Research: Economic Benefits of Water Pollution Cleanups Outweigh Costs

Water pollution is a major issue throughout the United States. More than $1.23 billion has been spent by the U.S. government since 2004 on the cleanup of toxic pollutants in waterways around the Great Lakes region alone.

A new research study finds that federal grants aimed at remediating Great Lakes Areas of Concern, or AOCs, had a notable and statistically significant effect on housing prices within about a 12-mile radius of specific regions on all five lakes.

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Published in the Journal of Public Economics, the research shows that the initial designation of AOCs lowered property values by an average of $25,700 per house. However, the subsequent awarding of federal grants to clean up these areas raised property values by an average of $27,295 per house—resulting in a net-positive benefit of the AOC program of $1,595 per house. 

“Our research finding that the benefits of the cleanups outweigh the costs is important,” said study co-author Robyn Meeks, assistant professor at the Sanford School of Public Policy at Duke University.

Meeks points out this research has implications for other states and regions as well.

“People in every state are thinking about the quality of water where they live. These might be concerns about pollution of drinking water or the surface waters that are crucial for people’s fishing, swimming, boating and livelihoods, more broadly. This paper demonstrates that people value clean water, as evidenced in the changes in housing prices that we see in response to the cleanup,” she said.

The paper details key findings around the impact of the AOC listing, the effect of the federal grants on housing prices and the impact of the AOC grants on the local economy.

“Despite concerns about various sources and types of pollution impacting water quality in the U.S., and a substantial amount of federal funding allocated towards mitigating the pollution, there is relatively little research on the economic benefits of efforts to clean up water pollution. This paper provides such evidence, and several key findings: how people value clean water and  that the benefits of cleaning up the pollution exceed the cost ,” Meeks said.

Study co-authors include Alecia Cassidy at the University of Alabama and Michael Moore at the University of Michigan.

Study: Cleaning up the Great Lakes: Housing market impacts of removing legacy pollutants