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Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium

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  • Boslett, Andrew
  • Guilfoos, Todd
  • Lang, Corey

Abstract

This paper examines the local impacts of shale gas development (SGD). We use a hedonic framework and exploit a discrete change in expectations about SGD caused by the New York State moratorium on hydraulic fracturing. Our research design combines difference-in-differences and border discontinuity, as well as underlying shale geology, on properties in Pennsylvania and New York. Results suggest that New York properties that were most likely to experience both the financial benefits and environmental consequences of SGD dropped in value 23% as a result of the moratorium, which under certain assumptions indicates a large and positive net valuation of SGD.

Suggested Citation

  • Boslett, Andrew & Guilfoos, Todd & Lang, Corey, 2016. "Valuation of expectations: A hedonic study of shale gas development and New York’s moratorium," Journal of Environmental Economics and Management, Elsevier, vol. 77(C), pages 14-30.
    • Handle: RePEc:eee:jeeman:v:77:y:2016:i:c:p:14-30
    DOI: 10.1016/j.jeem.2015.12.003
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    More about this item

    Keywords

    Shale gas development; Hydraulic fracturing; Hedonic valuation; Expectations; Rational expectations; Moratorium; Difference-in-differences; Border discontinuity;
    All these keywords.

    JEL classification:

    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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