There are many environmental factors that affect rental value of properties, albeit, in this article we will be taking a look at the effects of open waste dumps on rental values
The issue of waste disposal and management were not problems to early humans, due to the fact that there were no population explosion and technological advancement at that time.
However with population growing at an alarming rate coupled with technological advancement, over time, waste disposal and management began to constitute a serious problem. Open waste dumps refer to the uncovered areas of the earth surface that are used to dump waste of all kinds.
Waste Disposal is one of the major and very complex environmental problems facing developing and underdeveloped countries with high population rate and Nigeria is no exception. In fact one of the factors bedeviling the mega-city status of Lagos state and which has become an intractable nuisance is the open and indiscriminate dumping of waste which include human waste, animal waste and other waste components. Piles of decaying garbage litter in strategic locations in the area. Solid waste and other waste have become a menace to the environment. More so, open dump site is unarguably a source of atmospheric and water pollution, land contamination, health hazards and environmental degradation.
In Lagos and most fast growing cities in Nigeria like Ibadan and Port Harcourt, it is not uncommon to see open waste dumps located in close proximity to residential areas. According to Parker (ND) the Law of Garbage is: “Everybody wants it picked up, but nobody wants it put down.” And, the second part of this Law is: Nobody wants it put down anywhere near where they live, the so-called “not in my back yard” syndrome (NIMBY), or “locally unacceptable land use” (LULUs). But the reality is that open waste dumps are located close to residential areas where people live. Whilst, it is universally accepted that the location of a property influences the price or rent of the property either positively or negatively, however, what really is the impact of open waste dumps on rents of residential properties in Nigeria?
If the government cannot tackle the nuisance open waste dumps constitute, is it not only natural that such environmental hazard should affect rental values of properties located in close proximity to such?
The answer to the aforementioned premise is not far-fetched. A recent study that compared rental values of properties located in close proximity to and those located far from the open waste dumps revealed that there are differences in rental values. Invariably it means that the property owners have been compelled to beat down the rental value of their properties due to the bottlenecks caused by the open dump site and other agents of environmental degradation; an extra motivation for renters to rent properties barring the inherent environmental hazards posed by the open waste dumps.
Furthermore, the study found that rents paid on properties adjoining waste dump-sites are lower compared to similar properties further away and also, property transaction rates were very slow and unattractive as one approaches a dump-site.
Ordinarily, a clean (uncontaminated) property has a value equal to full market value and a dirty (contaminated) property which poses health or financial risk (either real or perceived) will affect value significantly in several ways.
When a property loses its marketability, it also loses its value. Markedly, income effect is the present value of the difference between the property value as if uncontaminated and the property value as if contaminated.
Tenants find it risky and unhygienic to live in an environment where open waste dumps have become a trademark. Therefore, such circumstance results to loss in rental income due to the increase in its void period. This affects not only the rental income but also creates negative impact on the economy in terms of reduction in property tax.
A close proximity to open waste dumps implies that there will be a subsequent reduction in the capital value of such properties and long period of voids (vacancy rates) as prospective tenants are unwilling to pay for such properties.
The perceived environmental problems that could arise from open dump-site located in populated neighbourhoods include underground water pollution as a result of leachate from the dump sites located close to properties which may pollute water, thereby reducing the quality of the water, air pollution, odour problem and reduction in aesthetic quality.
Other environmental problems include proliferation of Insects and rodents such as flies, mosquitoes, cockroaches, rats etc which can endanger public health through breeding of ailment such as dysentery, cholera, yellow fever, malaria and filariasis.
In summary, open waste dumps adversely impact on residential real estate investment, pose a threat to human health and the residential environment and should not be site in residential neighbourhoods.
The government should construct engineered sanitary landfill to reduce or possibly eliminate health risk, property investment risk in terms of income and value reduction and environmental problems.
People should be educated on waste management, that is reduction, reuse and recycling to discourage the throw away approach currently practiced and reduce the quantity of waste that is thrown away.