American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
The Local Economic and Welfare Consequences of Hydraulic Fracturing
American Economic Journal: Applied Economics
vol. 11,
no. 4, October 2019
(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