Rural Wealth Creation and Emerging Energy Industries: Lease and Royalty Payments to Farm Households and Businesses

36 Pages Posted: 10 Aug 2013

See all articles by Jeremy Weber

Jeremy Weber

University of Pittsburgh - Graduate School of Public & International Affairs

Jason Brown

Federal Reserve Bank of Kansas City

John Pender

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS)

Date Written: June 1, 2013

Abstract

New technologies for accessing energy resources, changes in global energy markets, and government policies have encouraged growth in the natural gas and wind industries in the 2000s. The growth has offered new opportunities for wealth creation in many rural areas. At a local level, households who own land or mineral rights can benefit from energy development through lease and royalty payments. Using nationally-representative data on U.S. farms from 2011, we assess the consumption, investment, and wealth implications of the $2.3 billion in lease and royalty payments that energy companies paid to farm businesses. We estimate that the savings of current energy payments combined with the effect of payments on land values added $104,000 in wealth for the average recipient farm.

Keywords: energy payments, household, consumption, investment, land values

JEL Classification: D12, Q12, R11

Suggested Citation

Weber, Jeremy and Brown, Jason and Pender, John, Rural Wealth Creation and Emerging Energy Industries: Lease and Royalty Payments to Farm Households and Businesses (June 1, 2013). Federal Reserve Bank of Kansas City Working Paper No. 13-07, Available at SSRN: https://ssrn.com/abstract=2307667 or http://dx.doi.org/10.2139/ssrn.2307667

Jeremy Weber (Contact Author)

University of Pittsburgh - Graduate School of Public & International Affairs ( email )

Pittsburgh, PA 15260-0001
United States

Jason Brown

Federal Reserve Bank of Kansas City ( email )

1 Memorial Dr.
Kansas City, MO 64198
United States

John Pender

U.S. Department of Agriculture (USDA) - Economic Research Service (ERS) ( email )

355 E Street, SW
Washington, DC 20024-3221
United States
202-694-5568 (Phone)

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