CONTAMINATION ISSUES – API NOTE
purpose of this guidance note is to outline information, issues, and
approaches relating to contamination of land.
Institute recommends that it be used by Members as a guide for the
valuation, assessment or reporting of land which is contaminated or
whose contamination status is unknown or uncertain. Land includes
improvements, structures or additions to the land.
Status of Guidance Notes
notes are intended to embody recognised ‘good practice’ and
therefore may (although this should not be assumed) provide some
professional support if properly applied. While they are not
mandatory, it is likely that they will serve as a comparative measure
of the level
performance of a Member. They are an integral part of ‘Professional
Scope of this Guidance Note
guidance note applies to Members reporting on property and it deals
with broad examples of environmental contamination and their
potential effect on value and marketability. It offers guidance on
general concepts and concerns, and suggests approaches that are
have merit. It does not purport to provide a definitive coverage of
the environmental issues, which may arise, or the manner in which
Members should deal with these issues. Many issues of land
contamination are poorly defined and involve complex or unresolved
approaches to the valuation and assessment of contaminated land, are
not adequately developed.
appropriate procedures will vary according to the circumstances of
each property being valued or assessed.
should apply their own skill and judgement in applying the
information contained herein to their own practice. This guidance
note should be used in conjunction with other guidance notes and
practice standards that are either over-arching or directly
applicable to the type of property, purpose or issues involved.
International Valuation Standards
guidance note recognises the International Valuation Standards 1 and
2, and the International Valuation Application 2, effective from July
2002 by the International Valuation Standards Committee and it is
intended to be consistent with the concepts and definitions contained
standards, however, there may be departures from IVSC Standards to
reflect Australian & New Zealand law and practice.
are able to provide appropriate skilled advice in relation to
valuation and property matters with the assistance of and in
accordance with this Guidance Note and bearing in mind the
limitations referred to herein.
Marketplace More Aware
environmental consciousness within the general community,
environmental protection legislation, litigation associated with
pollution and land contamination, and incidents where property users
suffer financial loss directly or indirectly from such cases, have
made the marketplace more aware of the potential adverse effects of
noise and other contaminants in air, groundwater, soil and the
overall environment. The market can overreact and prices may be
artificially depressed. Further, limited information about a
particular contaminant that is thought to be present on a property
can cause a secondary ‘stigma’ effect on values. Conversely, the
market seems to be increasingly aware that contaminated properties
can be redeemed and redeveloped into viable assets.
Advice about Commercial Impact
whether they are property owners, vendors, purchasers, financial
institutions, receiver-managers, holders of major or minor property
portfolios, etc, will often look to Members of the Institute for
advice and guidance on how land contamination affects their financial
security and asset value. Although Members cannot and should not
themselves as authorities who are fully capable of measuring,
recording and providing detailed scientific advice on behalf of the
client, they should be able to provide some level of advice to the
client about the commercial impact of suspected or evident
Problems Requiring Further Investigation
of the Institute should take all reasonable care in these matters.
Members who attempt to mitigate their responsibilities by adding a
disclaimer saying that the property has been valued or assessed
‘without regard to the question of presence of contamination’,
are not providing the level of best practice expected by clients and
may not satisfy the standards of practice required by the courts.
Therefore, the Institute recommends that its Members become
sufficiently knowledgeable about the contaminants, laws and
regulations associated with this topic and their effect on property
values to meet the
standards. This involves Members qualifying advice, where
appropriate, so as to properly inform the client of potential
problems which may require further investigation, and thereby meet
the Member’s professional obligations.
Can Affect Full Spectrum of Property Types
will rarely be in command of enough information or evidence to
completely rule out the possibility of land contamination. They can,
however, through careful research and observation, provide advice
about suspected contamination and the potential consequences on a
Market Value. Environmental contamination can affect the full
spectrum of property types, and should be considered in all property
valuations and assessments.
Definition of a Contaminated Site
defined by the Australian and New Zealand Environment and
Conservation Council (ANZECC) and the National Health and Medical
Research Council (NHMRC), a contaminated site comprises ‘a site at
which hazardous substances occur at concentrations above background
levels, and where assessment indicates it poses or is likely to pose
an immediate or long term hazard to human health or the environment’.
Point of Reference Members are encouraged to actively foster
professional association with consultants specialising in the
identification and treatment of contamination.
Types of Contaminants and Examples
is a wide range of potential environmental contaminants, varying from
liquid and solid chemicals to corrosive gases and radioactive
contaminant must be considered for its potential physical and
non-physical impact. Examples of physical contaminants include
asbestos, hydrocarbons, lead, mercury, arsenic, cyanide and
pesticides, but are not limited to these substances. Mining
by-products can include nutrients and arsenic compounds amongst
others. Unexploded ordinances have been another environmental
difficulty associated with former defence force lands. Organic
compounds such as formaldehyde are problem sources.
tars from coal-using powerhouse operations, asbestos, or PCBs can
cause toxicity problems.These are but some examples.
are contaminants that include non tangible, physical substance.
However, they should be considered as ‘real’ as physical
contaminants. A typical problem could be forms of radiation, intense
radio wave transmissions and excessive heat.
is a naturally occurring radio-active gas that is responsible for
about half our exposure, which is unavoidable, to background
radiation. The inhalation of radon and its decay products increases
the risk of lung cancer. Radon emanates from particular radioactive
the ground and, to a small extent, from building materials.
disperses in the open air, but elevated levels may be found in spaces
like poorly ventilated basements and caves, although such levels have
not been found to be a health hazard in Australia.
Toxins in the Internal Home Environment
comprise a long list of substances, including insecticides, lead
based paint, wood preservatives, polishes, weed killers, bleaches and
numerous other substances.
timber related or artificially produced materials used for home
insulation, furniture and fittings may release formaldehyde or other
traces of preservatives that create health problems for some
individuals. (Many of these home toxins are not structural but
transient and may be removed through relatively low cost means.)
Unless specific circumstances exist such as the use of these products
in commercial quantities, comments on domestic use in a valuation
report are considered excessive.
Changes in Lists and Definitions of Hazardous Substances
and characteristics of substances constituting hazardous waste and
amounts of substances considered detrimental change frequently as new
information becomes available. Such information is often available
from State or local environment agencies. Preliminary lists are
provided in Appendices 1 and 2.The ANZECC/NHMRC Australian
New Zealand Guidelines for the Assessment and Management of
Contaminated Sites, January 1992, also contain a substantial list.
Environment Related Court Cases
related court cases, particularly the Federal Court, have the
potential to affect value if judgements establish new areas as a
result of previous activities or management. Where doubt exists, this
case law may prove appropriate investigation.
Identifying and Quantifying Contamination
Information on Possible Contamination
on possible contamination of the site is crucial to the property
professional. The two main sources of such information are a
Historical Land Use Survey and a scientific Survey of Environmental
contamination as would be conducted by an Environmental
Phases of Investigation
1: Preliminary Site Investigation
Phase 1 is the preliminary assessment of any contamination on the
site. It includes the following steps:
investigation of site history;
physical site inspection;
basic sampling and analysis to determine the presence of
2: Detailed Site Investigation
the Phase 1 investigation shows further investigation is
a detailed site investigation is carried out to assess:
concentration of various contaminations;
volume of soil to be remediated;
leachability and mobility of contaminants;
contamination of groundwater;
possibility of off-site migration of contaminants.
3: Health and Environmental Assessment and Determination of
results from Phase 2 investigation provide information to determine
the potential ‘human exposure and environmental impact’ of the
contaminants on the existing and intended land uses. If the intended
use will cause unacceptable impact on the environment, then,
on the conditions, a partial or full remediation, or other land
contamination management strategy has to be implemented. A health and
environment risk assessment has to be carried out, and a site
specific remediation plan has to be prepared. (Footnote 4)
Phase I Survey : Background Research & Historical Land Uses
owners and employees can be a good source of information on the
property’s history. Local councils can provide a wealth of
information on more prominent properties, and a search of titles can
provide some indication of former use. Many state governments have
aerial photos that can assist in identifying some former uses.
Government departments such as those involved with mining, public
supply, environment and health, may have regulating
and other useful information.
Look for Signs
is important to look for signs that suggest a former use, if not a
present use, which may have lead to, or caused, some form of
contamination. Following the preparation of a site history, there
will need to be a complete detailed site inspection. There are often
tell-tale signs on the site that can indicate the possible presence
of some forms of contamination. The member should look for disturbed
or coloured soils, disturbed vegetation, the presence of any chemical
containers, or chemical odours, and view the quality of any surface
water. In addition, surface soils or earth fill may have been
introduced to the site from other locations. The potential for
contamination from off-site sources should also be considered. An
Environmental Assessment Checklist is provided in Appendix 3.The
ANZECC/NHMRC Australian and New Zealand Guidelines for the Assessment
and Management of Contaminated Sites include a useful chapter on
should be aware however, that their role and expertise is limited to
the detection and preliminary identification of discoverable
contamination by reasonable site inspection and enquiries of
appropriate authorities and subsequent reporting. Detailed
identification quantification of contamination should be left to
those who specialise in
field.Where, however, information is available to the Member, this
should be provided to the client together with a statement of the
source (whether it be a neighbour, former owner or environmental
expert) and an appropriate qualification.
Register of Contaminated Sites
States compile a register of contaminated sites which is maintained
by the relevant State environmental authority and is available for
public inspection. Where the Member discovers or suspects that a site
may be contaminated it would be prudent to inspect the Contaminated
Sites Register in applicable States. This will help to provide the
Member’s client with useful information, thereby enhancing
level of service provided and discharging the Member’s professional
obligations. Members should not be overreliant on these registers as
they are not exhaustive, especially in those States where they are
not formally required by legislation. Absence from a register should
not be taken to imply that a site in not contaminated.
in the absence of a register of contaminated sites, Department of
Environment staff may still be willing to provide relevant
information regarding some sites.
Potential or Actual Contamination Issues
Member conducting an inspection of a property for the purpose of
providing a valuation or other report should be aware of the
potential of site contamination of any property. During an inspection
for this purpose, the Member should attempt to identify from on-site
any potential or actual contamination issues and report accordingly,
recommending further expert advice where appropriate. Other site
factors to initially consider include site layout and contours,
storage areas, geology, water features and nearby developments which
affect the subject land.
Report by Suitably Qualified Expert Phase 1 of Investigation.
report on the site history of the property, provided by suitably
qualified expert, may address the following issues:
present and past land
activities carried out on the site;
and/or activities that were carried out near the site;
locations within the
site of each process and/or activity;
duration of each
process and/or activity;
contamination and effluent migration pathways;
presence and purpose
of underground tanks;
signs of spills of
2 of Investigation
after carrying out an investigation and inspection, the Member is
concerned or suspects that the property is or could be subject to
potential contamination that could either restrict the future use of
the site or militate against a financial consideration, the Member is
obliged to recommend that the client seek more detailed advice from
appropriately qualified professionals. Such advice should be formed
regard to both the current and future use of the site. A Phase 2
Investigation by a specialist environmental engineer or scientist or
other suitably qualified professional may include any or all of the
historical land use
evaluation of special
contaminants such as asbestos, PCB’s, acids, poisons such as
arsenic, and radionuclides;
on-site toxic vapours;
surface soil and
water samplings and laboratory analysis;
sampling and laboratory analysis;
and laboratory analysis;
site plan specifying locations of contaminants
health and safety plan.
survey may include, in terms of a particular purpose or specific
conditions of a site, a recommendation as to whether or not the
contamination has reached an action level where remediation or risk
reduction levels are necessary.
3 of Investigation
it may be necessary for the appointed environmental consultant to
move into a third phase of consultancy including site
characterisation, the preparation of a preliminary remedial action
plan with cost estimates, the conduct of negotiations with regulatory
agencies, the design of remediation systems and continuing
management, and the development of suitable future monitoring
Whether Expert Engaged
Member needs to be aware of the process of the Phase 1 investigation
sufficient to advise a client as to the need for the engagement of a
suitably qualified expert. The Member should also take detailed field
notes that may or may not be used in the final report but will
nevertheless stand as a record that the valuation or assessment was
out having regard to the potential presence of contamination.
Member should not hold himself or herself out as an expert in issues
of site or other contamination.
Recommending a Survey of Environmental Contamination Where
Information Cannot Be Obtained Ultimately, only through scientific
testing can the level of contamination be verified properly. Such
testing can be both expensive and time consuming and cannot in itself
provide a complete guarantee that contamination is not present.
contamination is suspected and where detailed information cannot be
obtained, the Member should assess on the basis that a property is
free of contamination, and qualify that value on the basis that some
contamination may be present that could have an impact on the value.
The following provides an example of the type of qualification
may be appropriate in these circumstances:
our inspection of the property we consider that there is (or could
be) a potential for (detail past/current contamination) to exist and
wouldrecommend that advice should be obtained from a suitably
qualified environmental expert. Please note that our valuation has
been assessed on the basis of no on-site contamination. Should the
above mentioned environmental advice reveal any contamination our
valuation may require revision.
greater the perceived risk of contamination being present, the
stronger the ‘qualification’ and the more specific should be the
Remediation Practices and Techniques
Remediation Techniques Rapidly Changing
practice of remediation of environmentally contaminated property is
rapidly changing. New techniques are being developed, new standards
are being set, both by the professions themselves and those who
has been defined as ‘an act of attempting to moderate the severity
of the contamination of soil, groundwater, service water or buildings
by various measures and methods’. Note that remediation can include
measures that alleviate the effect of contamination without
destroying or removing the contaminants, as with ‘clean-up’
Influence on Value
influence of remediation or clean-up on value will depend on such
factors as whether the contamination is contained (restricted)
on-site, technology available the EPA controls affecting it, the
length of time required to make good to permit development and use of
the land and the possible need for further analysis and monitoring
after the remediation process. The risks associated with achieving
remediation in accordance with the defined plans may have to be
factored into the value assessment.
techniques could involve removal of affected soil from the site and
replacement with clean fill, the extraction and ‘airing’ of
hydrocarbon-affected soil from lower depths, the pumping out of
contaminated groundwater or chemical neutralisation, eg. the use of
to neutralise high acid content, and a wide variety of other
measures. One difficulty with soil removal is that local authorities
tend to be reluctant to allow disposal of contaminated soil.
new technology that is becoming available may potentially reduce the
extent of the negative effect of contaminants on property and its
value. Technology that permits safe, efficient and inexpensive
clean-up of contaminants tends to minimise impact on value. However,
can still be prohibitively expensive because of difficulties in
disposing of contaminated soil, toxic waste and chemicals. Members
should keep abreast of technological advances relating to this topic.
The ANZECC/NHMRC Guidelines (Footnote 5) provide a site-specific
approach to the management of contaminated sites, and indicate that
remediation can be tailored to the actual proposed use of the land.
Such awareness will assist the Member in advising appropriately on
the potential risks associated with contaminated sites and the need
for their clients to seek further information from appropriately
qualified experts. Nevertheless, as previously referred to, Members
should avoid giving advice outside their area of expertise.
Clean Up Methods
far as the removal of the contaminant source is concerned, there are
different clean up methods. The common ones include:
contaminants are destroyed or broken down while the soil remains
in-situ or excavated on site, eg. bio remediation, land farming,
vertical mixing and chemical fixation.
contaminated soil is excavated, removed from the site and taken to a
depot for treatment, eg. high temperature incineration, soil washing,
thermal absorption, particle-size separation, chemical treatment like
base catalysed dechlorination (BCD), ball-mill pulverisation and
super-critical fluid extraction.
contaminate soil is excavated and removed from the site for disposal
at a controlled landfill. Given that it is a controversial issue to
allow transport of a contaminated soil on public roads, it is
unlikely that the authority will approve this remediation method
Containment on site
method is to keep the contaminated soil in-situ and to restrict
access to it and prevent leaking and leaching by suitable means, eg.
encapsulation and capping (Footnote 6).
addition to the above, recycling may also be an acceptable
remediation method, eg. silver is recovered from recycling silver
bromide used in the photo processing industry.
given the high cost of recycling, this method is feasible only for
end products with high value.
Impact on Value: General Areas of Cost Impact
upon the relevant legislation, it is usual that the responsible party
bear the clean-up costs of contaminated properties. Where
responsibility cannot be determined, the chain of title is generally
followed with the current owner most likely to be liable. Members
to their relevant state legislation when determining the responsible
party and the chain of responsibility.
Effect on Present and Future Utility
costs can range from mild instances requiring low expenditure with
little impact on value, to severe cases where virtually no use of the
property is possible for the present or foreseeable future and
prohibitive costs are needed to correct the problem. The degree to
contamination affects the present and future utility of the property
must be quantified before a value can be readily assessed.
to the specialist work involved in assessing the type, extent and
cost of remediation, Members are strongly advised not to provide
their own estimate.
Initial Survey Costs
first cost associated with environmental contamination is the cost of
discovering the extent of any problem.
Cost to Remedy
cost of remediation of a particular problem can be major, but care
needs to be taken not to understate or overstate the impact on value.
For example, property may be able to maintain an income stream while
remediation process is in progress. In some cases these costs may be
over a period rather than as a one-off cost.
All Costs with Clean-up
cost to remedy a contamination problem includes all costs resulting
from and associated with the clean-up.
include the cost of the physical clean-up, monitoring remedial
measures, legal fees and continuing costs. Costs may also involve a
capital improvement such as a more efficient, less polluting system
that enhances residual property value significantly.
Develop & Maintain Cost Information File
may develop and maintain files of clean-up cost information. This
information should not, however, be used to give detailed
environmental advice or cost estimates to clients. Appropriate
experts should be retained for this purpose.
Physical Clean-up and/or Remedial Costs
can involve a variety of techniques such as simply removing and
replacing contaminated soil (recognising that an acceptable location
to receive contaminated material is often very difficult to find),
extracting harmful chemicals in groundwater by pump extraction, or
permanently sealing off contamination. Neutralising the contaminants
with special chemicals is a possible solution in some cases.
Environmental engineers and other experts can explain the options for
remedial work or hazard reduction and provide cost estimates for
undertaking this work.
costs associated with contamination may be considered part of the
cost to cure the problem. The extent of these legal costs will vary
according to the circumstances of each particular property. Members
should refer to these costs in their report, where appropriate, and
ensure that they are addressed by any expert environmental report
obtained. The potential for litigation or pending litigation may
affect marketability and further affect value by deterring
prospective buyers. Such effects will usually be included within the
Stigma component of environmental liabilities. Alternatively, Members
may include a separate
figure’ to cover these effects. Such a figure should either be
provided by an environmental expert or estimated by the Member
following suitable enquiries of solicitors. It should always be
qualified to inform the client that it is a contingency figure only
and that it may not reflect the costs actually incurred should
costs are often unknown before the completion of any clean-up.These
costs often exceed original estimates, especially when future, more
stringent regulations are anticipated. In addition, perceived or
actual risks remaining after completion of clean-up may result in
higher insurance costs. Members should ensure that figures obtained
experts make allowance for these continuing costs and that these
costs are appropriately spread over a period corresponding to
anticipated plant or improvement life or the period of the
can include anything that affect the property’s income producing
potential during or after the clean-up.
example, tenants may not be able to live in a rental unit during lead
paint removal. Another example would occur if one portion of an
industrial plant could not be used because of toxic contamination and
an intermediate product manufactured in that area was no longer able
produced on-site. Additional expenses would be incurred and the
operation’s earnings could suffer accordingly. Holding costs, due
to delays in development caused by the need for prior remediation,
are another form of indirect cost.
can be an adverse effect through financiers applying more
conservative lending policies where there is a perception that a
property may be secondary due to the effects of contaminants. (A
Member, however, has a responsibility to ensure that mortgage clients
are adequately informed of risks associated with known
indemnification agreements, as set out by the seller, agree to retain
responsibility for current and future costs related to environmental
contamination. From the point of view of market sales information,
the sale price would need to be discounted. The valuer wherever
possible makes enquiries to establish the extent of the
is an intangible factor that may not be measurable in terms of cost
to cure but may have real impact on Market Value. It arises from the
effect of present or past contamination upon the market’s
perception of the property and represents a discount, beyond the
direct and indirect
likely to be incurred, required to compensate for the risks
associated with contaminated or previously contaminated property
including the risk of achieving the planned remediation.
market may perceive stigma exists because of:
the existing or future use of the site;
risks associated with
the effectiveness of remediation;
full ‘cure’ of the site being unattainable;
concern at possible
hidden clean-up costs;
prejudice arising out
of prior site uses;
alternative site uses
affecting contaminated sites;
financing and marketability difficulties;
risks associated with
makes property less desirable, even when a complete remediation or
cleanup has been carried out.
is, where there is a market perception that a property is or has been
contaminated, despite the availability of information that cleanup
has taken place, the market will often pay less than normal
unaffected values. This situation is similar to obsolescence and
represents a lingering detriment to a property. In some cases the
stigma effect is variable with time or is transitory.
Effect May be Out of Proportion
stigma effect on value may be out of proportion to the cost to cure
the problem, and can persist at varying levels for many years.
Causes of Market Value Loss There are three broad categories of
market value loss caused by land contamination:
cost and risk of
remediation including consultancy, legal and monitoring costs;
liability to the
marketability and suitability for mortgage security).
Contaminants may not Necessarily Reduce Value
presence of contaminants within a property may not necessarily reduce
its value within the land use class or industry in which it is
operating. Under State laws an existing use might be continued
without remediation being required. For example, an industrial
protective confines within land may contain toxic compounds that form
part of a valuable industrial process for which there is a long term
market demand. Special licensing generally accompanies these
processes and the property can continue to be used as it is. A valuer
a value under these circumstances should also advise the client that
the valuation could be significantly different should the current use
Potential Problems for Lenders
Lenders have Potential Exposure
have potential exposure to risk through land contamination as
loss of market value
of collateral (property);
borrower’s inability to repay loans because of cleanup costs,
penalties or inability to continue business activities;
for clean-up costs following foreclosure of a mortgage, entering into
possession as mortgagee in possession, or even exercising control
under a scheme of arrangement.
affecting property contamination and related environmental matters is
increasing in this country and overseas. A list of some of the
relevant legislation and agreements is offered in Appendix 6.
Environmental Protection Authorities in Australia
list of the internet addresses for the Environmental Protection
Authorities in Australia is offered in Appendix 7.1.
Certain State Legislation Embodies ‘the polluter pays’
who are acting for the vendor of a property should recognise that
certain State legislation embodies the principle that in matters of
land contamination, there is a principle ‘the polluter pays’, and
this means that if a vendor has caused the land being valued to be
contaminated, they may not be able to avoid responsibility for
subsequent remediation even though the property has been sold.
should refer to their own State legislation in this regard. Future
Federal legislation may influence liability issues.
Responsibility for Lessees
lessor could be responsible for the activities of a lessee who is
unable to pay remediation costs or penalties . Many leases now
contain provisions to prohibit activities that would result in
contamination. Where the lessee could be engaging in activities that
could result in contamination, the valuation should comment on
inadequate provisions of the lease.
should be aware of any exclusions within their professional indemnity
insurance policy related to pollution, contamination or specific
contaminants. Some policies do not provide cover in relation to
claims arising from or in connection with these matters. For example,
many policies exclude liability for claims arising from nuclear
a Member may in some instances not be covered by a policy where the
Member has failed to confine himself or herself to their field of
expertise. Members should consult their professional indemnity
insurance brokers in this regard.
the introduction of the GST on 1st July 2000 specific legal and/or
accounting advice will need to be sought regarding the GST
implications for this Guidance Note.
1 United Nations hazard classes
Highly Flammable Liquid
Substances Liable to Spontaneous Combustion
Substances Emitting Flammable Gases when Wet
Poisonous (Toxic) Substances
Miscellaneous Dangerous Substances
categorisation of contaminating substances into these ‘Hazard
Classes’ has been provided by the United Nations.
classes are not necessarily exclusive. Members should not confine
their attention to substances falling within these classes.
2 Potentially Contaminating activities, industries and land uses
Abattoirs and Animal Processing Works
Acid/Alkali Plant and Formulation
Agricultural Activities (Vineyards,Tobacco, Sheep Dips, Market
Gardens). Heavy metals
Airports.Trichlore-ethylene from solvent cleaning operations.
Alumina Refinery Residue Disposal Areas.
By-Product Animal Rendering. Pesticides.
Breweries. Pesticides, oils and greases, underground storage tanks
Car Wreckers. Oils and greases,TPH and BTEX compounds,TCE (solvent
Ceramic Works. Heavy metals.
Chemical Manufacture and Formulation
Coal Mines and preparation Plants. Organic
Docks. Oils and greases,TPH and BTEX compounds, TCE (solvent
cleaning), pesticides, heavy metals.
Drum Reconditioning Works
Dry Cleaning Establishments. Organic compounds.
Electricity Distribution. PCB compounds.
Electroplating and Heat Treatment Premises. Chrome, heavy metals.
Ethanol Production Plants
Engine works. TPH, BTEX compounds, organic compounds (associated with
Fertiliser Manufacturing Plants
Glass Manufacturing Works
Horticulture/Orchards. OCP and OPP pesticides.
Industrial Tailings Ponds. Heavy metals, organic
Iron and Steel Works
Landfill Sites.Variety of possible contaminants.
Marinas and Associated Boat Yards. Heavy metals –
Tri butyl tin
Metal Treatment. Heavy metals.
Mineral Sand Dumps
Mining and Extractive Industries
Munitions Testing and Production Sites
Oil Production,Treatment and Storage
Paint Formulation and Manufacture
Pesticide Manufacture and Formulation
Pharmaceutical Manufacture and Formulation
Photographic Developers. Heavy metals –
Cl used as part of process.
Piggeries. Pesticides and heavy metals.
Plant or Fibreglass
Prescribed Waste Treatment and Storage Facilities
Printed Circuit Board Manufacturers. Solvents and
– volatile organic compounds.
Properties Containing Underground Storage Tanks.
BTEX, PAH, solvents.
Radioactive Materials, Use or Disposal
Research Laboratories. Metal, organic compounds, radioactive
Sawmills and Joinery works. Copper, chrome, arsenic.
Smelting and Refining
Sugarmill or Refinery
Tanning and Associated Trades (eg. Fellmongery)
Timber Treatment works. Formaldehyde, copper, chrome, arsenic.
Tyre Manufacturing and Retreading Works. Glues – volatile organic
Waste Treatment Plants in which Solid, Liquid Chemical, Oil,
Petroleum or Hospital Wastes are Incinerated, Crushed, Stored,
Processed, Recovered or Disposed of.
Wood Storage Treatment. Formaldehyde, copper, chrome, arsenic.
Wood Treatment Facility. Formaldehyde, copper, chrome, arsenic.
Preservation. Formaldehyde, copper, chrome, arsenic.
Activities, Industries and Land Uses
Sites of incidence: road or rail spillage involving hazardous
substances; fires involving hazardous substances.
‘Hot spots’ of likely contamination by agricultural chemicals and
their by-products, eg. spray mixing sites; sheep and cattle dips;
pesticide disposal sites.
above lists are illustrative only. They are not intended to be
3 Suggested Environmental Checklist
following Checklist 3 is not intended to be exhaustive. It is
included to illustrate the type of factors Members should be aware of
when undertaking a visual inspection of a property. Members should
exercise their own professional judgement in deciding what factors
are relevant to the particular property being valued.
Materials, Storage and Disposal
Are there any drums, tanks or other holders of hazardous materials
like chemicals, pesticides, cleaners, solvents on the property?
If so, is there any indication of spills, leaks or discharges to the
ground from the drums, tanks, other holders of hazardous material?
Are there any areas observed with stains on the ground or with dead
or stressed vegetation?
Is the facility on the property a generator of hazardous waste?
If hazardous waste is generated at the property, does it appear to be
improperly monitored or not transported off the property by
professional hazardous waste disposal contractors?
If the property generated hazardous waste, does it have statutory
environmental authority approval, or is it licensed to do so?
Does the property appear to have any pits, ponds, lagoons (other than
normal water retention ponds required by some local councils) or
other dumping areas?
Is there any evidence of radioactive products being utilised on the
Does the facility appear to be free of any obvious sources of air
emissions that have chemical odours, fumes or mists?
Does the facility appear to be free of any noise pollution and are
controls in place?
Is there any evidence of any source of infectious waste (medical
pathological wastes) on the property?
If there is any source of infectious waste, are facilities for its
disposal inadequate or not functioning properly?
If the current use of the property does not indicate any of the
above, could prior uses of the land involve hazardous materials,
storage and disposal?
Is the property registered on any Government register of contaminated
land or its equivalent?
Are the existing or past operations on the property subject to local
environmental concerns expressed by the local community, Council,
Health Department or EPA?
Do the existing operations comply with current regulatory permits and
With reference to storage of hazardous chemicals, are the storage
structures designed to minimise contamination in the event of fire or
Controls: Hazardous Waste
Does this facility have a policy document and is it available to all
Does the facility have an action plan in place for monitoring and
reviewing environment controls?
Does the facility have an emergency plan and/or procedures in the
event of a spill, explosion or break
Are copies of licenses and/or registrations easily visible and are
they up to date?
Verify the current status on any current orders
Verify the status on current audits
Is there any extractive industry currently being operated on the
If yes, is there an Environmental Impact Statement available for
If yes, is there a current Development Approval available for
Is asbestos apparent on the property?
Does a walk through the facilities reveal any obvious evidence of
asbestos in ceilings, pipes, ducts, roofing, boiler insulation or
structural beams, etc, that appears to be fireable, flaking or
Were the facilities on the property constructed prior to 1980 when
the use of asbestos was banned?
Has an asbestos survey/audit of the facilities been conducted?
Did the survey find the buildings to be free of asbestos containing
Is there any electrical equipment (transformers, capacitors, etc)
that contain polychlorinated biphenyls
on the property?
If PCB containing electrical equipment is presently on the property,
is there any evidence of leaks or spills on the ground near the
Storage Tanks (USTs)
Are there any underground storage tanks (USTs) containing petroleum
products or hazardous chemicals on the property?
If USTs exist on the property, are leak detection equipment or
secondary containment systems not installed on the tanks?
Have they ever been tested for leaks?
Has there ever been an incident of a leak, spill or discharge?
Have the owners or lessees of the property undertaken any
environmental audit pertaining to underground storage tanks on the
Have the proper registration forms been submitted to the designated
Is there any evidence that the site is currently being filled or has
Have the filling operations been approved by Council and the EPA?
Do the filling operations allow for putrescible, nonputrescible or
Do the filling operations require a licence and/or Performance
Guarantee and License from the EPA?
If the property has previously been used for horticultural, orchard
or market garden purposes, is there any historic evidence of past
land uses having involved persistent pesticides, such as dieldrin or
Are there any environmental audits available evaluating the presence
Does the land contain unexploded munitions, radioactivity or other
hazardous substances that could be associated with defence works?
Is there any information available from the Department of Defence or
local authorities regarding the presence of unexploded munitions?
Hazards on Adjacent Properties 1. Do any adjacent properties appear
to have any improper storage or dumping of hazardous materials, drums
or containers that could impact on the value of the subject property?
Are there any landfills, dumps or other waste disposal facilities
within one kilometre of the subject property?
Is there any indication of operations such as gas stations, chemical
plants, bulk storage tanks, manufacturing plants or other land uses
which potentially involve land contamination (as outlined in
document), on any of the adjacent properties?
4 Sample Environmental Balance Sheet The following is a relatively
simple non-costed Environmental Balance Sheet for example purposes.
VALUE OPINION BALANCE SHEET
VALUE OPINION $
: ENVIRONMENTAL LIABILITIES:
Diligence/Initial Environment Consultants Costs $
& Alternative Strategy Development Costs $
VALUE OF ACTION PLAN COMPONENTS:
Action Costs $
Control and Management Measures $
of Production Facilities $
of Migration of Contamination to Adjacent Sites $
and Record Keeping $
for Emergency Response Actions $
Insurance for the Future $
Costs where Applicable $
Present Value of Action Plan $
Negative Intangible (Stigma) Impact $
ENVIRONMENTAL LIABILITIES $
IMPAIRED POSITION* $
5 A Method of Assessing Stigma
- The GREATER of
Zero or Unimpaired Value LESS any Environmental Liabilities.
Value of the Land (a medium hazard risk property) $
value of remediating costs $
value 1 - not allowing for stigma $
Study Number Indicated percentage Comparison to the property being
impaired value 1 lost
25.9% Treatment completed, stigma caused by fear of additional
less severe than the subject property.
29.2% No treatment proposed at present, continued industrial
similar risk level to subject property
20.9% Site not contaminated but is situated adjacent to
32.7% Similar type of contamination to subject property
slightly more severe
45.4% Heavily contaminated site, derelict land, more severe
the subject property
of stigma effects indicated by comparables 20.9% to 45.4%
closest to subject property, numbers 2 and 4, 29.2% to 32.7%
percentage stigma applicable to the subject property is 31%
of stigma @ 31% of impaired value 1 $
value 2 (taking account of treatment and associated costs and stigma)
value of buildings $
value of asset say $
reduction in value attributable to contamination 21.60%
Developed from Patchin (1994) and Syms (1995) (UK)
legislation in Australia see Australian Legal Information Institute
following list is not intended to be exhaustive. It should, however,
illustrate the wide variety of existing environmental legislation
which may affect the value of a particular interest in land.
The Inter-Governmental Agreement on the Environment.
National Waste Minimisation and Re cycling Strategy released by
Commonwealth Environmental Protection Authority.
Industrial Chemicals (Notification and Assessment) Amendment Act
Ozone Protection Amendment Act 1992.
Commonwealth Ozone Protection Act 1988.
Petroleum (Submerged Lands) Act 1967.
Environmental Protection (Nuclear Codes) Act 1978.
Nature Conservation Act 1980.
Water Pollution Act 1984.
10. ACT (Planning
& Land Management) Act 1988.
Clinical Waste Act 1990
Public Health Act 1982
Poisons Act 1993
Radiation Act 1983
Air Pollution Act 1984
6. Land Planning
Environmental Planning and Assessment Act 1979.
Environmentally Hazardous Chemical Act 1985.
State Environmental Planning Policy No. 33: Hazardous and Offensive
Development - Gazetted 11 March 1992.
Clean Waters Act 1970.
Environmental Offences and Penalties Act 1989.
Clean Air Act.
Noise Control Act.
State Pollution Commission Control Act.
Marine Pollution Act 1987.
Petroleum (Submerged Land) Act 1982.
Coastal Protection Act 1979.
Drainage Act 1939.
Water Board Act 1987.
Pesticides Act 1978.
Radioactive Control Act 1990.
Rural Lands Protection Act 1989.
Soil Conservation Act 1938.
Unhealthy Building Land Act 1990.
Environmental Restoration and Rehabilitation
20. Protection of
the Environment (Operations) Act 1997
Local Government (Planning and Environment) Act 1990.
The Contaminated Land Act 1991.
Nature Conservation Act.
Local Government (Planning & Environmental)
Pollution of Waters by Oil Amendment Bill 1992
Local Government Act 1936.
Petroleum (Submerged Land) Act 1982.
Harbours Act 1955.
River Improvement Trust Act 1940.
Water Resources Act 1989.
Soil Conservation Act 1986.
Radioactive Substances Act 1958.
National workshop on Health Risk, Assessment and
of Contaminated Land, November 1991.
Clean Air Act 1963-1990.
Environment Act 1988.
Planning Practice Circular (distributed by the Department of
Environment and Planning to Local Councils, Planners and Consultants
in October 1990).
Discussion Paper - Contaminated Land - A South Australian Legislative
Proposal for South Australian Environmental Protection Authority and
Chapter on Environmental Policy.
Dangerous Substances Act 1979/1988.
Environmental Protection Council Act 1972 and Local Government Act
Marine Environment Protection Act 1990.
Petroleum (Submerged Lands) Act 1982.
Water Conservation Act 1936.
Harbours Act 1936.
Water Resources Act 1976.
Native Vegetation Act 1991.
Soil Conservation and Land Care Act 1989.
Waste Management Act 1987.
Clean Air Act 1984.
15. Public &
Environmental Health Act 1987.
Environmental Protection Act 1973.
Chlorofluorocarbons and other Ozone Depleting Substances Control Act
Oil Pollution Act 1961.
Public Health Act 1962.
Groundwater Act 1985-1988.
Water Act 1957-1923.
(Submerged Lands) Act 1982.
Conservation Commission Act 1980.
Local Government Act 1954.
Ozone Protection Act 1990.
Public Health Act 1952.
Uranium Mining (Environmental Control) Act 1979-1981.
Petroleum (Submerged Lands) Act 1982-1986.
Environmental Protection (NT Supreme Court) Act 1978.
Environmental Assessment Act 1982.
Conservation & Land Utilisation Act.
Environment Protection Act 1970.
Pollution of Waters by Oil and Noxious Substances (Amendment) Act
Marine Act 1988.
Heritage Rivers Act 1992.
Agricultural and Veterinary Chemicals Act 1992.
Environment Protection (Resource Recovery) Act 1992.
Various State Environmental Protection Policies made under the
Environmental Protection Act 1970 covering air environment, control
of noise, ground waters, etc.
Local Government Act 1958.
Petroleum (Submerged Land) Act 1982.
Extractive Industries Act 1966.
Land Conservation Act 1970.
Soil Conservation and Land Utilisation Act 1958.
Health and Safety (Asbestos) Regulations 1992.
Environmental Protection Act 1986.
Local Government Act 1960.
Petroleum (Submerged Lands) Act 1982.
Marine Harbours Act 1981.
Pollution of Waters by Oil and Noxious Substances Act 1987.
Waterways Conservation Act 1976.
Poisons Act 1964.
Radiation Safety Act 1975.
Explosives and Dangerous Goods Act 1961.
Agricultural Produce (Chemical Residues) Act 1983.
Health Act 1911.
Aerial Spraying Control Act 1966.
Nuclear Activities Regulation Act 1978.
Industrial Lands Development Authority Act 1966.
15. Soil & Land
Conservation Act 1945.
7 Internet Address of Environment Protection Authorities of Australia
Australia – Department of the Environment and Heritage
of Lands Planning and Environment, NT
of Environment and Heritage, QLD
of Environment, Heritage and Aboriginal Affairs, SA
of Primary Industries, Water and Environment,TAS
of Environmental Protection,WA
Protection Authority, NSW
Protection Authority, SA
Australian and New Zealand Environment and Conservation
National Health and Medical Research Council, Australian
New Zealand Guidelines for the Assessment and Management
Contaminated Sites, January 1992, p. 2.
Research on Radon is being conducted by Murdoch University in
The Institute gratefully acknowledges the assistance of the NSW
Valuation Department of the Commonwealth Bank of
in the preparation of this Appendix.
DoE, Queensland 1998.
National Environmental Protection Council is to release a National
Protection Measure which will supersede the relevant sections of the
ANZECC/NHRMC Australia and New Zealand Guidelines for the Assessment
and Management of Contaminated Sites 1992.
6. New South Wales