Discussion Paper

The Housing Market Impacts of Shale Gas Development

Jul 13, 2015 | Lucija Anna Muehlenbachs, Elisheba Beia Spiller, Chris Timmins

Summary

Using property value data from New York and Pennsylvania to look at the impacts of proximity to a shale gas well on home values, experts find that the effects differ depending on whether homes have access to piped water versus well groundwater.

Abstract

Using data from New York and Pennsylvania and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale and water source. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped water-dependent homes are positively impacted by proximity (although by a smaller amount), suggesting an impact of lease payments. At a broader geographic scale, we find evidence that new wellbores can increase property values, but these effects diminish over time. Undrilled permits, conversely, may cause property values to decrease.