Environmental risk and the anchoring role of local amenities

Abstract

We analyse the anchoring role of local amenities following a news shock on environmental risk. Using an exhaustive registry of housing transactions in England and Wales between 2007 and 2014, we identify the impact of changes in perceived environmental risk by comparing property prices near nuclear facilities to those further away before and after the Fukushima nuclear accident. The local price drop is long-lived and amounts to 3.5%. There is significant heterogeneity, mostly driven by the nature of local production amenities. Atrisk areas with highly-mobile labour structure undergo a more substantial price decrease after the catastrophe. This heterogeneity is consistent with the existence of large equilibrium adjustments, only mitigated by persistent local amenities. Such finding is further supported by the long-term patterns of residential flight after the opening of nuclear plants—a gradual rise in deprivation is only observed in at-risk neighbourhoods where labour is mobile.