Skip to main content
Unpublished Paper
Valuation of the External Costs of Unconventional Oil and Gas Development: The Critical Importance of Mineral Rights Ownership
working paper (2016)
  • Andrew Boslett, University of Rhode Island
  • Todd Guilfoos, University of Rhode Island
  • Corey Lang
Abstract
We quantify the negative externalities associated with unconventional extraction of oil and gas using hedonic valuation and residential property transactions. One complication in determining local impacts is that some but not all properties are unified with mineral rights, which enable the residents to benefit financially from nearby drilling. To overcome this issue, we exploit the mineral severance legacy of the Stock-Raising Homestead Act of 1916 to identify properties in Western Colorado that with certainty do not have mineral rights and are therefore only impacted negatively by proximate drilling. Our regression results suggest that housing prices decline about 35% when drilling occurs within one mile. This estimate of local costs is substantially larger than prior results found elsewhere in the literature, which demonstrates the critical importance of mineral ownership. 
Keywords
  • unconventional oil and gas development,
  • hydraulic fracturing,
  • hedonic valuation,
  • mineral severance
Publication Date
June 1, 2016
Citation Information
Andrew Boslett, Todd Guilfoos and Corey Lang. "Valuation of the External Costs of Unconventional Oil and Gas Development: The Critical Importance of Mineral Rights Ownership" working paper (2016)
Available at: http://works.bepress.com/corey_lang/22/