The Local Economic and Welfare Consequences of Hydraulic Fracturing

52 Pages Posted: 23 Jan 2017 Last revised: 4 Jan 2025

See all articles by Alexander Bartik

Alexander Bartik

University of Illinois at Urbana-Champaign - Department of Economics

Janet Currie

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

Michael Greenstone

University of Chicago - Department of Economics; Becker Friedman Institute for Economics; National Bureau of Economic Research (NBER)

Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR); National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: January 2017

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 and Currie, Janet and Greenstone, Michael and Knittel, Christopher R., The Local Economic and Welfare Consequences of Hydraulic Fracturing (January 2017). NBER Working Paper No. w23060, Available at SSRN: https://ssrn.com/abstract=2903707

Alexander Bartik (Contact Author)

University of Illinois at Urbana-Champaign - Department of Economics ( email )

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Janet Currie

Princeton University ( email )

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Michael Greenstone

University of Chicago - Department of Economics ( email )

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Becker Friedman Institute for Economics ( email )

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Christopher R. Knittel

Massachusetts Institute of Technology (MIT) - Center for Energy and Environmental Policy Research (CEEPR) ( email )

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National Bureau of Economic Research (NBER)

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