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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
  • 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). Shale gas development caused appreciation in both areas but the effect was much larger in the Marcellus, 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. We find evidence that effects vary by farm type, which may reflect a correlation between farm type and the presence of oil and gas rights.

Suggested Citation

  • Weber, Jeremy & Hitaj, Claudia, 2015. "What can we learn about shale gas development from land values? Opportunities, challenges, and evidence from Texas and Pennsylvania," MPRA Paper 61198, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:61198
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    References listed on IDEAS

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    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Fitzgerald, Timothy, 2014. "Importance of Mineral Rights and Royalty Interests for Rural Residents and Landowners," Choices, Agricultural and Applied Economics Association, vol. 29(4).
    8. 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.
    9. 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.
    10. repec:fip:fedkrw:rwp2013-07 is not listed on IDEAS
    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.
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    13. 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.
    14. 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.
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    Cited by:

    1. repec:ucp:jaerec:doi:10.1086/694034 is not listed on IDEAS
    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.

    More about this item

    Keywords

    Barnett Shale; land values; Marcellus Shale; natural gas; oil and gas rights;

    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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