Gas industry study says pipelines do not have an effect on prices, but the study is flawed.
The Interstate Natural Gas Association of America (INGAA) Foundation, Inc., released another report on the impacts of pipelines on property values and property insurability. Like a previous report using the same methods, the report claims that pipelines have no measurable impact on property values of homes of any type, regardless of the age or size of the transmission line. The report quantitatively analyzes two pipelines in Ohio, one each in Virginia, New Jersey, Pennsylvania, and Mississippi.
The authors attempt to compare prices for properties “adjacent to” a pipeline with the price of properties “off” the pipeline. For most of the properties, the authors fail to distinguish the fact that between 50% and 100% of the “off” properties analyzed are in fact located in the evacuation zone of the pipeline, which would mean the study is not truly distinguishing between properties affected by the pipeline and those that are not. Any econometric evaluation of differences in market prices requires comparing observed prices of things that are different in some way. However, the studies compare similar properties and, not surprisingly, find that they have similar prices. Their conclusions are neither interesting nor relevant to the important question of how large an economic effect the proposed pipeline would have.
In addition, the INGAA study suffers from a more serious flaw in that the authors do not state whether or not the purchasers of any of the properties analyzed were aware of the properties’ proximity to a pipeline. If buyers in the study were unaware they were buying a property near a natural gas pipeline, then it is not possible to legitimately conclude that their offer prices reflect the presence or absence of a pipeline.
For Key-Log Economics’ recent study, we worked from solid estimates of differences in property value where buyers DID know what they were buying into and where the properties compared were, in fact, different. We estimate that the ACP would cost property owners between $55.8 and $80.2 million in property value for just Highland, Augusta, Nelson, and Buckingham Counties.
That is just a fraction of the total cost the ACP would impose on local people and communities. Counting lost recreational, aesthetic, water quality and other natural benefits and lost development associated with recreation, tourism and in-migration, and the tally tops $140 million during construction and $109 million per year forever after that.
Click here to see our letter in the Charlottesville Daily Progress
Click here to read more on our review of the INGAA Foundation Report, “Pipeline Impact to Property Value and Property Insurability”
Click here to read more about the Economics of the Atlantic Coast Pipeline.