Date of Award

Spring 2014

Degree Type


Degree Name

Master of Science (MS)


Agricultural Economics

First Advisor

Michael S. Delgado

Committee Member 1

Gerald E. Shively

Committee Member 2

Juan P. Sesmero


Recent years have seen increased discussion of issues related to natural gas, generally focusing on perceived risks associated with natural gas extraction. One aspect of natural gas extraction that has received little attention is the impact of natural gas storage on surrounding areas. Further, recent advances in horizontal drilling and hydraulic fracturing extraction techniques have greatly increased production of natural gas wells, and will likely increase demand for natural gas storage. Like other natural gas wells, underground storage wells have the potential for environmental and amenity impacts. The impacts of these risks may be reflected by a reduction in the values of nearby properties. This thesis tests the hypothesis that properties located on or near natural gas storage fields have relatively lower values, holding everything else constant.

To test the hypothesis that natural gas storage facilities bear statistically significant environmental and amenity risks, this analysis uses a semi-log hedonic property model through which to assess the impact of natural gas storage proximity and intensity on property values. The model also explores interaction effects of natural gas storage with public water, and allows for nonlinear effects. The dataset consists of a sample of 1,512 single-family residential property sales in 16 counties across the State of Indiana from 2004 to 2013. In addition to property sales data, the dataset includes housing characteristics such as size of the house, size of the property, year of construction, measures of building quality, distance to the nearest street, census block demographics, and in particular public water.

Results indicate that both distance to the nearest natural gas storage well and distance to the nearest observation well have significantly nonlinear impacts on housing values, both indicating that housing values generally increase by approximately 9.2 to 10.03 percent with further distance from storage activity. The results also indicate housing values decrease by approximately 0.43 percent with increased intensity of storage activities. Additionally, the results demonstrate that homes without access to public water see statistically significant impacts of larger magnitude than homes with public water due to increased intensity of underground natural gas storage activities.