Shale Gas Development and Property Values: Differences across Drinking Water Sources
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.
We thank Kelly Bishop, Jessica Chu, Carolyn Kousky, Alan Krupnick, Corey Lang, Joshua Linn, Lala Ma, Jan Mares, Ralph Mastromonaco, Stefan Staubli, Randy Walsh, and Jackie Willwerth. We thank the Bureau of Topographic and Geologic Survey in the PA Department of Conservation and Natural Resources for data on well completions. We gratefully acknowledge support from the Cynthia and George Mitchell Foundation. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.