Evaluating the Effect of Proximity to Hog Farms on Residential Property Values: A GIS-Based Hedonic Price Model Approach

Abstract: The decline of small-scale farms and the dramatic increase in the size of corporate animal operations in recent years has sparked controversy over the impacts of confined animal feeding operations on surrounding residential communities. This study examines the applicability of geographic information systems (GIS)- based hedonic price modeling for evaluating impacts to residential property values from feeding operations, particularly hog operations. Residential property attributes were derived and compiled in a GIS. These attributes were used to construct a hedonic model to examine the relationship between distance to hog farms and property sales prices. Results indicate a negative and significant impact on property value from hog operations. A comparison of the results from this study with those of several other GIS-based hedonic models indicates that GIS-based hedonic price modeling is a promising method for assessing property value damages associated with animal operations, for evaluating potential impacts when siting new operations, and for developing setback guidelines. Introduction The corporatization of livestock production during the 1990s has led to rapid growth of large-scale confined-animal feeding operations (CAFOs), especially in the pork industry. The result has been a decrease in the total number of hog farms in the United States and a tremendous increase in the size of individual operations. This trend has sparked a controversy about the relative benefits and costs of large-scale industrial hog farms. A major concern for local communities is the impact of nearby CAFOs on surrounding residents. These impacts might include offensive odors (Swine Odor Task Force 1995; Chapin et al. 1998; Tyndall and Colletti 2000), physical and mental health problems (Schiffman et al. 1995; Thu et al. 1997; Wing and Wolf 1999), and degraded water quality (Hallberg et al. 1992; Hallberg 1996; Jackson 1996). The costs of such negative impacts on surrounding communities are not reflected in market prices for pork. One possible approach to account for externalities associated with CAFOs is through evaluation of property values of residential parcels surrounding the operations. In this paper we describe the use of GIS techniques to derive additional parcel attribute data for constructing a hedonic price model of the impact of proximity to hog farms on residential property values. We include a brief discussion of model construction and potential applications. A more detailed discussion of the econometric techniques and analysis can be found in Ansine (2000). Hedonic Price Models The goal of this study was to evaluate the influence of proximity to swine facilities on the selling price of residential properties. Previous studies have used the hedonic pricing method (HPM) to approach the impact of CAFOs on property values (Abeles-Allison and Connor 1990; Taff et al. 1996; Palmquist et al. 1997; Mubarak et al. 1999; Bruton 2001; Herriges et al. 2003). A hedonic model attempts to explain the selling price of a house in terms of its physical attributes and its surrounding environment. If successful, it can reveal whether an environmental characteristic (such as proximity to a CAFO) has a significant effect on price, and how much the house's value is affected by a marginal increase or decrease in this environmental attribute. The hedonic price model can be expressed as P = f (C, E) (1) where P is the selling price of the house, C is a set of physical attributes that contribute to the price of a house (e.g., number of bedrooms, square footage, lot size), and E is a set of environmental attributes that can include factors that surround or define the house's physical location, such as its proximity to schools, parks, shopping, and livestock farms (Goodman 1978). Hedonic price models are commonly estimated by the method of ordinary least squares (OLS). …