The Impact of Oil and Natural Gas Facilities on Rural Residential Property Values: A Spatial Hedonic Analysis

Posted: 5 Apr 2006

See all articles by Peter Boxall

Peter Boxall

University of Alberta - Faculty of Agriculture, Forestry & Home Economics

Wing H. Chan

Wilfrid Laurier University - School of Business & Economics; City University of Hong Kong (CityUHK) - Department of Economics & Finance

Melville McMillan

University of Alberta

Abstract

This paper examines the impact of oil and gas facilities on rural residential property values using data from Central Alberta, Canada. The influences are evaluated using two groups of variables characterizing hazard effects and amenity effects. A spatial error model was employed to capture the spatial dependence between neighbouring properties. The results show that property values are negatively correlated with the number of sour gas wells and flaring oil batteries within 4 km of the property. Indices reflecting health hazards associated with potential rates of H2S release (based on information from Emergency Response Plans and Zones) also have a significant negative association with property prices. The findings suggest that oil and sour gas facilities located within 4 km of rural residential properties significantly affect their sale price.

Keywords: Sour gas, Hedonic prices, Property value impacts

JEL Classification: Q32, Q49

Suggested Citation

Boxall, Peter and Chan, Wing H. and McMillan, Melville, The Impact of Oil and Natural Gas Facilities on Rural Residential Property Values: A Spatial Hedonic Analysis. Resource and Energy Economics, Vol. 27, pp. 248-269, 2004. Available at SSRN: https://ssrn.com/abstract=894562

Peter Boxall (Contact Author)

University of Alberta - Faculty of Agriculture, Forestry & Home Economics ( email )

Edmonton, Alberta
Canada

Wing H. Chan

Wilfrid Laurier University - School of Business & Economics ( email )

Waterloo, Ontario N2L 3C5
Canada
519-884-0710, ext. 2773 (Phone)
519-888-1015 (Fax)

City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Melville McMillan

University of Alberta ( email )

Edmonton, Alberta
Canada

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