The Impact of Oil and Natural Gas Facilities on Rural Residential Property Values: A Spatial Hedonic Analysis
Posted: 5 Apr 2006
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
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