NBER Publications by Lucija Muehlenbachs

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May 2016Price Regulation and Environmental Externalities: Evidence from Methane Leaks
with Catherine Hausman: w22261
Price regulations are widely used to reduce inefficiencies from natural monopolies, but they can introduce other inefficiencies, such as the failure to cost-minimize. We examine a previously unstudied distortion in the natural gas distribution sector that allows firms to pass the cost of lost gas on to their customers. We show that firms abate leaks below what is theoretically optimal for a private firm – expenditure on abatement is well below the cost of lost gas. Additionally, natural gas, primarily composed of methane, is both explosive and a potent greenhouse gas. Thus the climate impacts of leaked methane greatly exacerbate the inefficiencies created by imperfect price regulation.
January 2014The Housing Market Impacts of Shale Gas Development
with Elisheba Spiller, Christopher Timmins: w19796
Using data from Pennsylvania and New York and an array of empirical techniques to control for confounding factors, we recover hedonic estimates of property value impacts from shale gas development that vary with geographic scale, water source, well productivity, and visibility. Results indicate large negative impacts on nearby groundwater-dependent homes, while piped-water-dependent homes exhibit smaller positive impacts, suggesting benefits from lease payments. At a broader geographic scale, we find that new wellbores increase property values, but these effects diminish over time. Undrilled permits cause property values to decrease. Results have implications for the debate over regulation of shale gas development.
September 2012Shale Gas Development and Property Values: Differences across Drinking Water Sources
with Elisheba Spiller, Christopher Timmins: w18390
While shale gas development can result in rapid local economic development, negative externalities associated with the process may adversely affect the prices of nearby homes. We utilize a triple-difference estimator and exploit the public water service area boundary in Washington County, Pennsylvania to identify the housing capitalization of groundwater risk, differentiating it from other externalities, lease payments to homeowners, and local economic development. We find that proximity to wells increases housing values, though risks to groundwater fully offset those gains. By itself, groundwater risk reduces property values by up to 24 percent.

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