SEPTEMBER 2008

Superfund cleanups not worth the cost, according to new MIT study

The cost of the federal Superfund program isn't bringing financial returns to homeowners living near the cleaned-up toxic sites, according to new research by Michael Greenstone, the 3M Professor of Environmental Economics at MIT. In a paper published in the August issue of the Quarterly Journal of Economics, Greenstone and a colleague analyzed housing markets affected by Superfund, a federal government program that cleans up the largest and most dangerous hazardous waste sites in the United States. Greenstone compared the housing prices of homes surrounding Superfund sites to those surrounding sites that narrowly missed qualifying for Superfund remediation.

Since Superfund's inception in 1980, almost 1,600 sites have been identified and made eligible for federally funded cleanups. Cleanup activities have been concluded at approximately two-thirds of these sites at an average cost of more than $43 million. The expected cost to clean up the remaining sites is an additional $30 billion.

Greenstone found that the expensive cleanups failed to increase house prices or rental rates near Superfund sites in comparison with neighborhoods surrounding toxic sites where Superfund cleanups did not take place. In addition, the population of the neighborhoods and rate of new home construction remained at pre-cleanup levels.

The paper also notes that the average cleanup takes 12-13 years to complete. “The lengthy interventions are disruptive and very expensive,” Greenstone said. “The housing market's clear message is that the cleanups are not worth it to the people living near these sites.”

Greenstone is now investigating whether there are health benefits from these cleanups, as his preliminary results failed to find reductions in the rates of infant mortality and birth defects or increases in birth weight.

“We are facing a wide range of environmental problems, including the severe threats to our well-being posed by climate change and water and air pollution,” Greenstone said. “In this time of limited budgets, society should focus its resources on solving problems that improve people’s lives.”

This work was funded in part by the Center for Energy and Environmental Policy Research at MIT. Greenstone's co-author, Justin Gallagher, is a graduate student at UC Berkeley.

—Source: MIT - Massachusetts Institute of Technology