Valuing the risk attached with living close to a hazardous waste site : the case of the BT Kemi scandal in Teckomatorp

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In this thesis I estimate a monetary value of the risk attached to living near a hazardous wastesite in the town of Teckomatorp. This site is the result of hundreds of rusty leaking barrels oftoxins being buried in the ground by the company BT Kemi in the 1970’s. Ever since then thesite has been remediated in several steps and is still contaminated today. For estimating theperceived risk of living near this site I use a hedonic price model (HP) which is a form of arevealed preference approach. In a HP model the price of a market good is a function ofdifferent utility-bearing characteristics and the estimated parameters can be used to calculatethe implicit prices of these characteristics. In this case I use a data set from the NationalSwedish Institute for Building Research (IBF) and regress property price on a number ofhousing characteristics. I compare an estimated town-effect for Teckomatorp with theestimates for two control towns: Billeberga and Anderslöv. I can confirm my hypothesis that,after controlling for housing characteristics, there is a negative effect on prices of prope...