UK: Republished DEFRA report admits fracking can affect house prices

England, Victorian terraced houses
Source: DollarPhotoClub

A report published by the Department for Environment, Food, and Rural Affairs (Defra), which originally appeared in 2014, with 63 ‘redacted’ sections and has subsequently been republished in full, acknowledges that UK shale industry may, under certain circumstances, exacerbate climate change and lower house prices near exploration sites by as much as 7 per cent.

The report, entitled “Shale Gas Rural Economy Impacts”, which was republished in full following a ruling by the UK Information Commissioner’s Office on 22nd June, states in one of the previously redacted sections that domestic shale gas production “could help to reduce net greenhouse gas emissions if it displaced imports of gas from overseas”. But it added that “if shale gas or oil produced in the UK is exported, this could increase emissions”.

The draft report listed potential economic, social, and environmental effects shale exploration might have on the local communities, but it also noted that far from fracking creating a completely new situation, “to a large extent these effects are already experienced by those rural communities located near established extraction activities e.g. quarrying, mining and conventional gas extraction.”

The report listed the following effects of shale exploration in rural communities:

Summary of economic impact:
Jobs: Likely to be positive but uncertain impact as higher skilled jobs may be awarded to workers from outside local area. Although some supply chain businesses may recruit locally boosting rural employment.

Services: Positive if council rebates and company contributions are invested in local services and infrastructure. This could be a major benefit for rural communities using these services.

Energy: Positive outlook for energy security which will benefit rural communities following increased domestic production rather than relying on foreign imports of gas and vulnerability to political or exchange rate uncertainty.

Tourism: Broadly neutral. Losses from tourists avoiding area due to shale gas operations may be off-set by increased hospitality to new workers.

Summary of social impacts:
Congestion: Negative but localised. Additional volume of lorries and vehicles using local rural roads, but depends on location as some may be situated near national highways.

Housing Impacts: Negative but localised. House prices in close proximity to the drilling operations are likely to fall. However, rents may increase due to additional demand from site workers and supply chain.

Services: Broadly neutral. Depends if new workers at shale gas operations and supply chains create additional demand on schools, doctors and other local rural services that cannot be met by existing services.

Summary of environmental impacts:
Water resources: Low impact if properly regulated but risks need to be managed effectively on site.

Noise: Localised impact on rural communities living within close proximity of shale gas fracking operations.

Air Quality: Low impact If properly regulated but risks need to be managed effectively.

Landscape: Low impact that is site specific, although will have localised impact on businesses reliant on tranquil environment.

The report also dealt with arguments, predominantly put forward by the anti-fracking lobby, that the examples of shale exploration in the U.S., with high incidence of environmental damage, clearly shows that similar exploration in the UK cannot be safe.

The report states that: “it is important to note that the USA experience is not directly transferrable to the UK context for a number of reasons. For example, the USA have a different regulatory regime for the treatment of waste water which is not the same in the UK, where there are tighter environmental permit controls that will reduce the risks of ground and surface water pollution. In addition property rights for mineral extraction are owned by landowners in the USA creating a financial incentive for private owners to allow the disruptions associated with shale operations. Whereas in the UK property rights reside with the state and landowners receive no compensation or reward. These regulatory control and incentive differences are likely to lead to different scenarios in the expansion and impact of shale gas operations in the UK.”

Despite the draft document representing a rather balanced, leaning toward a positive, assessment of the potential shale exploration in the UK, it’s admittance regarding climate change and the risk of fracking impacting on the house prices is very damaging for the Conservative government and its unequivocal support for shale.

Before the UK Information Commissioner’s Office ruling, Defra had argued that the report should not be published because it was incomplete and contained vague claims and “inaccurate and potentially misleading information”, which would be “disproportionately damaging”. It seems that their assessment in this matter was entirely correct.

In its covering note, the authors of the report stated that “This paper is an early draft of an internal document; it is not analytically robust. Work on it has since been discontinued. The draft paper was intended as a review of existing literature. It includes early, often vague, assumptions which are not supported by appropriate evidence.
These were never intended as considered Defra positions or as statements of fact.”

UKOOG said that while the report indicates that house prices near shale gas sites may fall as a result of “negative perceptions”, it says the “evidence…is quite thin and the results are not conclusive”.

“The experience in the UK of homes near major oil and gas production sites does not show any negative impact,” the lobby group said.

Ken Cronin, chief executive of UKOOG, said: “It is a shame that this report has become such a cause celebre as it is merely a review of literature and brings nothing new to the debate or any new information in a UK context.”

Liz Truss, the Environment Secretary, has distanced herself from the report, calling it misleading and emphasising its draft nature, but Caroline Lucas, Green Party MP, said the Environment Secretary should apologise for downplaying the findings of the report.

“The evidence in this report – that local communities could suffer from deafening noise pollution, surface water contamination and hikes in insurance costs – adds further weight to the growing case against fracking in Britain,” she said. “The government has conducted itself appallingly in holding back this crucial evidence. The Environment Secretary should now offer a full apology to communities facing the threat of fracking and guarantee that such deceitful behaviour won’t happen again in the future.”

Article continues below this message

Have your opinion heard with Shale Gas International

We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.

If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.

If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com