The Impact of the U.S. Shale Boom on Agriculture : Evidence from North Dakota

Shale energy exploitation often occurs in rural areas. While agriculture dominates surface land use in these regions, energy development competes for inputs such as water and labor, and localized congestion externalities can create bottlenecks in transporting agricultural output. Additionally, well spacing, rights-of-way and chemical spillage potentially decrease the returns to surface land as greater numbers of oil wells are drilled. This study examines the impact of shale drilling on agriculture by estimating parcel rent differences as a function of energy industry activity for over 17,000 land rental transactions using State Trust Lands data from North Dakota. I find that, despite anecdotal evidence that the above-mentioned processes threaten farm profitability, surface renters in North Dakota do not significantly decrease their willingness to pay for parcels with nearby oil activity relative to parcels with no activity in the vicinity