Property Values Decrease Around a Quarry

The negative impacts on local property values of a new quarry operation in a community are clear and irrefutable. The reduction in value of properties are significant, as high as 25% or more, and are irrespective of whether a local resident actually sells his or her property.   It is important to note that these impacts are permanent.

  • Properties within 0.31 Miles of the mine dropped in value by 25 percent or more.
  • The decline .625 miles away was between 15 and 20 percent.
  • The decline 1 mile away was just under 15 percent.
  • The decline 1.25 – 2  miles away was just over 10 percent.
  • The decline 2.5 – 3.1 miles away was between 5 and 7 percent.

We have a specific example right in our neighborhood.  A brand new house has recently gone on the market with a beautiful view of the entire Zumbro River valley.  With the disclosure of the proposed quarry, realtors have turned and walked away.

Here are the sources used here:

US Study on the impact of pits and quarries on home prices

Centre of Spatial Economics – The Potential Financial Impacts of the Proposed Rockfort Quarry

Background: The quality of life sought by rural residents reflects the sum total of the many desirable attributes of rural settings including peace, solitude, proximity to nature, etc.  It is impossible to measure with financial precision the value rural residents place on each individual quality of life attribute.  It is possible, however, to measure with financial precision the extent to which an area threatened by a new quarry has been rendered less attractive to existing and potential future residents.

This can be done by observing the impact a new quarry has on property values in the area.  The loss in value of nearby properties quantifies the impact of a new quarry on the deterioration in the quality of life of its nearby residents.  The price reduction of properties reflects the incentive owners must offer to induce new buyers to purchase their property.  Irrespective of whether a local resident actually sells his or her property, the reduction in the value of a person’s property measures the adverse effects on the quality of life perceived by new purchasers associated with the nuisance and incompatibilities introduced into the area by the new quarry.

People worldwide oppose proposals for the development of new quarries or the expansion of existing facilities in their neighborhoods.  The opposition is understandable:
Operators of pits and quarries remove virtually all vegetation, topsoil and subsoil to access the resource. In so doing, they remove any natural habitat that may have been on site, and disrupt pre-existing stream flows . . . The extraction of aggregate resources changes the slope of the land and alters water drainage patterns . . . Once the aggregate is extracted . . . water storage capacity is lost. Aggregate operations . . . are characterized by the release of significant amounts of particular matter (i.e. dust) and noise pollution from extraction and processing activities as well as smog precursors and greenhouse gases from the operation of heavy equipment and machinery. The heavy truck traffic to and from aggregate sites is often a serious hazard and nuisance affecting people over wider areas, and is a significant source of air pollution itself.  -Pembina Institute, 2005

Study Details – THE IMPACT OF QUARRIES ON PROPERTY VALUES

Many factors influence house prices including the characteristics of the unit itself (house age, size, lot size, number of bedrooms, number of bathrooms, quality of construction and upkeep, etc.).  Other factors can also play a significant role, including proximity to amenities (a lake, pleasant neighborhoods, major employment centers, urban services, etc.) or to disamenities (landfill sites, pollution sites, quarries, etc.).  Professor Diane Hite of Auburn University in Alabama is an economist that has published widely in the area of property value impact analysis.  Using a hedonic pricing model procedure which separately accounts for the relative impacts on house values of the variety of attributes described above, Professor Hite examined the effects of distance from a gravel mine in Delaware County, Ohio on the sale price of more than 2,500 residential properties in the late 1990s.   George E. Erickcek of the W.E. Upjohn Institute for Employment Research recently used Professor Hite’s model to assess the potential impacts of the proposed Stoneco Gravel Mine in Richland Township, Michigan, on property values in the area.  Exhibit 6 (below) relates the impact of distance from the gravel pit on property values and reveals that properties closest to the gravel mine faced the largest value declines, and that property value declines diminished with distance from the mine:

Realestate loss

  • Properties within 0.31 Miles of the mine dropped in value by 25 percent or more.
  • The decline .625 miles away was between 15 and 20 percent.
  • The decline 1 mile away was just under 15 percent.
  • The decline 1.25 miles away was just over 10 percent.
  • The decline 2 miles away was just under 10 percent.
  • The decline 2.5 – 3.1 miles away was between 5 and 7 percent.

It is important to note that these impacts are permanent.  While it is true that properties within 1 mile or 3 mile radius of the proposed site will increase in value in the future in line with increases in average property values in general in the broader area, it is equally true that the gap in values resulting from the negative impact of the quarry persists over time.  The average negative impact on property values within a 1 mile  radius of the site was 15 percent.

There is an extensive amount of literature available applying hedonic models to study the effects of environmental disamenities on residential property values.  These studies generally show that proximity to quarries, landfills, hazardous waste sites, and the like have a significant negative effect on the price of a residential property.

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One thought on “Property Values Decrease Around a Quarry”

  1. Hi. We have a similar issue with a proposed sand mine/ quarry here on the Sunshine Coast, Queensland, Australia, impacting property prices. I was interested to see the quote from the Pembina Institute. Do you have a link to the original article ?? It is something we can use in our local fight. Thanks and good luck. Regan

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