SUMMARY OF LITERATURE ON PROPERTY VALUE IMPACTS OF CAFOs

Although the studies on property value impacts go back at least to 1997, this is an area where much more research needs to be done. We know of no studies that take into account properties that have been abandoned by owners, or those that were put on the market for sale and did not sell. There are also no long-term studies to tell whether property values come back after time. And, a final comment: when you look at a study, try to figure out who funded it. Many got money from pork associations.

An interesting facet of these studies is the emphasis on “hedonic” value, which means “relating to or considered in terms of pleasant (or unpleasant) sensations”. One research group observes that when a consumer buys a piece of property, they are also buying the sensory atmosphere, including views, sounds, odors, climate and other environmental aspects of the property. This “hedonic” aspect is more important when it comes to a home than it is regarding farm land or industrial site.

One of the first studies to quantitatively determine that CAFOs depress home values comes from North Carolina. Researchers looked at prices within a 2- mile radius, finding they declined at varying levels depending on the homes’ distance from the CAFO: Palmquist, R., F. Roka, and T. Vukina, Hog Operations, Environmental Impacts, and Residential Property Values, Land Economics (1997). https://www.researchgate.net/publication/46552317_Hog_Operations_Environmental_Effects_and_Residential_Property_Values Several websites, funded by universities and pork associations, reference this study. See https://thepigsite.com/articles/economic-impacts-of-hog-operations

Researchers at the University of Missouri found that an average residential parcel within 3 miles of a CAFO experienced a value loss of between 6.6% and 17%. However, if the parcel was located within one-tenth of a mile of the CAFO, then the loss in value was estimated at 88.3%. There’s a site with a cute video to explain their findings and a list that includes other sources. Go to http://agebb.missouri.edu/commag/cafo/economic.htm.

Hamed, Mubarek, et. al., The Impacts of Animal Feeding Operations on Rural Land Values, Univ. of Missouri-Columbia Community Policy Analysis Center Report R-99-02 (May, 1999). An easy download at: https://www.researchgate.net/publication/258399091_The_Impacts_of_Animal_Feeding_Operations_on_Rural_Land_Values/download

Illinois State University study found that CAFOs are the cause of “disruption of local social and economic systems, pollution problems . . . and negative impacts on the quality of life in rural communities.” Gomez, Miguel and Liying Zhang, Impacts of Concentration in Hog Production on Economic Growth in Rural Illinois, Illinois State University, working paper presented to the American Agricultural Economics Association (July, 2000). This is a study that did not get money from pork associations. https://www.sraproject.org/wp-content/uploads/2017/10/impactsofconcentrationinhogproductiononecongrowth.pdf

Odors from a CAFO with 5,200 sows found to diminish value of residential properties within ¾ mile radius by 30%. Aiken, J. David, Property Valuation May Be Reduced by Proximity of Livestock Operation, Cornhusker Economics, Department of Agricultural Economics, University of NebraskaLincoln (May, 2002). https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=1004&context=coopext_swine

Iowa State University Study considered impacts of being downwind of a CAFO and associated odor and pest issues and found that a moderate size CAFO has an impact of up to 6% property value loss within 1.5 miles and 26% loss within a ¼ mile. Herriges, Secchi, et. al., Living with Hogs in Iowa: The Impact of Livestock Facilities on Rural Residential Property Values, Iowa State University Center for Agricultural and Rural Development (Aug. 2003). Study found an A CAFO with 5,000 swine had a statistically significant impact on the value of residential properties within 1 mile. See the study at http://le.uwpress.org/content/81/4/530.short

Milla, Katherine, et. al., Evaluating the Effect of Proximity to Hog Farms on Residential Property Values: A GIS-Based Hedonic Price Model Approach, URISA Journal, Vol. 17, No. 1, 27-32 (2005). This study found that “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 . . . a decrease in the total number of hog farms in the United States and a tremendous increase in the size of individual operations . . . sparked a controversy about the relative benefits and costs of large-scale industrial hog farms.” https://www.questia.com/library/journal/1G1-177439929/evaluating-the-effect-of-proximity-to-hog-farms-on

A landmark in the question of property values and environment found that “only landfills have a worse effect [than CAFOs] on adjacent property values” and that “a sewage treatment plant has a less depressing effect on nearby housing prices [than a CAFO].” Ready, Abdalla, et. al., The Impact of Open Space and Potential Local Disamenities on Residential Property Values in Berks County, Pennsylvania, American Journal of Agricultural Economics 87, 314-326 (May, 2005). https://www.rosemonteis.us/files/references/ready-abdalla-2003.pdf

Another landmark study, by John A. Kilpatrick, Ph.D., MRICS, says, “Establishment of a CAFO results in value diminution to other nearby properties both through a negative externality as well as through indirect economic impacts. . . . [I]t is clear from the broad array of empirical studies and case studies that diminished marketability, loss of use and enjoyment, and loss of exclusivity results in a diminishment which can range from 50% to nearly 90% of otherwise unimpaired value for homes which are adjacent to the facility [with] negative impacts noted at distances exceeding 3 miles.” John A. Kilpatrick, Impacts of a Concentrated Animal Feeding Operation on Surrounding Properties in and Near Union Mills, Indiana, Report to Alan M. Landing, (October 25, 2006). http://www.myappraisalinstitute.org/webpac/pdf/TAJ2015/TAJ_WI15_p041-050_Feat3-AnimalOperations.pdf

(From the University of Missouri comes an argument on this study, however. In a white paper, Ray Massey studied Kilpatrick and found many points to argue with. Massey concluded: If Kilpatrick understood the economics of Kim and Goldsmith, he would be discouraged because it does not fit his bias against large hog farms.  Kim and Goldsmith find “The two variables related to hog farm impact (HOG_D and SIZE) were significant at the 10% level with a negative sign for HOG_D and a positive sign for SIZE. The negative HOG_D suggested that hog farms negatively affect property values. The positive sign on SIZE may be indicative of scale economies in abatement as larger farms on a per pig basis may more effectively manage their neighborhood affects.” Hog farms do have a negative effect on housing values BUT larger hog farms have a smaller effect.

A University of Iowa study group applied the WHO definition of health, “a state of complete physical, mental and social well-being and not merely the absence of disease or infirmity,” applies to rural communities. They recommended policy changes such as a stringent process for issuing permits for CAFOs, bonding for manure storage basins, limiting animal density per watershed, enhancing local control, and mandating environmental impact statements. See Community Health and Socioeconomic Issues Surrounding Concentrated Animal Feeding Operations, with entries by Kelley J. Donham,1 Steven Wing,2 David Osterberg,1 Jan L. Flora,3 Carol Hodne,1 Kendall M. Thu,4 and Peter S. Thorne1 1College of Public Health, The University of Iowa, Iowa City, Iowa, USA; 2Department of Epidemiology, University of North Carolina, Chapel Hill, North Carolina, USA; 3Department of Sociology, Iowa State University, Ames, Iowa, USA; 4Department of Anthropology, Northern Illinois University, DeKalb, Illinois, USA. https://scholar.google.com/scholar?q=community+health+and+socioeconomic+issues+surrounding+concentrated+animal+feeding+operations&hl=en&as_sdt=0&as_vis=1&oi=scholart

**Conducting a literature review, the Purdue Extension concluded that, “[m]arket prices for homes are expected to decline the closer the home is to the CAFO,” and specifically that a “downwind home will realize a significantly larger decline in value relative to a home upwind that is the same distance from the CAFO.” Furthermore, the Purdue Extension concludes that these “potential inequities . . . indicate that communities and operators must choose to site CAFOs in a manner that either minimizes differential impacts on home values or compensates those individuals disproportionately impacted.” Roman Keeney, Community Impacts of CAFOs: Property Values, ID-363-W, Purdue Extension, Purdue University (2008). https://www.extension.purdue.edu/extmedia/ID/ID-363-W.pdf

The Indiana Soybean Alliance studied The Effect of Regulated Livestock Operations on Property Values in Selected Indiana Counties, Prepared by the Indiana Business Research Center for the Indiana Soybean Alliance (Sept. 2008). As mentioned, it’s important to know who paid for studies. This one studied home-sale data for homes near CAFOs in Decatur, Hancock and Shelby Counties, and found that CAFOs can have a positive effect on rural properties and a negative impact on suburban and urban properties because “whether nor not large-scale animal operations produce documented environmental effects is irrelevant if a prospective buyer perceives proximity to [a CAFO] as negative.” In other words, rural buyers do not perceive the operations as negatively as those buyers who prefer to live on the outskirts of a town. The study also surveyed appraisers and agents and found that their “perceptions . . . were consistent with recent reports in the media, namely, that proximity to [a CAFO] has a substantially negative effect on residential property values.” Although the study attempts to discredit the consistent findings of peer-reviewed studies conducted over the last two decades, the IBRC study can be discounted because: 1. The Indiana Soybean Alliance who commissioned and paid for the report is a major agribusiness lobbying group with an interest in creating confusion over the data found by major research institutions and universities; 2. The findings of this biased report have not been duplicated by any objective, peer-reviewed studies; 3. The study data for this report considered small CAFOs with less than 3,500 pigs, with the vast majority of the CAFOs having less than 1,000 pigs; 4. The study focuses only on the effects of CAFOs on home-sale prices but does not in any way consider the impacts of stigma, and interference with property rights (use & enjoyment, exclusion, and transfer) regardless of whether the listed property actually sells. Check it out at https://www.ibrc.indiana.edu/studies/indiana_cafo_cfo_property_impact_2008.pdf