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Broadening Benefits from Natural Resource Extraction: Housing Values and Taxation of Natural Gas Wells as Property
Author(s) -
Weber Jeremy G.,
Burnett J. Wesley,
Xiarchos Irene M.
Publication year - 2016
Publication title -
journal of policy analysis and management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.898
H-Index - 84
eISSN - 1520-6688
pISSN - 0276-8739
DOI - 10.1002/pam.21911
Subject(s) - property tax , natural gas , boom , natural resource economics , natural resource , property value , economics , revenue , fossil fuel , shock (circulatory) , tax reform , business , public economics , environmental science , waste management , real estate , environmental engineering , finance , engineering , ecology , medicine , biology
We study the effects of the property tax base shock caused by natural gas drilling in the Barnett Shale in Texas—a state that taxes oil and gas wells as property. Over the boom and bust in drilling, housing appreciation closely followed the oil and gas property tax base, which expanded the total tax base by 23 percent at its height. The expansion led to a decline in property tax rates while maintaining or increasing revenues to schools. Overall, each $1 per student increase in the oil and gas property tax base increased the value of the typical home by $0.15. Some evidence suggests that the cumulative density of wells nearby may lower housing values, indicating that drilling could reduce local welfare without policies to increase local public revenues.