Working Paper

Rural wealth creation and emerging energy industries: lease and royalty payments to farm households and businesses


Abstract: New technologies for accessing energy resources, changes in global energy markets, and government policies have encouraged growth in the natural gas and wind industries in the 2000s. The growth has offered new opportunities for wealth creation in many rural areas. At a local level, households who own land or mineral rights can benefit from energy development through lease and royalty payments. Using nationally-representative data on U.S. farms from 2011, we assess the consumption, investment, and wealth implications of the $2.3 billion in lease and royalty payments that energy companies paid to farm businesses. We estimate that the savings of current energy payments combined with the effect of payments on land values added $104,000 in wealth for the average recipient farm.

Keywords: Farms - Valuation; Households - Economic aspects; Consumption (Economics) - United States;

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File(s): File format is application/pdf http://www.kansascityfed.org/publicat/reswkpap/pdf/rwp13-07.pdf

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Research Working Paper

Publication Date: 2013

Number: RWP 13-07