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Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property

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  • Jeremy G. Weber
  • J. Wesley Burnett
  • Irene M. Xiarchos

Abstract

We study the effects of the property tax base shock caused by natural gas drilling in the Barnett Shale in Texas—a state that taxes oil and gas wells as property. Over the boom and bust in drilling, housing appreciation closely followed the oil and gas property tax base, which expanded the total tax base by 23 percent at its height. The expansion led to a decline in property tax rates while maintaining or increasing revenues to schools. Overall, each $1 per student increase in the oil and gas property tax base increased the value of the typical home by $0.15. Some evidence suggests that the cumulative density of wells nearby may lower housing values, indicating that drilling could reduce local welfare without policies to increase local public revenues.

Suggested Citation

  • 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.
  • Handle: RePEc:wly:jpamgt:v:35:y:2016:i:3:p:587-614
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    File URL: http://hdl.handle.net/10.1002/pam.21911
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    Cited by:

    1. repec:eee:pubeco:v:158:y:2018:i:c:p:12-24 is not listed on IDEAS
    2. Marchand, Joseph & Weber, Jeremy, 2017. "The Local Effects of the Texas Shale Boom on Schools, Students, and Teachers," Working Papers 2017-12, University of Alberta, Department of Economics, revised 26 Jan 2018.
    3. repec:bla:jecsur:v:32:y:2018:i:2:p:469-490 is not listed on IDEAS
    4. repec:eee:enepol:v:111:y:2017:i:c:p:281-296 is not listed on IDEAS
    5. Hitaj, Claudia & Weber, Jeremy & Erickson, Ken, "undated". "Ownership of Oil and Gas Rights: Implications for U.S. Farm Income and Wealth," Economic Information Bulletin 276228, United States Department of Agriculture, Economic Research Service.
    6. Hitaj, Claudia & Weber, Jeremy G. & Hopkins, Jeffrey W. & Erickson, Kenneth W., 2018. "Ownership of Oil and Gas Rights and Farm Sector Income and Wealth," 2018 Annual Meeting, August 5-7, Washington, D.C. 274316, Agricultural and Applied Economics Association.
    7. Joseph Marchand & Jeremy Weber, 2018. "Local Labor Markets And Natural Resources: A Synthesis Of The Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 32(2), pages 469-490, April.
    8. repec:ucp:jaerec:doi:10.1086/694034 is not listed on IDEAS
    9. Brown, Jason, 2017. "Response of Consumer Debt to Income Shocks: The Case of Energy Booms and Busts," Research Working Paper RWP 17-5, Federal Reserve Bank of Kansas City.

    More about this item

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • Q32 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Exhaustible Resources and Economic Development
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)

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