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Coal-to-gas fuel switching and its effects on housing prices

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  • Rivera, Nathaly M.
  • Loveridge, Scott

Abstract

We derive causal property value impacts of the coal-to-gas fuel switching conversion implemented by several power plants in the United States. We use an extensive dataset of property transactions around the country and adopt several spatial difference-in-difference approaches that use records of residential property transactions of homes with pollution exposure and proximity to the fuel-switching plants before and after the switch. The use of homes near coal-fired plants that did not innovate strengthens these estimations. The results suggest that the shutdown of coal-fired generators increased property values by roughly 12%–20% within 1 mile of distance from fuel-switching stations. These effects significantly increase once we consider wind exposure of homes around these plants, which brings to light the strong and localized disamenity effect of coal-fired power stations. Conservative back-of-the-envelope calculations suggest that the fuel-switching led to a $70-million increase in property values around the country.

Suggested Citation

  • Rivera, Nathaly M. & Loveridge, Scott, 2022. "Coal-to-gas fuel switching and its effects on housing prices," Energy Economics, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:eneeco:v:106:y:2022:i:c:s0140988321005818
    DOI: 10.1016/j.eneco.2021.105733
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    Cited by:

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    3. Jiaojiao Sun & Feng Dong, 2023. "Optimal reduction and equilibrium carbon allowance price for the thermal power industry under China’s peak carbon emissions target," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-27, December.

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    More about this item

    Keywords

    Fossil fuels; Coal combustion; Fuel switching; Environmental quality; Environmental valuation; Hedonic models; Housing market; Willingness-to-pay;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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