The costs of induced seismicity: A hedonic analysis

- Earthquakes due to wastewater injection became prevalent in Oklahoma in 2010.
- The external cost of these earthquakes is found using a hedonic analysis.
- The revealed cost is between 3.15% and 4.7% of home prices.

New developments in drilling technology and hydraulic fracturing have brought unprecedented change to energy markets domestically and internationally. Unintended effects of this extraction technique have been felt, quite literally, due to induced seismicity from wastewater injection. This research measures the costs of induced seismicity through changes in home prices using a hedonic price analysis within a differences-in-differences framework. We find the revealed cost to be between 3.15%-4.7% of home values, up to a $6660 reduction at the average.