Environmental Hazards and Local Investment: A Half-Century of Evidence from Abandoned Oil and Gas Wells
64 Pages Posted: 15 Sep 2020
Date Written: September 14, 2020
Influential studies that generally cover a few years find that environmental hazards reduce property values and welfare. Over decades, however, hazards may further harm neighborhoods by discouraging investment. This paper exploits the quasi-random assignment of oil and gas wells that were and were not properly decommissioned (plugged) in a county in Western Pennsylvania. Over half a century, the two acres around unplugged wells had roughly half as much building as the area around plugged wells. Evidence suggests this reduction stems from disincentives to invest and not from poorer households sorting to properties near unplugged wells.
Keywords: environmental hazards; oil and gas wells; investment; real estate
JEL Classification: D23, R11, Q32, Q33
Suggested Citation: Suggested Citation