Report

WHIMBY (What’s Happening in My Backyard?): A Community Risk-Benefit Matrix of Unconventional Oil and Gas Development

Jun 15, 2017 | Alan J. Krupnick, Isabel Echarte, Laura Zachary, Daniel Raimi

Summary

The Community Risk-Benefit Matrix illustrates and summarizes the literature on the community impacts of unconventional oil and gas development, specifically regarding the prevalence, consistency, and quality of findings across studies and regions.


RFF experts and collaborators are working to help answer questions about the community impacts of unconventional oil and gas development and better understand the benefits and costs to local communities, as well as which regulatory, voluntary, and market actions can maximize benefits while reducing costs. As part of this effort, the Community Risk-Benefit Matrix identifies specific areas of concern related to impacts addressed by the team’s literature review (left column), as well as impacts for which RFF experts have conducted original research and analysis (see Further Reading below each section of the matrix).

The matrix indicates the quality of the literature for each impact, judged subjectively with the color indicating whether we find the studies analyzing an impact to be, on average, of a certain quality. Impacts may be assessed by multiple low-quality studies and a medium-quality study, for example, and we would consider this body of literature to be low quality. A high-quality classification indicates that we trust the results of such studies, including the accuracy, magnitude, and direction of the results—meaning, in a practical sense, that it has no serious or fatal flaws (such as inadequate methodologies) that would lead us to question the results. A study is considered low quality if we believe we cannot trust the results because the study has multiple, serious flaws (e.g., methodology, data, focus, or study design are inadequate to reliably estimate outcomes). A study is considered medium quality if it does not fit in the other two categories. A study is considered medium quality if it is not of high or low quality. A study is therefore medium quality if it has any such major flaw or if either the methodology, data, focus, or study design leads to questionable results for a number of reasons. Generally, we find the magnitude and direction of these results to be informative, but question the precision.

Lastly, we summarize the findings reported by the literature for each impact—whether the studies as a whole report increases, decreases, or no relationship between the impact and an increase in unconventional oil and gas development. The “heterogeneous” classification indicates that the literature reports different outcomes across areas. The “inconsistent” classification indicates that the literature reports contradictory results (i.e., two studies find an increase or decrease for a certain impact in the same context).

Key

  Higher quality: The majority of studies reviewed for an impact are of higher quality. Where there is one study of higher quality, it is marked as such.
  Medium quality: The majority of studies reviewed for an impact are of medium quality. Where there is one study of medium quality, it is marked as such.
  Lower quality: The majority of studies reviewed for an impact are of lower quality. Where there is one study of lower quality, it is marked as such.
  Not reviewed: Research on an impact was not reviewed.
Increase: Studies show a positive, robust association with an impact (an increase in incidence or magnitude).
Decrease: Studies show a negative, robust association with an impact (a decrease in incidence or magnitude).
↑↓ Heterogeneous: Across regions or areas, studies report robust results that differ.
Ø No association: Studies report results that showed no association.
~ Inconsistent: Studies report differing (contradictory) results.

Local Government Effects

Local governments in municipalities and counties across the United States as well as school districts can benefit from oil and gas production in their regions through a number of revenue streams, including local taxes, greater property taxes, and enhanced economic development. Many states also share revenues with local governments from severance taxes as well as state and federal leases. At the same time, costs to local governments are likely to increase—mainly associated with road damages or expansion of sewer and water systems and sometimes more crime—and local areas can suffer if new revenues do not keep pace with needs. Even if revenues offset local government operating expenses (e.g., staff costs), localities can go into debt due to increased infrastructure spending to support oil and gas production and increased populations. Some counties and municipalities reach agreements with industry to fix road damages directly (or pay to fix them), as well as build recreation or education infrastructure in order to mitigate costs to the community overall, help balance the impacts of oil and gas production more broadly in a region, and generate goodwill. Education outcomes can likewise be affected by changes to the composition and size of student populations, school finances, and the market for teachers and administrators, each of which may impact teacher effectiveness and student performance. Overall, how a local government or school district might be affected by an increase in unconventional oil and gas development is largely driven by local conditions and, in particular, state and local fiscal policies.

Read the full literature reviews: Local Government Impacts of Unconventional Oil and Gas Development​ and Public Education Impacts of Unconventional Oil and Gas Development​.

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Fiscal Impacts and Infrastructure for Counties and Cities
Impact Findings Results
State revenue sharing Several studies note that in most states, allocation of state severance taxes, state lease revenues, and federal lease revenues to local governments increases.
Local tax receipts ↑Ø Several studies find increases in local sales taxes and property taxes in jurisdictions that collect them. Large variation exists across regions.
Donations ↑Ø Several studies note collaboration between operators and local governments in select regions, notably on road repair.
Water and sewage infrastructure ↑Ø One higher-quality study finds that particularly in rural regions, increased population can strain existing infrastructure.
Expenditures Several studies note that increased demand for government services requires higher expenditures. Increased revenues allows higher expenditures and improved services.
Debt ↑↓ Studies note that in rural regions experiencing rapid growth, debt loads have increased. In other regions, increased revenues have allowed debt to be paid off, while some studies note no changes.
Government staffing Several studies note staff growth in law enforcement, fire and emergency services, social services, and clerk/recorder. Increased compensation is often required to grow/retain staff.

Further Reading:

Raimi, Daniel, and Richard G. Newell. 2016. US State and Local Oil and Gas Revenues. Discussion paper 16-50. Washington, DC: Resources for the Future.

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K-12 Education
Impact Findings Results
Student-teacher ratio ↑↓ Large variation exists across regions. Increase in number of students per teacher found for Texas and North Dakota, yet significant decreases found in the Marcellus region. Appears to be led by change in student numbers and does not indicate a change in teachers.
Revenue ↑↓ Several higher-quality studies report large variation across regions with varying tax policies. One study found an increase in total revenue per pupil in the Marcellus, but a decrease in North Dakota.
Education expenditures ↑↓ Several higher-quality studies report large variation across regions. Increase in the Marcellus region, but decrease in North Dakota and Texas.
Capital expenditures ↑Ø Several studies analyzing different regions report differing results. One higher-quality study found increases for Texas and several studies found an increase for capital spending per pupil in North Dakota. However, no statistically significant association found for other regions.
Educational attainment ~ Two studies with data-related limitations (particularly for rural areas) report decreases. One study found no evidence of increased dropouts in the Marcellus region, Bakken region, or Colorado.
Performance ~ One study finds a number of mixed results across grades and subjects. One study finds slight decrease in student achievement in Texas.

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Truck Traffic
Impact Findings Results
Traffic congestion Several studies note increased vehicle traffic, particularly in regions with limited pipeline infrastructure.
Road damage Two studies measure increased road damage, while several find concern in interviews with local officials. Damage in some regions is offset with donations or increased local revenues.
Accidents Two studies note increases in accident rates for heavy-duty trucks and all traffic, with increased rates of injuries and fatalities in accidents.

Health and Safety

Of particular concern to communities experiencing or making the decision to allow unconventional oil and gas development has been the potential for adverse health effects and seismicity-related safety impacts (and damages) from such development. Since 2009, the central and eastern regions of the United States have seen a dramatic increase in the rate of earthquakes, with Oklahoma surpassing California in the number of M3+ earthquakes per year in 2014. This increase has been tied to underground injection of wastewater, enhanced oil recovery activities, and (more recently) fracking. The literature on health concerns is less conclusive. Local air pollution related to engines used in drilling and stimulation phases of development as well as truck traffic are areas of potential concern, and noise and light pollution could be associated with a number of health impacts, such as stress or disturbed sleep. Public discussions often reflect concerns about cancer or adverse birth outcomes as well, though which development activities are to blame, if any, is less clear. While such concerns are understandable for local communities, the literature has been unable to either definitely prove or disprove any health impact studied.

Read the full literature reviews: Health Impacts of Unconventional Oil and Gas Development​ and Induced Seismicity Impacts of Unconventional Oil and Gas Development​.

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Birth Outcomes
Impact Findings Results
Birthweight ~ Studies of mixed quality find positive, negative, and null associations with birthweight.
Low APGAR ~ One study finds a positive association, while a high-quality study finds no association.
Preterm birth ~ Several studies report no association with development, while one higher-quality study and another lower-quality study find an increase in premature births.
Small for gestational age ~ Two studies report an increase in babies who are small for their gestational age, while another higher-quality study reports no association.
Birth defects One flawed study finds evidence of an increase in some birth defects, but no association with one defect.

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Cancer
Impact Findings Results
CNS Tumors One study finds evidence of positive association.
Childhood cancers Ø One lower quality study finds no association.
Leukemia and lymphoma ~ Studies report evidence of an increase or no association. One risk assessment finds an elevated risk of leukemia and other cancers based on air measurements of benzene, though another study finds air measurements of pollutants to be below a threshold of concern.

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Other Health
Impact Findings Results
Asthma One study reports increases in asthma hospitalizations, ER visits, and prescriptions for asthma medications.
Hospitalization One study finds an increase in hospital rates for some types of inpatient cases, but no associations for most cases.
Migraines ~ Two medium-quality studies report no association, while one lower-quality study reports an increase; all are self-reported symptoms.
Multiple symptoms One study finds positive and no associations for different types of self-reported symptoms.

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Seismicity
Impact Findings Results
Damage to buildings Increase in seismicity associated mainly with wastewater injection and also hydraulic fracturing operations, depending on geological conditions and land use patterns.
Stress and anxiety ~ Only one survey includes questions about the acceptability of induced seismicity as part of a larger study.

Economic Impacts

The localized impacts of shale gas and tight oil development are often framed in terms of income, employment, and economic development. These impacts may take various forms: royalty payments to mineral rights owners, the potential for increased direct and indirect job opportunities, increased sales for local businesses, and possible growth in wages for both extraction-related sectors and others due to an increase in the demand for labor. All of these benefits then have indirect and induced benefits to other sectors and the regional economy. Landowners with active leases earn royalties, but their neighbors and other landowners who do not own their mineral rights may receive no compensation, experience negative externalities, and even see property values drop. Workers see new opportunities but, at least initially, much of the workforce comes in from outside the community, particularly in areas that do not have prior experience with oil and gas development. Likewise, local businesses that support oil and gas operations see increased demands and income growth, but residents may see higher prices for goods and housing. The overall economic changes to a local area are therefore not necessarily clear cut, though the literature generally finds an overall increase in employment and income.

Read the full literature reviews: Economic Impacts of Unconventional Oil and Gas Development​ and Housing Market Impacts of Unconventional Oil and Gas Development​.

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Employment
Impact Findings Results
Local Several studies see increases, with large variation in magnitude across studies. Limited growth for local workers in regions without existing oil and gas workforce.
Regional Several studies see modest increases at the state- or shale play-levels; variation across studies, with some finding only short-term effects.

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Income
Impact Findings Results
Wages Most studies see increases, some find no association; large variation in magnitude across studies
Other income Several studies note increases in bonuses and royalties prior to and during production for those with mineral rights.

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Economic Development
Impact Findings Results
Long-term growth ~ A number of studies report evidence for and against the resource curse.

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Property Values
Impact Findings Results
Homes near wells, piped water Several studies find modest increases in value (depending on distance to unconventional oil and gas development as well as other factors).
Homes near wells, groundwater Several studies find large decreases in value (depending on distance to unconventional oil and gas development as well as other factors).
Homes without mineral rights One study finds that homes without mineral rights see large, negative decreases in their price from nearby unconventional oil and gas development.

Further Reading:

Muehlenbachs, Lucija, Elisheba Spiller, and Christopher Timmins. 2015. The Housing Market Impacts of Shale Gas Development. Discussion paper 13-39-REV2. Washington, DC: Resources for the Future.

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Social License to Operate
Impact Findings Results
Social license to operate   One study analyzes the relationship between oil and gas companies and local communities in which they operate.

Environmental Effects

Though no literature review was conducted for environmental impacts as part of this initiative, RFF experts have published and are in the process of conducting a number of studies that address some of these impacts, including those to water quality and land use.

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Water Quality
Impact Findings Results
Water use   One study examines the spatial and temporal patterns of water withdrawals and consumption for natural gas development in the Susquehanna River Basin, finding that Susquehanna River Basin Commission policies for gas companies have been more binding than what has been suggested.
Surface water quality   Two studies address this endpoint. One finds no systematic effects of spills on Pennsylvania streams but does find effect of sedimentation from well sites and roads as well as effluent from treatment plants. One study finds that pits and tanks both present risks of spillage, but does not examine stream impacts.

Further Reading:

Olmstead, Sheila M., Lucija Muehlenbachs, Jhih-Shyang Shih, Ziyan Chu, and Alan Krupnick. 2013. “Shale Gas Development Impacts on Surface Water Quality in Pennsylvania.” Proceedings of the National Academy of Sciences 110 (3): 4962–4967.

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Land Use
Impact Findings Results
Solid waste/Landfills   One study finds that toxicity levels in solid wastes from Pennsylvania wells are generally below benchmarks (though uses a small sample).
Leasing   Two studies are forthcoming on this topic.
Agricultural land use   One study uses geospatial analysis to assess the short- and medium-run effects of increased oil and gas development on agricultural land use in North Dakota, finding that well construction and subsequent operation are correlated with a reduction in crop acreage.
Fragmentation   One study develops an optimization approach to incorporate environmental objectives into shale gas pipeline development. The authors illustrate model usage by estimating the trade-offs between costs and environmental externalities using data from northeastern Pennsylvania.