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What Can We Learn about Shale Gas Development from Land Values? Opportunities, Challenges, and Evidence from Texas and Pennsylvania

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  • Weber, Jeremy G.
  • Hitaj, Claudia

Abstract

We study farm real estate values in the Barnett shale (Texas) and the northeastern part of the Marcellus shale (Pennsylvania and New York). We find that shale gas development caused appreciation in real estate values in both areas but the effect was much larger for the Marcellus, suggesting broader ownership of oil and gas rights by surface owners. In both regions, the greatest appreciation occurred when land was leased for drilling, not when drilling and production boomed. We find evidence that effects vary by farm type, which may reflect correlation between farm type and ownership of oil and gas rights.

Suggested Citation

  • Weber, Jeremy G. & Hitaj, Claudia, 2015. "What Can We Learn about Shale Gas Development from Land Values? Opportunities, Challenges, and Evidence from Texas and Pennsylvania," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 44(2), August.
  • Handle: RePEc:ags:arerjl:207742
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    References listed on IDEAS

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    1. Allison Borchers & Jennifer Ifft & Todd Kuethe, 2014. "Linking the Price of Agricultural Land to Use Values and Amenities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(5), pages 1307-1320.
    2. Weber, Jeremy G., 2012. "The effects of a natural gas boom on employment and income in Colorado, Texas, and Wyoming," Energy Economics, Elsevier, vol. 34(5), pages 1580-1588.
    3. Dan Black & Terra McKinnish & Seth Sanders, 2005. "The Economic Impact Of The Coal Boom And Bust," Economic Journal, Royal Economic Society, vol. 115(503), pages 449-476, April.
    4. Hill, Elaine L., 2012. "Unconventional Natural Gas Development and Infant Health: Evidence from Pennsylvania," Working Papers 128815, Cornell University, Department of Applied Economics and Management.
    5. Fitzgerald, Timothy, 2014. "Importance of Mineral Rights and Royalty Interests for Rural Residents and Landowners," Choices, Agricultural and Applied Economics Association, vol. 29(4).
    6. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    7. repec:fip:fedkrw:rwp2013-07 is not listed on IDEAS
    8. Weber, Jeremy G., 2014. "A decade of natural gas development: The makings of a resource curse?," Resource and Energy Economics, Elsevier, vol. 37(C), pages 168-183.
    9. Jeremy G. Weber & Jason Brown & John Pender, 2013. "Rural wealth creation and emerging energy industries: lease and royalty payments to farm households and businesses," Research Working Paper RWP 13-07, Federal Reserve Bank of Kansas City.
    10. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2012. "Shale Gas Development and Property Values: Differences across Drinking Water Sources," NBER Working Papers 18390, National Bureau of Economic Research, Inc.
    11. Sathya Gopalakrishnan & H. Allen Klaiber, 2014. "Is the Shale Energy Boom a Bust for Nearby Residents? Evidence from Housing Values in Pennsylvania," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(1), pages 43-66.
    12. C. Arden Pope III & H. L. Goodwin, 1984. "Impacts of Consumptive Demand on Rural Land Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(5), pages 750-754.
    13. Marchand, Joseph, 2012. "Local labor market impacts of energy boom-bust-boom in Western Canada," Journal of Urban Economics, Elsevier, vol. 71(1), pages 165-174.
    14. Brown, Jason, 2014. "Production of natural gas from shale in local economies: a resource blessing or curse?," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 1-29.
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    Cited by:

    1. Jeremy G. Weber & J. Wesley Burnett & Irene M. Xiarchos, 2016. "Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 35(3), pages 587-614, June.
    2. repec:ucp:jaerec:doi:10.1086/694034 is not listed on IDEAS

    More about this item

    Keywords

    land values; oil and gas rights; shale; Community/Rural/Urban Development; Environmental Economics and Policy; Land Economics/Use; Resource /Energy Economics and Policy;

    JEL classification:

    • Q15 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Land Ownership and Tenure; Land Reform; Land Use; Irrigation; Agriculture and Environment
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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