The Effect of Environmental Disclosure Requirements on Willingness to Pay for Residential Properties in Borderlands Community

ABSTRACT

Objective.This study examines the effect of environmental information disclosure requirements on future real estate transactions. The setting involves pollution from a concrete products and quarrying site near a largely Hispanic, residential community.

Methods.The survey-based contingent valuation (CV) method is used to test the hypothesis that a split-sample treatment for an information disclosure requirement with a potentially negative affective quality will reduce the willingness to pay (WTP) of potential buyers for a typical property.

Results.Results indicate that the information disclosure treatment reduces WTP, and that this effect is significantly exacerbated when the surveys are conducted in Spanish.

Conclusions.In addition to identifying significant reductions in the WTP of potential home buyers, our findings demonstrate the importance of cultural and regional considerations for how information disclosure requirements are conducted in real estate transactions. Future CV studies should also consider Spanish-language options in applications involving significant Hispanic populations.