The cost of unconventional gas extraction: A hedonic analysis

• We study property value effects of shale gas development.
• Our study area is the Northeast Pennsylvania over the Marcellus Shale.
• Multiple quasi-experimental and semi-parametric methods are utilized in estimation.
• Proximity to well estimates are not robust across methods and counties.

We focus on identification and estimation of potentially negative environmental impacts of unconventional natural gas extraction on property values in the United States and advance previous research by contributing new data and new identification strategies for isolating these potential impacts. Our study area consists of two counties in Pennsylvania that are home to large amounts of unconventional natural gas extraction but are otherwise isolated from other resource extraction industries or large urban areas. We deploy parametric, semi-parametric, and matching hedonic regression models that include recent quasi-experimental methods and, in contrast to previous research and much popular intuition, we fail to find robust significance that negative environmental externalities of natural gas extraction are manifested in nearby property values. While there may be plausible risks associated with unconventional natural gas extraction, we do not find consistent evidence to suggest that these risks significantly affect nearby property values.