The Impact of Energy Production on Farmland Markets: Evidence from New York’s 2008 Hydraulic Fracturing Moratorium

Abstract

Future conventional and renewable energy production will predominantly occur on farmland, resulting in economic gains as well as potential negative externalities for farmland owners and rural communities. However there is limited research on the economic impact of energy production that takes place on farmland. This study uses the discrete change in expectations caused by the 2008 New York State moratorium on hydraulic fracturing to investigate the net impact of shale gas development on farmland values. We use a difference-in-differences empirical design with a hedonic pricing model. We find that the moratorium led to net economic losses for rural landowners in New York’s Southern tier, as reflected in farmland values declining approximately $1,400/acre.

Keywords

Shale gas development Farmland markets Marcellus Formation

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