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The Local Economic and Welfare Consequences of Hydraulic Fracturing

119 Pages Posted: 21 Dec 2016 Last revised: 4 Jan 2017

Alexander Wickman Bartik

Massachusetts Institute of Technology (MIT), Department of Economics, Students

Janet Currie

National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Princeton University

Michael Greenstone

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER)

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: December 22, 2016

Abstract

Exploiting geological variation within shale deposits and timing in the initiation of hydraulic fracturing, this paper finds that allowing fracing leads to sharp increases in oil and gas recovery and improvements in a wide set of economic indicators. At the same time, estimated willingness-to-pay (WTP) for the decrease in local amenities (e.g., crime and noise) is roughly equal to -$1000 to -$1,600 per household annually (-1.9% to -3.1% of mean household income). Overall, we estimate that WTP for allowing fracing equals about $1,300 to $1,900 per household annually (2.5% to 3.7%), although there is substantial heterogeneity across shale regions.

Suggested Citation

Bartik, Alexander Wickman and Currie, Janet and Greenstone, Michael and Knittel, Christopher R., The Local Economic and Welfare Consequences of Hydraulic Fracturing (December 22, 2016). Available at SSRN: https://ssrn.com/abstract=2692197

Alexander Wickman Bartik

Massachusetts Institute of Technology (MIT), Department of Economics, Students ( email )

Cambridge, MA
United States

HOME PAGE: http://economics.mit.edu/grad/abartik

Janet Currie

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Princeton University ( email )

Princeton, NJ 08544-1021
United States
6092587393 (Phone)

HOME PAGE: http://www.princeton.edu/~jcurrie

Michael Greenstone (Contact Author)

University of Chicago - Department of Economics ( email )

1126 East 59th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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