Studying the Impact of Disasters on Property Values

Researchers studying the effects of the Deep Water Horizon oil spill in the Gulf of Mexico developed tools to quantify the effects of a disaster on property values.

Their work could help governments more accurately assess the impact of disasters and, in the case of man-made disasters, help citizens seek compensation.

Researchers at Florida International University used property sales records and geographical databases to compare properties based on characteristics and location. They analyzed massive property datasets across distance and time scales to find patterns of potential significance. For example, they looked at fluctuations in the unit price of single-family homes in a relatively small geographical area in Florida's Escambia County, which was in the center of the 2010 oil spill disaster. They found that county coastal areas and neighborhoods along a nearby river (expected to be contaminated) were the most affected areas. In the next iterations, the researchers will quantify the impact of a disaster while separating the impact of other economic factors.

The model is also applicable to natural disasters such as hurricanes and tropical storms.

In an initial set of experiments, the researchers studied the effects of Hurricanes Andrew (1992) and Wilma (2005) in Miami-Dade County and successfully identified geographical regions where property values declined.