Willingness to pay for electricity sourced from natural gas extracted using hydraulic fracturing : location and preference heterogeneity
Date
2012
Authors
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Publisher
University of Delaware
Abstract
This study uses a choice experiment to measure the welfare impacts of electricity generated by natural gas from hydraulic fracturing. Our model estimates how proximity and location to drill sites and the Marcellus Shale impact willingness to pay. Our results from an Internet survey of New York State residents indicate that residents exhibit, on average, a negative willingness to pay for that electricity source. In addition, all subsamples of residents incur disutility on average, but those who live in counties within the Marcellus Shale have the greatest disutility. New York State residents’ mean WTP ranged from a decrease in their monthly electric bill of $22 to $48 depending on proximity and whether they resided in a county within the Marcellus Shale Play. For comparison, the average electric bill was $124, so the negative impacts of hydraulic fracturing are perceived to be substantial by New York State residents.