Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain

47 Pages Posted: 28 Nov 2016 Last revised: 18 Jun 2023

See all articles by Stephen Gibbons

Stephen Gibbons

London School of Economics & Political Science (LSE) - Department of Geography and Environment

Stephan Heblich

Munk School of Global Affairs & Public Policy and Dept. of Economics,

Esther Lho

Duke University - Department of Economics

Christopher Timmins

Duke University - Department of Economics

Date Written: November 2016

Abstract

Shale gas has grown to become a major new source of energy in countries around the globe. While its importance for energy supply is well recognized, there has also been public concern over potential risks such as damage to buildings and contamination of water supplies caused by geological disturbance from the hydraulic fracturing (‘fracking’) extraction process. Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008 implying potential future development. This paper examines whether public fears about fracking are evident in changes in house prices in areas that have been licensed for shale gas exploration. Our estimates suggest differentiated effects. Licensing did not affect house prices but fracking the first well in 2011, which caused two minor earthquakes, did. We find a 2.7-4.1 percent house price decrease in the area where the earthquakes occurred. Robustness checks confirm our findings.

Suggested Citation

Gibbons, Stephen and Heblich, Stephan and Lho, Esther and Timmins, Christopher D., Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain (November 2016). NBER Working Paper No. w22859, Available at SSRN: https://ssrn.com/abstract=2876404

Stephen Gibbons (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
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HOME PAGE: http://www.lse.ac.uk/people/s.gibbons@lse.ac.uk/

Stephan Heblich

Munk School of Global Affairs & Public Policy and Dept. of Economics, ( email )

105 St George Street
Toronto, Ontario M5S 3G8
Canada

Esther Lho

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

Christopher D. Timmins

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States
919-660-1809 (Phone)
919-684-8974 (Fax)

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