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Department of Agricultural, Environmental, and Development Economics


Is the shale energy boom a bust for nearby residents? Evidence from housing values in Pennsylvania

Profitable extraction of previously inaccessible shale gas reserves has led to rapid expansion of shale exploration across the United States. While there is much enthusiasm surrounding the benefits from this source of energy as a potential path to energy independence, very little is known about the environmental risks associated with this exploration activity. In this paper, we present one of the first empirical studies to measure the impact of early shale exploration as capitalized into surrounding property values. Our dataset combines real estate data, shale well data and land use data in Washington County, Pennsylvania from 2008 to mid-2010 to estimate the impact of shale activity on nearby housing values using a Box-Cox hedonic specification. We find that households are adversely impacted by shale gas exploration activity, but this impact depends on the proximity and intensity of shale activity and is largely transitory in duration. While the magnitude of the overall effect of an additional shale well within one mile from the property is modest (-0.8%) this impact is heterogeneous. The effect is larger for households located close to major highways and sourced with private well water. The impacts are larger and more persistent for properties surrounded by agricultural lands.

Gopalakrishnan, S., & Klaiber, H. A. (2014). Is the shale energy boom a bust for nearby residents? Evidence from housing values in Pennsylvania. American Journal of Agricultural Economics96(1), 43-66.


Publication type: 
Journal article
Date published: 
Wednesday, January 1, 2014