Report Finds Devaluation of Homes Near Pipelines

A recent study indicates that homes built near and around pipelines face potential devaluation. Published in the journal Resource and Energy Economics, the study entitled Shale gas transmission and housing prices used real estate data in New York State to study the correlation between home values and pipeline infrastructure.

The researchers chose New York as it is home to the Constitution Pipeline, a 125 mile long pipeline which transports natural gas from the Marcellus Shale basin in Pennsylvania to Albany, New York. Their work was extensive, but the most interesting conclusion stemmed from their comparison between home values pre-announcement of the Constitution Pipeline and post-announcement. Though they found from previous research that home values in the area were increasing pre-announcement, the trend was reversed post-announcement.

Homes within a 3 kilometer, or 1.8 mile, radius of the Constitution Pipeline decreased in value by 9.29% after announcement of construction.  On average, this equated to a decline of $12,477 for homes within that radius according to real estate data. There was also an effect on homes within the same radius of proposed alternate routes for the Constitution Pipeline, though less significant. The data showed that homes within 3 kilometers of proposed alternate routes saw a 2% reduction in value.

The research also considered the root cause of why the pipeline infrastructure caused the devaluation of homes. They argue that the factors are varied and subjective to each pipeline location across the country, but common themes of safety concerns, visual disturbances and bad press are key contributors.

For Pennsylvanians, the concern for pipeline safety has been driven to the forefront of minds after numerous accidents and explosions occurred since the pipeline development began. Recently, residents have been bought out of their homes as a result of pipeline development. This externality of pipeline development elevates the need for more stringent regulations in order for energy demands to be met without disrupting those in the path of a pipeline.