Unconventional Shale Gas Development, Risk Perceptions, and Averting Behavior: Evidence from Bottled Water Purchases

46 Pages Posted: 22 Mar 2015 Last revised: 28 Aug 2016

See all articles by Douglas H. Wrenn

Douglas H. Wrenn

Pennsylvania State University, Agricultural Economics, Sociology, and Education

H. Allen Klaiber

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

Edward C. Jaenicke

College of Agricultural Sciences, Department of Agricultural Economics and Rural Sociology

Date Written: May 23, 2016

Abstract

Advances in technology have made extraction of natural gas from deep shale formations economically viable. While unconventional shale gas development is seen as an economic benefit, concerns have been raised about the environmental and health risks associated with the extraction process. We combine GIS data on unconventional shale gas development in Pennsylvania and Ohio with household data on bottled water purchases to assess the impact that perceived risks to drinking water from unconventional shale development have had on household well-being using a triple difference treatment effects design. In our preferred triple difference models with time-varying treatment effects, we find per-household averting expenditure in 2010 ranges from 10.74 in our full sample specification to $15.64 when omitting urban counties more likely to contain public water supplies. Converting the sample-average averting expenditure of $10.74 to an annual expenditure for the entire impacted population implies an averting expenditure in Pennsylvania shale counties exceeding $19 million for the year 2010.

Keywords: Hydraulic Fracking, Risk, Averting Behavior, Water

JEL Classification: I18, Q32, Q51, Q53

Suggested Citation

Wrenn, Douglas H. and Klaiber, H. Allen and Jaenicke, Edward C., Unconventional Shale Gas Development, Risk Perceptions, and Averting Behavior: Evidence from Bottled Water Purchases (May 23, 2016). Kilts Center for Marketing at Chicago Booth – Nielsen Dataset Paper Series 1-037. Available at SSRN: https://ssrn.com/abstract=2581729 or http://dx.doi.org/10.2139/ssrn.2581729

Douglas H. Wrenn (Contact Author)

Pennsylvania State University, Agricultural Economics, Sociology, and Education ( email )

University Park, PA 16802-3306
United States

H. Allen Klaiber

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

2120 Fyffe Rd
Columbus, OH 43210-1067
United States

Edward C. Jaenicke

College of Agricultural Sciences, Department of Agricultural Economics and Rural Sociology ( email )

University Park, PA 16802-3306
United States

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