Essays in the economics of energy development and disamenities

Abstract

<p>This dissertation consists of three essays broadly themed around evaluating the impact of energy infrastructure on local consumers and industries. Taken together, they characterize ways in which the presence of energy activity is reflected in local land and labor market conditions, with a particular focus on the deployment of wind energy generation and shale resource extraction.</p> <p>The first chapter examines the relationship between the placement of wind energy infrastructure and house values and incomes in Iowa. The results suggest that income growth offsets some of the negative house-value effects commonly observed in the evaluation literature, but also that income gains reported in the literature are geographically distributed away from wind farm locations. I conclude that proximity to wind turbines does not increase the real incomes of local residents.</p> <p>The second chapter applies a regional model to county-level wage, house value, employment and energy production data to characterize the economic impact of the U.S. shale boom of the mid-2000s. While the boom has been responsible for wage and employment gains in counties located within the bounds of U.S. shale oil and gas plays, the net effect on house values has been negative. Within the set of energy-producing counties, however, house value declines are mitigated during the boom period as willingness-to-pay for residential space can overcome some of the the negative impacts of energy industry activity. I conclude that shale energy extraction is a disamenity at the local level.</p> <p>The third chapter extends the analysis of the impact of the shale boom by examining possible spillovers in agriculture. Using parcel-level data from North Dakota, I analyze rental rates to assess the extent to which oil industry activity affects the returns to agricultural land. While “on-shale” parcels lease at lower rates than parcels located outside the oil fields, I cannot reject the hypothesis that proximity to an oil well has no impact on returns to agricultural land. Since my data examine agricultural surface rents with no associated mineral rights, my results imply that fracking-related house value declines reported in the literature may be due to aesthetic and nuisance considerations rather than lasting local environmental damage.</p>