Pipelines Don’t Hurt Home Values, Study Says

pipeline_impactA month after foes of the Atlantic Coast Pipeline issued an economic study showing that the natural gas pipeline would diminish property values along the proposed 550-mile route by $141 million, Dominion Energy has fired back by citing a study claiming that gas pipelines have no impact on residential property values at all.

Analyzing property values in communities in Ohio, New Jersey, Virginia, Mississippi, and Pennsylvania, the report determined that “there is no measurable impact on the sales price of properties located along or in proximity to a natural gas pipeline versus properties which are not located along or in proximity to the same pipeline.”

“These findings might help property owners feel more confident about natural gas pipelines proposed in their communities,” said Don Santa, CEO of the INGAA Foundation in a press release. The foundation is associated with the Interstate Natural Gas Association of America. The bulk of the analysis was conducted by Integra Realty Resources.

The study identified residential neighborhoods that were bordered or bisected by at least one pipeline and compared 200 home sales of similar properties both on and off the pipelines. Study areas included suburban communities outside Cincinnati, Ohio, a rural neighborhood in Clinton, N.J., a master-planned residential community in Prince William County, Va., a suburb outside Jackson, Miss., and a small town subdivision in Dallastown, Pa. Houses were “normalized” by adjusting for gross living area, size, age and other factors.

The INGAA study employed a methodology that compared actual home sales. By contrast, the Key-Log Economics study underwritten by pipeline foes calculated the loss of what it called “ecosystem service values,” which incorporated such intangibles as the loss of viewsheds, air quality and protection from extreme events. Key-Log obtained its per-acre values primarily from a database of more than 1,300 estimates compiled as part of a global study known as “The Economics of Ecosystems and Biodiversity.”

Your assignment: compare and contrast the merits of the two reports.

Pipeline Impact to Property Value and Property Insurability, INGAA Foundation

Economic Costs of the Atlantic Coast Pipeline, Key-Log Economics

— JAB

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16 responses to “Pipelines Don’t Hurt Home Values, Study Says

  1. “These findings might help property owners feel more confident about natural gas pipelines proposed in their communities,” said Don Santa, CEO of the INGAA Foundation in a press release. The foundation is associated with the Interstate Natural Gas Association of America.”

    That would be former FERC Commissioner Don Santa, now the president and CEO of the Interstate Natural Gas Association of America. http://www.ingaa.org/cms/115.aspx

  2. Of course they don’t! And if it comes from a gas pipeline industry spokesman, you can trust it!

  3. how about individual houses next to pipeline rights of ways?

  4. Dominion has apparently decided that they can win a PR battle with the opponents… eh? usually a risky proposition even if you’re in the “right” and in this case they seem to be busy making lots of bitter enemies willing to oppose them long term.. bad karma.

  5. Winning the PR battle is one thing but either way, you have to engage. That is one field of battle where retreat is not an option!

    Always consider the source. On both sides. But I suspect the data reflects the reality that buried pipelines eventually get forgotten, which will be the case with this one if it gets built. And Larry, of course the property directly taken for the pipeline loses value, which is why there is compensation. Can we all say: Duh!

    I can’t remember the bill number but there was a pretty interesting scene in a committee room a few weeks back as a bill dealing with the compensation paid by VDOT for takings was the subject of a legislative proposal. Lots and lots of utility lobbyists in the room as that bill came up for some reason. But, as usual, no reporters……As noted previously, I’m fine with the ACP being built but I’m also fine with the directly affected landowners being not just barely compensated, but well compensated. Me, I’d want stock…..

  6. re: ” And Larry, of course the property directly taken for the pipeline loses value, which is why there is compensation. Can we all say: Duh!”

    well yeah – so what’s with these bogus studies that are entitled: ” Pipelines Don’t Hurt Home Values”

    beyond that Steve – tell me why a property owner should have to turn over their property to another property owner if they don’t want to – no matter the price?

    do you support willing seller/willing buyer for private transactions?

    • Larry, Any study that gives a result you don’t like is “bogus.” Calling something bogus does not make it wrong. I actually have some thoughts on the limitations of that study, which I will describe if I have time. (The graphic I embedded with the post provides a clue.) But I can’t let you get away with dissing the report without describing what is wrong with its methodology or, at least, how it doesn’t support the conclusions that Dominion Energy would like to draw.

      • bullfeathers. Steve answered the question truthfully – yes pipelines CAN affect the value of property and the ‘study’ was done at the neighborhood level.. which totally evades the central question.

        the “limitations” on the “study” are that it gives a dishonest view of the issue because CLEARLY pipelines CAN affect the value of property.

        this is yet another example of the corrupt and dishonest way that “studies” are used… to promote conclusions that are just not true.

        again – let me remind you – I’m NOT on the side of NIMBYs here… EITHER… but the current practice of commissioning “studies” to pre-ordain a desired “truth” is totally bogus – AND it’s incumbent on all of us – to not let them get away with it – no matter what your political philosophy.. it’s total BS..

        people who peddle these reports as if they are legitimate -…what can I say.???

    • This study gives the basic results that I would have suspected.

      Unfortunately, however, we live in a world where now common sense is far to often twisted out of shape by the rising social media and communications power of some groups’ ideology driven agendas.

      Still, formerly sound common sense from time to time needs adjustment to take into account new circumstances that, for one example, over time vastly change our rural landscapes, their uses, and how they are valued, given changes in culture, so as to bring the equities in line with new realities.

      This was earlier made clear in some of Jim earlier articles on this subject as well as by the comments of others, as I recall by Don and Larry.

  7. Just passing on information from the Key-Log report authors as to why they feel the INGAA did not properly compare properties affected by the pipeline to those which were not:

    “In the study for the Interstate Natural Gas Association of America (INGAA), for example, the authors compare prices for properties directly on pipeline rights-of-way to prices of properties off the right-of-way. But in almost all cases the geographic scope of the analysis was small enough that most or all of the properties not on the right-of-way are still within the pipelines’ respective evacuation zones (Allen, Williford & Seale Inc., 2001).26”

    “. . . the INGAA study reaches the forgone and not very interesting conclusion that properties that are similar in size, condition, and other features including their location within the evacuation zone of a natural gas pipeline have similar prices.”

    “In short, one cannot conclude from these flawed studies’ failure to identify a negative effect of pipelines on property value that no such effect exists. To evaluate the effects of the proposed ACP on property value, FERC and others must therefore look to studies (including those summarized in the previous section) in which buyers’ willingness to pay is fully informed about the presence of nearby pipelines and in which the properties bought are truly different in terms of their exposure to pipeline-related risks.”

    For example, the case INGAA studied in Virginia was for pipelines built in the 50’s and 60’s where subdivisions have grown up around it. A buyer looking at a house 50 years later would not know that they are exposed to the risk of explosion (unfortunately, they do happen more often than we would think). Therefore, it would not reduce the property value unless they were fully informed.

    Nowadays, people do intensive internet searches for property and a farmer wishing to sell could not hide the wide swath cut through his woodlot. And being an honest farmer, he would also mention the inability to use certain farm machinery on parts of the property because they are not allowed to cross the right-of-way.

    The evacuation zone for the Atlantic Coast Pipeline is 1.4 miles wide. If the presence of the pipeline now posed a risk of incinerating your property (however slight) would you say it has the same value as before? Would your ability to sell it to fund your retirement be as likely as before?

    I think most reasonable people would say a pipeline this large would have an impact on property values. This is a 42″ diameter pipe full of gas under 1,440 pounds of pressure. This is not the small diameter distribution line that most of us see running through our neighborhoods and counties.

    I have been concerned for some time that what we once thought was unbiased science has too often been bought and paid for to support a particular interest. And yes, this sometimes happens on both sides of the argument.

    Unfortunately, in this day of overwhelming information most people just come away with the sound bite “Dominion says this study proves that there is no effect on property values” without taking the time to explore the truth for themselves. And with the decline of good reporting and reliable newspapers, most don’t have access to someone like Jim who will take the time to dig a little deeper on their behalf.

    Residents of a nation of independent thinkers are becoming herd animals responding to pre-digested pablum from their favorite source.

  8. If a study concludes something that seems to defy common sense – it deserves a harder look starting with who funded it then look for other supporting or contrasting studies preferably done by folks without conflicts – on either side.

    Dominion, in my view, has chosen to take an intentionally combative approach , upping the ante and probably risking reinforcing a public perception of them as a corporate bully used to getting their way in Virginia because of their favored status in the General Assembly.

    There are several existing pipeline transmission companies with existing rights of ways who could legitimately make a case for expanding and filling in their lines – for a genuine public purpose without being perceived as throwing their corporate weight around..

    The ACP – is clearly an attempt by Dominion to competitively expand it’s business into that sector – inappropriately using it’s favored political status in Va and exploiting public necessity laws in ways that are further damaging their reputation as the public does not know the distinction between their differing corporate entities.

    they might win in the end – but not without a cost to their reputation or they might lose in spectacular fashion.

    At some point, I do expect the courts to deal with the issue that are there several competitors trying to do more routes than are necessary – all of the utilizing a law that presumes ANY new corridor is a de faco public necessity.

    that idea is probably not going to withstand a legal challenge.

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  10. Tom H, thanks for digging into the guts of the assumptions of the two studies. That’s the kind of conversation we should be having.

    Now, to add my own two bits: I don’t think the INGAA study is flawed insomuch as I think one must be careful about extrapolating the conclusions from the INGAA study to the situation in Virginia. Four of the five study areas were suburban/small town residential areas. The places impacted in Virginia are overwhelmingly rural. Now, notice the table at the top of the story. The four locations showing a positive increase in prices were the suburban/small town samples. The one location showing a negative was a more rural location in New Jersey. One sample is too little from which to extrapolate broad conclusions, however, it is suggestive that in rural areas the impact of gas pipelines might be greater than elsewhere.

    That might seem counter-intuitive. After all, in suburban subdivisions, homes tend to be located much closer to the pipeline, thus they are more exposed to the potential dangers, insofar as such dangers exist.

    However, as have I noted many times, people who own rural properties increasingly value them not for their productive value but their lifestyle value — in other words, their view sheds and the pleasure of conserving a piece of nature. The presence of a pipeline cutting a swath through a forest is far greater visually than a pipeline right-of-way in a developed area. Insofar as a gas pipeline diminishes rural amenities, rural properties would be affected more.

    That’s just a hypothesis, and it cries out for more analysis. But the argument is ample grounds for being very cautious about extrapolating from the INGAA study to the ACP or Mountain Valley Pipelines.

    • That is precisely what I was getting at. And what I illustrated earlier with my homes atop buttes example weeks ago.

    • Jim – you have expressed the issue precisely. And it is not something that regulators living in metro DC have a real feel for. Much of the income growth in Augusta county is coming from retirees moving to the area. Today, 40% of the personal income in the county comes from investments, pensions,social security payments and other non-wage sources. These people, as well as tourists visiting from Northern Virginia and elsewhere are coming for the lifestyle experience. Even farmers who have been here for generations know that construction of the pipeline across their property will fundamentally alter the character of their land.

      This is not accounted for in the “comparable sales” model of easements or eminent domain. A total of 14,357 parcels just in Augusta County will have their views affected by the pipeline. Most of these landowners will not receive any compensation for their loss in property value or the effect on their lifestyle. Most would argue that no amount of money can compensate for the loss anyway. They live here for a reason and that reason will be drastically affected by the construction of the pipeline.

      This region is attracting people precisely because of its rural character. Young families are coming too for walkable cities, access to recreational areas, a safe place to raise children, and strangers who wave to you when you are out for a walk.

      You can quibble with the numbers from the Key-Log report, but they are attempting to address some of these issues. The difficulty is that our culture wants to boil everything down to a monetary value. Many people are here because of the special character of the place. A payment from Dominion cannot paper over a fundamental change in that character.

      Staunton touts the purity of its spring-sourced municipal water supply which could be affected by blasting and sedimentation from pipeline construction. Dominion has typically not accepted responsibility for its equipment. Recently, when a sinkhole exposed some of their underground power lines, Dominion said it was the landowner’s responsibility to repair the damage.

      What makes this difficult to swallow is that the ACP is not necessary for Virginia to have a sufficient supply of natural gas. Pipelines which are already operating can provide that supply. Many landowners opposing surveyors coming on to their land are asking that Dominion prove the need for the pipeline before they are forced to submit to the disruption of their property by the survey crews.

      It’s not a bad idea to have an open and well researched discussion of the need for major projects before money is wasted and the public is riled up about a project that might not be needed. Unfortunately, FERC does not have such a mechanism even in their traditional regulatory process. They have approved every pipeline proposal presented to them in the history of the agency. In 2015, FERC staff presented information to the commissioners that after 2017 the pipeline capacity planned to move gas from the Marcellus is about 40% greater than the projected maximum output from the production zone. Even industry insiders are discussing whether the Marcellus is “overpiped”.

      Virginia regulators are remarkably silent about the costs to Virginia counties and the higher costs to ratepayers for a pipeline that exists only for the benefit of private companies. Unfortunately, it is not widely known that we can get the gas we need at a lower cost without the disruption of private property.

  11. A legitimate study would have explicitly differentiated between properties directly affected either by being in the parcel or adjacent and would be using a large diameter high pressure line, TomH hit it smack on the nailhead.

    then if it ALSO, in addition wanted to include neighborhoods, urban, suburban and rural adjacent to and in the right of way of smaller local/regional feeder lines – then do that also – and again explicitly disclosing the relevant info and delineating it.

    this “study” is obvious not one like that and has a specific intent and it’s not that hard for an average person to see that.

    these days – “studies” are little more than posers for the gullible and those that need something to back up their own biases – and such studies are not knew – have often been industry-funded or funded by those with obvious conflicts of interest.

    these days – folks who purport to be journalists – will – even if they themselves recognize that a study is funded by folks with conflicts – will sometimes disclose the authors but leave it up to the reader to do the due diligence.

    It’s up to us – the folks who read these things to 1. not be lazy about due diligence 2. be wary about studies that might be appealing to our own biases and 3. consider the reputation and credibility of the authors of the study – have they always been more or less objective presenters of facts and evidence and conservative in their findings, i.e. use words like “suggest” or “indicate” of words like “conclusively” or “prove”

    there is so much propaganda, misinformation and disinformation floating around today – folks need to be alert and question everything even if it’s from folks you like saying things you like.

    trust but verify – even more so in the internet age –

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