The cost of unconventional gas extraction: A hedonic analysis

We focus on identification and estimation of potentially negative environmental impacts of unconventional natural gas extraction on property values in the United States and advance previous research by contributing new data and new identification strategies for isolating these potential impacts. Our study area consists of two counties in Pennsylvania that are home to large amounts of unconventional natural gas extraction but are otherwise isolated from other resource extraction industries or large urban areas. We deploy parametric, semi-parametric, and matching hedonic regression models that include recent quasi-experimental methods and, in contrast to previous research and much popular intuition, we fail to find robust significance that negative environmental externalities of natural gas extraction are manifested in nearby property values. While there may be plausible risks associated with unconventional natural gas extraction, we do not find consistent evidence to suggest that these risks significantly affect nearby property values.     

A shaky business: Natural gas extraction,earthquakes and house prices

The production of natural gas is strongly increasing around the world. Long-run negative external effects of extraction are understudied and often ignored in (social) cost-benefit analyses. One important example is that natural gas extraction leads to soil subsidence and subsequent induced earthquakes that may occur only after a couple of decades. We show that induced earthquakes that are noticeable to residents generate substantial non-monetary economic effects, as measured by their effects on house prices, also when house owners are fully compensated for damage to their houses. To address the issue that earthquakes do not occur randomly over space, we use temporal variation in the occurrence of noticeable earthquakes while controlling for the occurrence of earthquakes that cannot be felt by house owners. We find that earthquakes that are noticeable with peak ground velocities of above half a cm/s lead to price decreases of 1.9 percent. The total non-monetary costs of induced earthquakes for Groningen are about €170 million (about €600 per household). These results indicate that the non-monetary costs are in the same order of magnitude as the monetary damage costs.     

A regression discontinuity approach to measuring the effectiveness of oil and natural gas regulation to address the common-pool externality

Oil and natural gas reservoirs typically span multiple productive leases so that no owner has rights to the entire stock of resource, resulting in production externalities. Previous literature has examined the effectiveness of government regulation in Texas and Oklahoma in abating these externalities, finding Oklahoma to be more successful in unifying common pools and securing property rights. Using regression discontinuity design, we quantify the impact of regulatory difference between the two states. We find that Oklahoma produces an average of 3361 more barrels of oil over the life of a well, relative to Texas. Given the maturity of the fields in question, the result underscores the continuing importance of addressing common pool externalities even after the primary phase of recovery has largely been completed.     

Modeling production externalities in the maquila industry

In the past decade, the maquiladora export industry surpassed both tourism and petroleum products to become the number one source of earned foreign exchange for Mexico. The continued growth of the maquila industry suggests that there may be significant production spillovers into the local environments. Dynamic modeling, using STELLA, provides a framework for quantifying the environmental impacts emanating from the growth of the maquila industry, focusing on wastewater treatment consequences and resulting infrastructural policy considerations. Such detailed modeling of industrial, infrastructural, and ecological linkages has not yet been a feature of research on this region, despite the potential for significant human health ramifications. An environmental model is therefore developed for two focal urban communities, Nogales and Mexicali, facing potential wastewater treatment concerns due to the growth of nearby maquila factories. In the former case, the analysis revealed the inadequacy of the capacity planning for the treatment of effluent; in the latter case, conservative projections reveal that the system upgrades should be able to handle demands through 2020.     

Combinations of technology in US patents, 1926–2009: a weakening base for future innovation?

In combinatorial models of innovations, new technologies are built from combinations of pre-existing technological components. Researchers learn which components work well together by observing previously successful combinations and the pool of ideas can be ‘fished out’, i.e. exhausted, if it is not ‘restocked’ by the discovery of novel connections. We first show US patents have made increasingly less novel connections among technological constituents since the 1950s, and that the number of technological fields to which these connections are applicable has stopped growing since the 1980s. We then estimate the parameters of an ideas production function, and find parameter estimates consistent with technology fields being fished out if not continually restocked by the discovery of novel connections between technological components. We use the ideas production function to estimate the number of new patent applications induced by each patent granted between 1926 and 2001, and show this number has trended downward since the 1940s.     

An estimate of the producer cost of liability for oil spills

Governments often impose liability for environmental harms on firms when direct monitoring of operations is difficulty or costly. In the case of oil production, little is known about the private cost of liability. This article takes advantage of a natural experiment to estimate the loss in projected future profits of oil and gas production after the Oil Pollution Act of 1990, which imposed liability on some producers and was exogenously timed in response to the Exxon Valdez spill. I find no evidence of economically substantial firm costs of the Oil Pollution Act’s liability rule.     

DAMS, DAM REMOVAL, AND RIVER RESTORATION: A HEDONIC PROPERTY VALUE ANALYSIS

This article presents the results of a hedonic property value analysis for multiple hydropower sites along the Kennebec River in Maine, including the former site of the Edwards Dam in Augusta, Maine. The effect of the removal of the Edwards Dam on the Kennebec River in Maine is examined through consumer's marginal willingness to pay to be close to or distant from the dam site. Data from both before and after the dam was removed are used to estimate changes in marginal prices. A similar data set is also used to look at the effects of the remaining upstream dams on property values. This article presents one of the first (to our knowledge) ex post analyses on the economic impact of dam removal on property values. As more privately owned dams in the United States come up for relicensing, evaluating the impacts with and without the dam will become increasingly important. This work can help inform those analyses. ( JEL Q25, Q51, Q58)     

Spring cleaning: rural water impacts, valuation, and property rights institutions

Using a randomized evaluation in Kenya, we measure health impacts of spring protection, an investment that improves source water quality. We also estimate households' valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water, which limits incentives for private investment. Spring infrastructure investments reduce fecal contamination by 66%, but household water quality improves less, due to recontamination. Child diarrhea falls by one quarter. Travel-cost based revealed preference estimates of households' valuations are much smaller than both stated preference valuations and health planners' valuations, and are consistent with models in which the demand for health is highly income elastic. We estimate that private property norms would generate little additional investment while imposing large static costs due to above-marginal-cost pricing, private property would function better at higher income levels or under water scarcity, and alternative institutions could yield Pareto improvements.     

Did Open Access Integrate Natural Gas Markets? An Arbitrage Cost Approach

Several studies, using analyses that measure the correlation between prices in various markets, have argued that deregulation of natural gas pipeline contracts has reduced the transaction costs between natural gas markets. Correlations approaches, however, have potentially serious problems. Given these problems, this article estimates transactions costs directly. Deregulation is found to have lowered transactions costs to and from the Louisiana, Oklahoma, and Texas regions, but increased transactions costs from the Rocky Mountain area. Deregulation of pipeline contracts, by lowering the cost of using the market and therefore increasing demand for pipeline capacity, may therefore have differential impacts upon transactions costs between markets. This study implies that the transactions cost approach may be able to overcome several difficulties inherent in the correlations approach.     

The Shifting Geopolitics of Russia’s Natural Gas Exports and Their Impact on EU-Russia Gas Relations

In the sphere of natural gas, Russia and the EU share an interdependent relationship: Russia is the single largest supplier of natural gas to the EU, while the EU is Russia’s largest gas export market. In May 2014, a deal was struck between Gazprom and the China National Petroleum Corporation to enable large-scale Russian gas exports to China. What impact could this deal have on the EU-Russia gas relationship? This article analyses Russia’s existing and proposed gas production and export infrastructure for the delivery of natural gas to Europe and to China, and the extent to which increased gas exports to the East could result in the limitation of Russian gas exports to Europe. It is concluded that, due to its dependence on new gas production in eastern Siberia and the construction of new, purpose-built pipeline infrastructure, the Gazprom-CNPC deal of May 2014 will not have a significant impact on Russia’s gas exports from north-western Siberia to the EU. The launch of talks aimed at delivering Russian gas from the Yamal Peninsula to China via the ‘western route’ opened the first possibility for Russia to balance its gas exports between East and West. However, this is unlikely to generate price competition between Europe and China, due to Gazprom’s inability to extract a ‘European’ price for its gas exports to China. This suggests that Gazprom will not re-direct significant volumes away from Europe towards China, but rather will seek additional export volumes.     

Willingness to accept compensation for the environmental risks of oil transport on the Amazon: A choice modeling experiment

This paper looks at the question of whether subsistence level/indigenous people place a value on the preservation of ecosystems independent of direct impacts of environmental change, such as impacts on their production activities. The economics literature generally suggests that non-use values don't exist among the poor and in the informal sector of the economy. We examine this issue through a choice modeling experiment. A survey was conducted of rainforest communities who live on the banks of the Amazon River (Rio Solimões), in the vicinity of proposed oil and gas pipelines. The data were analyzed in the choice modeling framework, revealing relatively high amounts of compensation that were necessary in order to accept the potential ecosystem damages associated with oil transport, even if the people were completely compensated for direct damages such as loss of access to productive resources. These results suggest that environmental quality is important for its own sake, a result that is very different from the implicit assumption among many economists.     

Flood Risk Information,Actual Floods and Property Values: A Quasi‐Experimental Analysis

Hedonic property price analysis tells us that property prices can be affected by natural hazards such as floods. This paper examines the impact of flood‐related variables (among other factors) on property values, and examines the effect of the release of flood risk map information on property values by comparing the impact with the effect of an actual flood incidence. An examination of the temporal variation of flood impacts on property values is also made. The study is the first of its kind where the impact of the release of flood risk map information to the public is compared with an actual flood incident. In this study, we adopt a spatial quasi‐experimental analysis using the release of flood risk maps by Brisbane City Council in Queensland, Australia, in 2009 and the actual floods of 2011. The results suggest that property buyers are more responsive to the actual incidence of floods than to the disclosure of information to the public on the risk of floods.     

中国钢铁行业能源内部的替代弹性分析

本文运用中国钢铁行业滞后一期的产出代替劳动和资本变量,把钢铁行业能源投入要素分解为煤炭、石油、天然气和电力的投入,建立了一个超越对数生产函数模型,用岭回归估算了中国钢铁行业各能源品种投入要素的产出弹性、替代弹性。结果表明:煤炭与石油、煤炭与天然气、煤炭与电力的替代弹性在1左右,中国钢铁行业可通过用石油、天然气、电力替代煤炭来实现其行业全要素能源效率的提高。     

Valuing externalities from energy infrastructures through stated preferences: a geographically stratified sampling approach

The externalities produced by high-voltage transmission lines are multidimensional, may strongly depend on the local context, and are thus difficult to capture through standard environmental valuation exercises. We experiment a GIS approach to design a geographically stratified contingent valuation sample of the population resident in infrastructure corridors in a whole region. We estimate, by means of a binary choice logit model, the perceived marginal damage from impacts of power lines on human health, the landscape and the environment. Specific treatment is given to qualitatively different forms of impact, namely real estate depreciation versus diffused perception of damage, arising at different distances from the lines. The set of GIS-based variables (proximity to power lines, presence of other infrastructure, endowment of natural and built heritage and other local context variables) prove to be significant predictors in the utility function of resident households. Finally, we compute simulated values that combine information on individual’s willingness to pay, population density and the dimension of the considered corridor around the infrastructure, so as to generalize the outcomes of case-specific studies for use in policy choices such as infrastructure localization, undergrounding and negotiation of compensations.     

Waste Sites and Property Values: A Meta-Analysis

Recent studies suggest that some of the most contaminated waste sites in the United States have idiosyncratic or no discernable effects on nearby property values. This paper presents a meta-analysis of the literature measuring the economic impact of sites harboring waste materials on real estate values. A sample of 46 North American studies issued from 1971 to 2008 yields 129 distinct estimates that survive outlier diagnostics. The estimation results are highly robust and significant across estimators and specifications. They suggest that all classes of waste sites affect real estate prices, but sites classified as hazardous, especially aquatic hazardous sites, are associated with the greatest discounts. The estimated impacts of nonhazardous waste and nuclear sites are not statistically different from one another. Surprisingly, estimated impacts associated with sites included on the EPA??s National Priority List (NPL) are generally smaller (although still statistically significant) than those for non-NPL hazardous waste sites. The estimates for sites in Canada and Mountain, Middle Atlantic, and South Atlantic states exceed those for other regions. Larger impact areas and aggregated data, such as census block observations, are associated with lesser estimates.     

Valuing the Ozone-Related Health Benefits of Methane Emission Controls

Methane is a greenhouse gas that oxidizes to form ground-level ozone, itself a greenhouse gas and a health-harmful air pollutant. Reducing methane emissions will both slow anthropogenic climate change and reduce ozone-related mortality. We estimate the benefits of reducing methane emissions anywhere in the world for ozone-related premature mortality globally and for eight geographic regions. Our methods are consistent with those used by the US Government to estimate the social cost of carbon (SCC). We find that the global short- and long-term premature mortality benefits due to reduced ozone production from methane mitigation are (2011) $790 and $1775 per tonne methane, respectively. These correspond to approximately 70 and 150 % of the valuation of methane’s global climate impacts using the SCC after extrapolating from carbon dioxide to methane using global warming potential estimates. Results for monetized benefits are sensitive to a number of factors, particularly the choice of elasticity to income growth used when calculating the value of a statistical life. The benefits increase for emission years further in the future. Regionally, most of the global mortality benefits accrue in Asia, but 10 % accrue in the United States. This methodology can be used to assess the benefits of methane emission reductions anywhere in the world, including those achieved by national and multinational policies.     

Tenure Security and Long‐term Investment on Tenanted Land: Evidence from Colonial Taiwan

We use farm diary data from Taiwan in the 1920s and 1930s to estimate the impacts of a state‐wide tenancy reform on tenants’ investment in the farmland and production outcome. The reform, commencing in 1922, enhanced the tenure security for the tenants by promoting written contracts that extended tenure length from 1 year to 5–6 years, and by establishing government‐sponsored organizations for dispute settlements. Our estimations rely on a difference‐in‐difference framework, where self‐cultivated farms are used as the control group. We find that the reform encouraged tenants to make investments in the irrigation and drainage system of the farms, which is expected to have long‐lasting benefits for production. The improved irrigation/drainage system led to significant efficiency gains for the farms. In contrast, the reform did not affect tenants’ usage of fertilizer much, which benefits production for only a crop season or a year.     

A hedonic analysis of the impact of LUST sites on house prices

Petroleum from leaking underground storage tanks (LUSTs) can contaminate local soil and surface and groundwater. This can pose health risks to the surrounding population. Focusing on single family home sales from 1996 to 2007 in three Maryland Counties, we use a hedonic house price model and a difference–in-difference approach to estimate the willingness to pay to clean up the LUST sites. Particular attention is given to how property values are affected by leak and cleanup activity at a LUST site, the severity of contamination, the presence of a primary exposure pathway (i.e., private groundwater wells), and publicity surrounding a LUST site. The results suggest that although the typical LUST may not significantly affect nearby property values, more publicized (and more severe) sites can decrease surrounding home values by more than 10%.     

Economic Analysis for the UK National Ecosystem Assessment: Synthesis and Scenario Valuation of Changes in Ecosystem Services

We combine natural science modelling and valuation techniques to present economic analyses of a variety of land use change scenarios generated for the UK National Ecosystem Assessment. Specifically, the agricultural, greenhouse gas, recreational and urban greenspace impacts of the envisioned land use changes are valued. Particular attention is given to the incorporation of spatial variation in the natural environment and to addressing issues such as biodiversity impacts where reliable values are not available. Results show that the incorporation of ecosystem services and their values within analyses can substantially change decisions.     

自然灾害、巨灾保险与政府主导

近年来,中国各地频频发生地震、干旱、洪水等自然灾害,给人民群众的生命和财产造成了损失,影响了社会经济的运行。巨灾保险作为一种有效转移自然灾害风险的市场手段,对分担巨灾带来的经济损失、稳定社会经济发挥着重要的作用。而当前中国巨灾保险体系的建设还离不开政府的主导推动,只有政府和保险公司紧密合作,加大巨灾险种的引进创新,利用好再保险和巨灾保险基金等多样化风险转移工具,尽快构建巨灾保险体系,才能有效保障中国经济继续保持又好又快增长。