Friday, 23 August 2013

DEFRA poised to cover up negative impact of shale gas on house prices

Owen Paterson's much publicised prospect of what appears to be a contrived attack on the 'rural economic' impacts (on house prices one presumes) of onshore windfarms is most likely to feature a big cover-up of the impacts of shale gas extraction on rural economies (and house prices!). DEFRA has commissioned a report on the subject of the impact of energy activities on rural economies (ie constituencies that are largely held by the Tories and subject to loss of votes to UKIP).


The simple fact is that there is no data on the impact of shale gas extraction on rural economies in the UK since, as yet, there is no shale gas extraction! Therefore DEFRA will be able to commission research on rural impacts of shale gas extraction safe in the knowledge that no impacts for shale gas will be discovered and that it can interpret the future for shale gas extraction as being wonderfully rosy.
Now, I have never heard of a report that has been commissioned by a government department about energy that does not support government policy and satisfies the political aspirations of the government in power. In this case DEFRA is under the control of a politician who doesn't like windfarms but does like fracking, and DECC is run by a politician that supports both windfarms and fracking. Hence the end result is likely to be a report that is moderately critical about the impact of windfarms on house price but says that fracking will have a clearly positive effect on the local economy.
In fact the evidence from the US, in so far as it is comparable, suggests that the impact of shale gas on house prices is likely to be significantly negative. I base this on a report done by academics at Duke University. They identified a positive effect on property prices associated with an increase in land values because of the mineral rights that go with them (in the USA), but, on the other hand, a very big negative effect (a 24 per cent decline) impact on property prices owing to fears about groundwater contamination from shale gas extraction.
Now the point to make in comparisons with the UK is that here mineral rights do not accrue to the landowners as in the USA but to the Government. This means that there will be no positive pressure on house prices UK if shale gas is extracted nearby, but only negative effects from perceived loss in value because of fears about pollution.
Now I am confident that, despite the uncertainty, such fears will be brushed off or consigned to report annexes by DEFRA in favour of headline attention to be given to allegations about declines in house prices caused by windfarms. In fact the research here is rather inconclusive, and does not imply a significant negative impact. There may be small effects at the time of the planning application process when anti-windfarm campaigners are in action, but little if any lasting impacts on properties close to the location of the windfarm.
In short, the danger to house prices is likely to be much higher in the case of local shale gas extraction than it is in the case of nearby windfarms. Of course this message certainly will not be broadcast by DEFRA. Instead there will be a lot of talk about extra money to local communities being made available (as in the case of winfarms), even though this will have no impact on house prices themselves. House prices, of course are the top concern in the world for many readers of the 'Daily Telegraph' and the 'Daily Mail'.  Fears about shale gas extraction will be brushed aside on the basis of analysis of 'objective' evidence. Of course as we social scientists know, what matters is what people's perceptions are, not what specially appointed government scientists say. In this case there is a lot of uncertainty revolving about how people interpret the uncertainty, if you see what I mean, and some evidence from the USA that pollution fears will have a significantly negative effect on property prices.
The history of energy policy in the UK is replete with Government reports written to satisfy particular interest groups and to justify what the Government held to be its policies. The reports may thus be erroneous, and do not stand the test of time. In recent years we have witnessed a string of government reports explaining, for example, how cheap nuclear power is. Eventually reality catachs up, as it will, no doubt, in the case of house prices and shale gas.
You can see a summary of some research into the impact of windfarms on house prices at
You can see the report on the impact of shale gas extraction on US property price at
 You can see some coverage of the proposed DEFRA report at:


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