The Local Economic and Welfare Consequences of Hydraulic Fracturing
- (pp. 105-55)
(Complimentary)
Abstract
Exploiting geological variation and timing in the initiation of hydraulic fracturing, we find that fracking leads to sharp increases in oil and gas recovery and improvements in a wide set of economic indicators. There is also evidence of deterioration in local amenities, which may include increases in crime, noise, and traffic and declines in health. Using a Rosen-Roback-style spatial equilibrium model to infer the net welfare impacts, we estimate that willingness-to-pay (WTP) for allowing fracking equals about $2,500 per household annually (4.9 percent of household income), although WTP is heterogeneous, ranging from more than $10,000 to roughly 0 across 10 shale regions.Citation
Bartik, Alexander W., Janet Currie, Michael Greenstone, and Christopher R. Knittel. 2019. "The Local Economic and Welfare Consequences of Hydraulic Fracturing." American Economic Journal: Applied Economics, 11 (4): 105-55. DOI: 10.1257/app.20170487Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- K42 Illegal Behavior and the Enforcement of Law
- L71 Mining, Extraction, and Refining: Hydrocarbon Fuels
- Q35 Hydrocarbon Resources
- Q51 Valuation of Environmental Effects
- Q53 Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
- R41 Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
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