Thursday, November 01 09:24:42
Fracking for shale gas in the US is much further advanced than in Europe and thousands of jobs are now linked to the activity although concerns remain. For states such as Pennsylvania, there are pros and cons. On the plus side, all that production creates thousands of jobs and boosts income for locals. Residents with land that's suitable for drilling can sign over their mineral rights to a gas company. In exchange, they can receive up to thousands of dollars up front, as well as royalties on the gas that's extracted. For some landowners, that can mean tens of thousands of dollars or more.
But there are risks, as well. Scientists are still trying to assess whether drilling for shale gas - through a technique known as hydraulic fracturing, or "fracking" - can contaminate nearby groundwater. Fracking involves cracking open the shale rock with pressurized water, chemicals and sand in order to extract gas. If the well casings are faulty, or if fracking occurs too close to aquifers, either chemicals or methane could conceivably contaminate nearby drinking water. For now, there's little evidence that this is occurring, in part because studies are still scarce, but it's an ongoing concern.
Ideally, in trying to craft regulations around gas drilling, state governments would try to balance those risks against the benefits. So far, however, those risks have been fairly difficult to quantify. That's what makes this new NBER working paper by Lucija Muehlenbachs, Elisheba Spiller and Christopher Timmins so interesting. The authors try to look at how shale-gas drilling has affected property values around drilling sites in Pennsylvania. Doing so, they say, can help give a better sense of how to tally those upsides and downsides.