Download this Paper Open PDF in Browser

Is the Shale Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania

Gopalakrishnan, S., & Klaiber, H. A. (2014). Is the shale energy boom a bust for nearby residents? Evidence from housing values in Pennsylvania. American Journal of Agricultural Economics, 96(1), 43-66.

48 Pages Posted: 28 Jul 2012 Last revised: 23 Jun 2014

Sathya Gopalakrishnan

Ohio State University (OSU)

H. Allen Klaiber

Ohio State University (OSU) - Agricultural, Environmental & Development Economics

Date Written: July 1, 2013

Abstract

Profitable extraction of previously inaccessible shale gas reserves has led to rapid expansion of shale exploration across the United States. While there is much enthusiasm surrounding the benefits from this source of energy as a potential path to energy independence, very little is known about the environmental risks associated with this exploration activity. In this paper, we present one of the first empirical studies to measure the impact of early shale exploration as capitalized into surrounding property values. Our dataset combines real estate data, shale well data and land use data in Washington County, Pennsylvania from 2008 to mid-2010 to estimate the impact of shale activity on nearby housing values using a Box-Cox hedonic specification. We find that households are adversely impacted by shale gas exploration activity, but this impact depends on the proximity and intensity of shale activity and is largely transitory in duration. While the magnitude of the overall effect of an additional shale well within one mile from the property is modest (-0.8%) this impact is heterogeneous. The effect is larger for households located close to major highways and sourced with private well water. The impacts are larger and more persistent for properties surrounded by agricultural lands.

Keywords: Shale, Hedonic, Risk, Housing values

JEL Classification: Q51, Q53, Q40, Q33

Suggested Citation

Gopalakrishnan, Sathya and Klaiber, H. Allen, Is the Shale Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania (July 1, 2013). Gopalakrishnan, S., & Klaiber, H. A. (2014). Is the shale energy boom a bust for nearby residents? Evidence from housing values in Pennsylvania. American Journal of Agricultural Economics, 96(1), 43-66.. Available at SSRN: https://ssrn.com/abstract=2117932 or http://dx.doi.org/10.2139/ssrn.2117932

Sathya Gopalakrishnan

Ohio State University (OSU) ( email )

Dept. of Ag, Env & Dev Economics
2120 Fyffe Rd
Columbus, OH 43210

H. Allen Klaiber (Contact Author)

Ohio State University (OSU) - Agricultural, Environmental & Development Economics ( email )

2120 Fyffe Rd
Columbus, OH 43210-1067
United States

Paper statistics

Downloads
358
Rank
68,365
Abstract Views
1,313