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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 glean information about shale gas development by studying farm real estate values over time. Looking at the Barnett Shale (Texas) and the northeastern part of the Marcellus Shale (Pennsylvania and New York), we find that development caused appreciation in both areas but the effect was much larger in the Marcellus. There, quantile regressions reveal that farms at the 50th and 75th quantiles experienced substantial appreciation, suggesting broader ownership of oil and gas rights by surface owners. In both regions, most appreciation occurred when land was leased for drilling, not when drilling and production boomed. The higher values then persisted through the last year of our study, 2012, indicating a net positive effect of shale gas development on landed properties. Compared to agriculturally-intensive farms, the effect of development was greater for farms with limited agricultural sales and whose owners had a primary occupation other than farming. A correlation between farm type and the presence of oil and gas rights may explain the difference, a possibility that underscores the value of information on oil and gas right ownership when studying the effect of shale gas development on property values.

Suggested Citation

  • Weber, Jeremy G. & Hitaj, Claudia, 2014. "What can we learn about shale gas development from land values? Opportunities, challenges, and evidence from Texas and Pennsylvania," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170596, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea14:170596
    DOI: 10.22004/ag.econ.170596
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    Cited by:

    1. Lee, Brian & Chang, Hung-Hao & Wang, Szu-Yung, 2021. "Solar power promotion plans, energy market liberalization, and farmland prices – Empirical evidence from Taiwan," Energy Economics, Elsevier, vol. 99(C).
    2. 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.
    3. 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).
    4. Katie Jo Black & Shawn J. McCoy & Jeremy G. Weber, 2018. "When Externalities Are Taxed: The Effects and Incidence of Pennsylvania’s Impact Fee on Shale Gas Wells," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(1), pages 107-153.
    5. Gibbons, Stephen & Heblich, Stephan & Timmins, Christopher, 2021. "Market tremors: shale gas exploration, earthquakes, and their impact on house prices," LSE Research Online Documents on Economics 107900, London School of Economics and Political Science, LSE Library.
    6. Hitaj, Claudia & Boslett, Andrew J. & Weber, Jeremy G., 2020. "Fracking, farming, and water," Energy Policy, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    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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