Market tremors: shale gas exploration, earthquakes, and their impact on house prices

Gibbons, Stephen ORCID: 0000-0002-2871-8562, Heblich, Stephan and Timmins, Christopher (2021) Market tremors: shale gas exploration, earthquakes, and their impact on house prices. Journal of Urban Economics, 122. ISSN 0094-1190

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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 from hydraulic fracturing (‘fracking’). Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008, signalling potential future development. This paper examines whether public fears about fracking affect 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 3.9–4.7 percent house price decrease in the area where the earthquakes occurred. The earthquakes were too minor to have caused any damage but we find the effect on prices extends to a radius of about 25 km served by local newspapers. This evidence suggests that the earthquakes and newspaper coverage increased awareness of exploration activity and fear of the local consequences.

Item Type:	Article
Official URL:	https://www.sciencedirect.com/journal/journal-of-u...
Additional Information:	© 2020 The Authors
Divisions:	Geography & Environment
Subjects:	H Social Sciences > HD Industries. Land use. Labor G Geography. Anthropology. Recreation > GE Environmental Sciences
Date Deposited:	14 Dec 2020 08:36
Last Modified:	17 Apr 2024 03:27
URI:	http://eprints.lse.ac.uk/id/eprint/107900

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