In our experience with large-scale groundwater-contamination cases, one of the first and most important hurdles is delineating the geographic extent of the affected area. For clients attempting to file a class-action suit, this is a critical step in the certification process. During the actual appraisal analysis, correctly defining the affected area guides the selection of impaired and unimpaired comparables. And in developing an econometric model, the economic analyst must correctly define which observations are those in the affected region and which are in a control area. An econometric model, no matter how precise, will be inaccurate if it is fed inaccurate data. Unfortunately, correctly determining geographic extent can often be a challenging task. This is especially true in groundwater-contamination cases.
Consider the difference between groundwater contamination and other potential sources of property-value diminution. Many localized facilities—such as refineries, chemical plants, wind farms, or pipelines—may impact nearby properties via odor, view, noise, or simply perceived risk due to proximity. Typically, exposure to these various impacts is approximated by using distance as a proxy for exposure. Though it may require more time or expert input, exposure can be measured more precisely. For example, in the case of a wind farm, impacts on a property’s viewshed, if any, can be estimated using the ArcGIS Viewshed tool, which can model a simplified viewshed for each property using elevation data. In the case of noise, a noise-impact study for the facility in question or for a similar facility can be used to estimate the geographic extent of the noise.