Does the renovation of waste-to-energy incineration plants attenuate the housing price gradient? Evidence from a quasi-natural experiment in Shenzhen, China

Waste-to-energy (WTE) incineration plants, which inevitably cause negative externalities due to their impacts on the surrounding environment, have encountered frequent protests from residents during their construction and operation. The negative externalities could lead to property value losses by impacting residents' marginal willingness to pay (MWTP). To assess whether the renovation of WTE incineration plants can attenuate the housing price gradient around the plants, we use the completion of the renovation project of Yantian Plant in Shenzhen as a quasi-natural experiment to exploit difference-in-differences (DID) estimators, and propose a hedonic price model based on resale apartment transaction data within 10 km of the plant. Results indicate that the renovation completion narrows the price gap between proximate and distant apartments from the plant by 35.25%, and the housing price gradient begins to decrease significantly in the late construction period. Moreover, the effect on the housing price gradient remains sustained throughout the whole post-treatment period. Furthermore, the analysis of the underlying mechanism suggests that the renovation completion attenuates the housing price gradient through the improved environment.