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Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain

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  • Steve Gibbons
  • Stephan Heblich
  • Esther Lho
  • Christopher Timmins

Abstract

Shale gas has grown to become a major new source of energy in countries around the globe. While its importance for energy supply is well recognized, there has also been public concern over potential risks such as damage to buildings and contamination of water supplies caused by geological disturbance from the hydraulic fracturing (‘fracking’) extraction process. Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008 implying potential future development. This paper examines whether public fears about fracking are evident in changes in house prices in areas that have been licensed for shale gas exploration. Our estimates suggest differentiated effects. Licensing did not affect house prices but fracking the first well in 2011, which caused two minor earthquakes, did. We find a 2.7-4.1 percent house price decrease in the area where the earthquakes occurred. Robustness checks confirm our findings.

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  • Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," NBER Working Papers 22859, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22859
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    2. Ng'ombe, John N. & Boyer, Tracy A., 2019. "Determinants of earthquake damage liability assignment in Oklahoma: A Bayesian Tobit censored approach," Energy Policy, Elsevier, vol. 131(C), pages 422-433.
    3. Rozo, Sandra V., 2020. "Unintended effects of illegal economic activities: Illegal gold mining and malaria," World Development, Elsevier, vol. 136(C).
    4. Diemer, Andreas, 2020. "Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom," LSE Research Online Documents on Economics 105868, London School of Economics and Political Science, LSE Library.
    5. Jonathan Eyer & Matthew E. Kahn, 2017. "Prolonging Coal’s Sunset: The Causes and Consequences of Local Protectionism for a Declining Polluting Industry," NBER Working Papers 23190, National Bureau of Economic Research, Inc.

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    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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