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Quantifying the Effects of Underground Natural Gas Storage on Nearby Residents

Published online by Cambridge University Press:  15 September 2016

Michaela Jellicoe  and
Michael S. Delgado
Michaela Jellicoe
Affiliation:
Community Attributes, Inc. in Seattle, Washington
Michael S. Delgado*
Affiliation:
Department of Agricultural Economics at Purdue University
*
Correspondence: Michael S. Delgado ▪ Department of Agricultural Economics ▪ Purdue University ▪ West Lafayette, IN 47907 ▪ Phone 765.494.4211 ▪ Email delgado2@purdue.edu.
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Abstract

We estimate the potential negative effects of underground natural gas storage on local residents using hedonic regression and a sample of Indiana properties transacted between 2004 and 2013. We find that underground natural gas storage activities significantly reduce property values. Property values increase by about 10 percent at a distance of 1 kilometer from a storage field. Each additional storage well and observation well located near a property reduces the property's value by about 0.43 percent and 2.64 percent, respectively. Our research sheds new light on a previously unexplored aspect of natural gas resource activities.

Keywords

externalitieshedonicnatural gas storage
Type
Selected Papers
Information
Agricultural and Resource Economics Review , Volume 44 , Issue 2: Special Issue: Unconventional Gas and Oil Development: Economic and Environmental Impacts , August 2015 , pp. 59 - 82
Copyright
Copyright © 2015 Northeastern Agricultural and Resource Economics Association 

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