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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