Local income related to Marcellus shale activity in Pennsylvania

Abstract

This study examines the impact of Marcellus shale development on Pennsylvania (USA) residents’ income, as reported on state tax returns between 2007 and 2010, and pays special attention to the distribution of these economic impacts across residents within Pennsylvania counties. The analysis shows that Marcellus development has had a positive effect on taxable income of local residents and that the increases in lease and royalty income going to mineral right owners exceed local employment and compensation impacts in high drilling activity counties. This suggests that focusing on employment effects from such activity, as has been done in much recent economic research, misses an important potential impact on resident income. In addition, because land ownership is highly concentrated, it means local economic benefits of unconventional drilling are heavily concentrated among a small percentage of the population, potentially raising equity issues about the distribution of costs and benefits from such activity.

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