The housing-market impacts of shale-gas development
Lucija Muehlenbachs, Beia Spiller, Christopher Timmins 09 February 2014
Compared to coal and oil, shale gas offers the prospect of greater energy independence and lower emissions of carbon dioxide and other pollutants. However, fracking is controversial due to the local externalities it creates – particularly because of the potential for groundwater contamination. This column presents evidence on the size of these externalities from a recent study of house prices. The effect attributable to groundwater contamination risk varies from 10% to 22% of the value of the house, depending on its distance from the shale gas well.
Technological improvements in the extraction of natural gas from shale rock have transformed the industry.
house prices, housing, externalities, pollution, property prices, shale gas, fracking
Are property values affected by concerns over groundwater contamination from shale?
Lucija Muehlenbachs, Beia Spiller, Christopher Timmins 29 September 2012
Natural gas is seen as an attractive source of energy – it is cleaner than coal and often more reliable. But there are potential risks from the drilling and hydraulic fracturing process. This column shows how shale gas extraction could reduce property prices, and argues that policymakers need to bear this in mind when thinking about the costs and benefits.
A recent increase in the extraction of natural gas and oil using unconventional methods has transformed communities and landscapes. Shale gas extraction has grown rapidly in recent years thanks to developments in hydraulic fracturing and horizontal drilling. The extraction of natural gas from shale, which had hitherto been economically unrecoverable, has resulted in greatly expanded supply and in many landowners receiving high resource rents for the hydrocarbons beneath their land.
externalities, pollution, natural gas, property prices