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.

Keywords: shale gas, property values, hedonic models, groundwater, triple difference estimator

JEL Classification: Q4, Q53

Suggested Citation: Suggested Citation

Muehlenbachs, Lucija and Spiller, Elisheba and Timmins, Christopher D., Shale Gas Development and Property Values: Differences Across Drinking Water Sources (September 1, 2012). Economic Research Initiatives at Duke (ERID) Working Paper No. 131, Available at SSRN: https://ssrn.com/abstract=2149612 or http://dx.doi.org/10.2139/ssrn.2149612