1# RECORD 275ef524fa6ec8255e8b2778f98bbc60cfd20e7a2# TITLE: Determining the negative effect on house values of proximity to a landfill site by means of an application of the hedonic pricing method3# YEAR: 2011.0 VENUE: nan DOI: 10.4102/sajems.v12i2.2804# AUTHORS: M. du Preez; T. Lottering5# PAGES: 7 CANDIDATE TABLE PAGES (1-based): []6# ABSTRACT: This study applied the hedonic pricing method to determine whether a disused, solid waste landfill site has an adverse effect on the prices of low-cost houses in New Brighton, a neighbourhood of the Nelson Mandela Metropole, Eastern Cape, South Africa. The results of the study show that the landfill site has a negative effect on New Brighton house prices. The average increase in house value is R36.00 per one hundred metres from the landfill site. This increase amounts to 0.44 percent of the value of a house per 100 metres from the landfill. When the change in value is summed for all the properties in the sample area (allowing for variation in value change due to differing distances from the landfill site) the total disamenity effect of the landfill site is approximately R1.4 million.789===== PAGE 1 (score 6, numeric-paren 0, table-words 0, var-words 6) =====1011256 12SAJEMS NS 12 (2009) No 213Determining the negative effect on house values 14of proximity to a landfill site by means of an 15application of the hedonic pricing method16M du Preez17Department of Economic History, Nelson Mandela Metropolitan University18T Lottering19Aberdare Power Cables, Port Elizabeth20Abstract21This study applied the hedonic pricing method to determine whether a disused, solid waste landfill 22site has an adverse effect on the prices of low-cost houses in New Brighton, a neighbourhood of 23the Nelson Mandela Metropole, Eastern Cape, South Africa. The results of the study show that the 24landfill site has a negative effect on New Brighton house prices. The average increase in house value 25is R36.00 per one hundred metres from the landfill site. This increase amounts to 0.44 percent of 26the value of a house per 100 metres from the landfill. When the change in value is summed for all 27the properties in the sample area (allowing for variation in value change due to differing distances 28from the landfill site) the total disamenity effect of the landfill site is approximately R1.4 million.29JEL Q57301 31Introduction32Whether, and to what degree, solid waste landfills 33have an adverse effect on residential property 34prices has received a great deal of attention 35over the years (see, for example, Bouvier, 36Halstead, Conway & Manalo, 2000; Havlicek, 37Richardson & Davies, 1971; Reichert, 1991). It 38is a well-recognised fact that the establishment 39and operation of a landfill creates negative 40externalities, which may include environmental 41damages, such as the build-up of methane gas 42and groundwater contamination (Lomberg, 43Rosewarne, Raymer & Devey, 1996; Reddy & 44Gardiner, 2003). In addition to these damages, 45the dumping of solid waste may also give rise 46to bad odors, vermin and flies, while litter may 47spread from the landfill if it is not properly 48policed (Bouvier et al., 2000). Moreover, 49covering and compacting the solid waste with 50soil creates airborne dust. As a result of these 51negative impacts, it is normal to locate landfills 52that may have a deleterious aesthetic and 53health impact on areas remote from residential 54neighbourhoods, as well as creating buffer zones 55to prevent further encroachment.56The economic impact of a landfill on the value 57of properties situated in close proximity to it is 58important for a number of reasons. First, price 59disparities between like properties, differing 60only in their distance from a landfill, provide 61information on the welfare effect on households 62situated in the vicinity (Ready, 2005). Second, 63affected property owners want to know what 64effect, if any, the presence of a landfill has or 65will have on the value of their assets. Third, in 66the event of a landfill project being subject to 67cost-benefit analysis, estimates of property price 68effects can be incorporated into the cost-benefit 69profile.70Numerous studies have been conducted to 71determine an empirical relationship between 72residential property prices and proximity to 73a solid waste landfill site (Ready, 2005). The 74hedonic pricing method, which entails drawing 75