Methods for Estimating Economic Damages from Environmental Contamination

While significant attention has been given to the decrease in property values associated with environmental contamination (i.e., stigma effects), little attention has been given to the stigma impacts on the local community as a whole. In addition, most estimates of stigma damages have been performed within a community, using distance from contamination or comparing contamination and non contamination areas in the community. In this article we determine stigma damages by analyzing property values in comparable communities and develop the rationale for estimating the community impact associated with environmental contamination that extends beyond the impact on individual property owners. These impacts were estimated for the environmental contamination from zinc smelting in the municipality of Blackwell, Oklahoma. The impacts were measured in terms of lost ad valorem tax revenue using hedonic pricing and average treatment effects.