments to removal of contaminated sediments. Since 2004, almost $1.23 billion federal dollars have been spent on restoration efforts.
But how did all of these cleanup efforts affect housing markets in the polluted areas?
In “Cleaning Up the Great Lakes: Housing Market Impacts of Removing Legacy Pollutants,” published last month in the Journal of Public Economics, Culverhouse’s Dr. Alecia Cassidy, along with collaborators Robyn C. Meeks (Sanford School of Public Policy, Duke University) and Michael R. Moore (School for Environment and Sustainability, University of Michigan) seek to answer this question.
After analyzing publicly-available information about grants, housing prices, and AOC communication efforts, the researchers found:
- The first designation of AOCs in 1987 had a negative impact on housing prices of properties within 20 kilometers of the AOCs. Interestingly, these negative changes in housing prices do not appear to be due to anything other than the stigma of being located near a polluted area.
- However, they also found that the later AOC remediation grants offset this original effect. While the initial listing dropped housing prices by an average of $25,700 per house, the grants increased the value by $27,295 per house.
- This suggests that grants do not simply cancel losses in housing prices due to pollution, but have benefits that exceed their costs.
“Federal remediation grants have positive effects on property values that outweigh the remediation costs,” said study co-author Alecia Cassidy.
“The federal programs are a success story from an economic perspective.”