Working Paper: NBER ID: w23060
Authors: Alexander W. Bartik; Janet Currie; Michael Greenstone; Christopher R. Knittel
Abstract: Exploiting geological variation within shale deposits and timing in the initiation of hydraulic fracturing, this paper finds that allowing fracing leads to sharp increases in oil and gas recovery and improvements in a wide set of economic indicators. At the same time, estimated willingness-to-pay (WTP) for the decrease in local amenities (e.g., crime and noise) is roughly equal to -$1000 to -$1,600 per household annually (-1.9% to -3.1% of mean household income). Overall, we estimate that WTP for allowing fracing equals about $1,300 to $1,900 per household annually (2.5% to 3.7%), although there is substantial heterogeneity across shale regions.
Keywords: hydraulic fracturing; local economic impacts; welfare consequences; oil and gas production
JEL Codes: Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| High fracing potential (L71) | Increase in oil and gas production (L71) |
| High fracing potential (L71) | Increase in economic activity (O49) |
| High fracing potential (L71) | Increase in employment (J23) |
| High fracing potential (L71) | Increase in salaries (J39) |
| High fracing potential (L71) | Increase in local government revenues (H79) |
| High fracing potential (L71) | Increase in local government expenditures (H72) |
| High fracing potential (L71) | Increase in violent crime rates (K42) |
| Increase in public safety expenditures (H76) | Willingness to pay for amenity changes (D11) |
| High fracing potential (L71) | Willingness to pay for allowing fracing (L71) |