The Economic Consequences of Local Gas Leaks: Evidence from Massachusetts Housing Market

Abstract

Research over the past decade has highlighted the climate impacts of natural gas leakage throughout the supply chain, from production to processing to transmission and distribution. Urban methane emissions from local distribution and end-users initially received less attention, yet they can be a significant emissions source in areas with aging infrastructure. This study provides the first empirical evidence on the impact of local gas leaks on nearby house prices. Using high-resolution geographical data in property transactions and a difference-in-differences method, we find that gas leaks significantly reduce nearby house prices by 2.61% ($11,700) on average in MA. Our estimation is robust to the different boundary definitions of the control group. More importantly, the estimated benefits of fixing gas leaks are larger than the average costs per repair reported by utilities in MA.

Keywords: Local gas leaks; House prices; Repairing; Methane emissions

JEL Classification: Q38;Q35;Q51;Q54;Q58