The Impact of Noise and Dust Level on Rental Price of Residential Tenements Around Lafarge Cement Factory in Ewekoro Town, Nigeria

Abstract

This study employed hedonic pricing model to investigate the impact of noise and dust spewed from a cement factory on a sample of 126 tenements from 11 residential settlements within Ewekoro local housing market in Nigeria. Market-wide hedonic model for all the 126 tenements within 5.5km of the cement factory) was estimated. In addition, two separate unrestricted hedonic models were also estimated (the first consisting of 38 tenements within 2.5km of the factory and the other comprising 88 tenements located between 2.5km to 5.5km of the factory). The hedonic models which take the double-log functional form were estimated with house rent (a proxy for house price) as the dependent variable. Generally, the results of the market-wide model revealed that, dust level and noise, which are negative externalities from the cement factory dampen rent by 21.90% (N 13815) and 1.49% (N 24.80) respectively within the study area. Findings from the unrestricted models further signify that tenement rents tend to decrease with increasing distance to Lafarge cement factory due to severity of dust and noise. As panacea to this problem it is recommended that government should provide policy response - the introduction of effluent fees which would force the cement and other manufacturing companies to internalize their externalities by paying for noise and dust pollution. The basic objective of such policy response is for manufacturing companies to move to the use of energy efficient and eco-friendly plants that generate less noise and dust in their production operations. On the other, the cement company should also imbibe Corporate Social Responsibility (CSR) as part of its efforts in providing a sustainable living environment for the residents in Ewekoro town.

Keywords: Cement factory, Externalities, Hedonic modelling, Tenements, Settlements