The economic consequences of local gas leaks with evidence from Massachusetts housing market

This study provides the first empirical evidence of the impact of leaks in natural gas distribution pipelines on nearby home prices. Using high-resolution property transaction data in Massachusetts and a difference-in-differences approach, we find that gas leaks significantly reduce nearby home prices by 2.61% ($11,700) on average. Damage to local greenery likely plays an important role in the negative impact of gas leaks on nearby home prices. The impact is economically and statistically significant for houses with high surrounding tree cover and not significant for houses with low surrounding tree cover. However, we fail to detect a significant difference in the impact before and after an information shock of a deadly natural gas accident. Our estimated benefits of fixing gas leaks are larger than the average costs per repair reported by utilities in Massachusetts, which supports actions by policymakers and environmental organizations to reduce methane emissions from gas distribution pipelines.