Impacts of an Iron and Steel Plant on Residential Property Values

The hedonic price method is used to estimate the relationship between residential property values and proximity to an integrated iron and steel plant located in the outskirts of Gijón, a city in the north of Spain. Empirical results suggest that there is a statistically significant negative relationship between housing values and the distance from the iron and steel plant. From a partial equilibrium analysis, increasing the distance from the plant, decreasing plant production or dismantling the plant would lead to an increase in the value of the housing units. The results show as well that the housing units located nearest to the factory would be the most favoured by applying the aforementioned changes.