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I can hear my neighbors' fracking: The effect of natural gas production on housing values in Tarrant County, TX

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  • Balthrop, Andrew T.
  • Hawley, Zackary

Abstract

In this study we estimate the effect of hydraulically fractured natural gas wells on residential real estate prices. We exploit variation in distance to nearby gas wells in home sale prices to estimate this effect. In contrast to previous studies, we focus on a relatively densely populated area, a section of the Dallas–Ft. Worth–Arlington urban area. Using a dataset of 127,556 observations from Tarrant County, Texas over the period 2005–2011, we find robust evidence that increased proximity to a well leads to reduced home sale prices. Existence of wells within 3500ft of a property reduces property values by approximately 1.5–3%. We demonstrate that the reduction seems to be driven by unconventional rather than conventional wells, and that well construction causes an added 1–2% reduction in home value.

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  • Balthrop, Andrew T. & Hawley, Zackary, 2017. "I can hear my neighbors' fracking: The effect of natural gas production on housing values in Tarrant County, TX," Energy Economics, Elsevier, vol. 61(C), pages 351-362.
    • Handle: RePEc:eee:eneeco:v:61:y:2017:i:c:p:351-362
    DOI: 10.1016/j.eneco.2016.11.010
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    Cited by:

    1. Howell, Emily L. & Li, Nan & Akin, Heather & Scheufele, Dietram A. & Xenos, Michael A. & Brossard, Dominique, 2017. "How do U.S. state residents form opinions about ‘fracking’ in social contexts? A multilevel analysis," Energy Policy, Elsevier, vol. 106(C), pages 345-355.
    2. Siu, Wai Yan & Akhundjanov, Sherzod B., 2020. "Fracking Boom and Agricultural Doom: Evidence from Kern County, California," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304255, Agricultural and Applied Economics Association.
    3. Daniel Broxterman & Tingyu Zhou, 2023. "Information Frictions in Real Estate Markets: Recent Evidence and Issues," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 203-298, February.
    4. Jason P. Brown, 2021. "Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(7), pages 1629-1675, October.
    5. Malin, Stephanie A. & Mayer, Adam & Hazboun, Shawn, 2023. "Whose future, whose security?: Unconventional oil and gas extraction and the economic vulnerability and forced participation of small-scale property owners," Resources Policy, Elsevier, vol. 86(PA).
    6. Kelsey L. Conley & Brian E. Whitacre, 2020. "Home Is Where the Internet Is? High-speed Internet’s Impact on Rural Housing Values," International Regional Science Review, , vol. 43(5), pages 501-530, September.
    7. Martínez-Espiñeira, Roberto & García-Valiñas, María Á. & Matesanz, David, 2019. "Public Attitudes towards Hydraulic Fracturing in Western Newfoundland," Energy Economics, Elsevier, vol. 84(C).
    8. Rickman, Dan & Wang, Hongbo, 2020. "What goes up must come down? The recent economic cycles of the four most oil and gas dominated states in the US," Energy Economics, Elsevier, vol. 86(C).
    9. Gibbons, Stephen & Heblich, Stephan & Timmins, Christopher, 2021. "Market tremors: Shale gas exploration, earthquakes, and their impact on house prices," Journal of Urban Economics, Elsevier, vol. 122(C).
    10. Daniel Berkowitz, 2022. "Rational but Not Prescient: Borrowing during the Fracking Boom," Working Paper 7314, Department of Economics, University of Pittsburgh.
    11. Kangil Lee & Brian Whitacre, 2021. "A Study on the Impact of Unconventional (and Conventional) Drilling on Housing Prices in Central Oklahoma," Sustainability, MDPI, vol. 13(24), pages 1-17, December.
    12. Daniel Berkowitz & Andrew J. dup Boslett & Jason Brown & Jeremy G. Weber, 2022. "Rational but Not Prescient: Borrowing during the Fracking Boom," Research Working Paper RWP 2022-05, Federal Reserve Bank of Kansas City.
    13. Corey Young, 2023. "Between a Rock and a Hard Place: Governing Unconventional Natural Gas at the Local Level in the United States," Sustainability, MDPI, vol. 15(7), pages 1-14, March.
    14. Ferreira, Susana & Liu, Haiyan & Brewer, Brady, 2018. "The housing market impacts of wastewater injection induced seismicity risk," Journal of Environmental Economics and Management, Elsevier, vol. 92(C), pages 251-269.
    15. Keeler, Zachary T. & Stephens, Heather M., 2020. "Valuing shale gas development in resource-dependent communities," Resources Policy, Elsevier, vol. 69(C).
    16. Karen Maguire & John V. Winters, 2017. "Energy Boom and Gloom? Local Effects of Oil and Natural Gas Drilling on Subjective Well†Being," Growth and Change, Wiley Blackwell, vol. 48(4), pages 590-610, December.
    17. Brent W. Ambrose & Lily Shen, 2023. "Past Experiences and Investment Decisions: Evidence from Real Estate Markets," The Journal of Real Estate Finance and Economics, Springer, vol. 66(2), pages 300-326, February.

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    More about this item

    Keywords

    Hydraulic fracturing; Spatial dependence; Hedonic valuation;
    All these keywords.

    JEL classification:

    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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