Setting up Postgis with Postgresql

application.rb

require 'rails/all'

require 'squeel'
require 'active_record/connection_adapters/postgis_adapter/railtie'

database.yaml

development:
  adapter: postgis
  schema_search_path: "public,postgis"
  su_username: postgresql
  postgis_extension: true
  encoding: unicode
  database: myapp_development
  pool: 5
  username: myapp
  password:

error message:

PG::Error: ERROR:  syntax error at or near "EXTENSION"
LINE 1: CREATE EXTENSION postgis SCHEMA postgis
               ^
: CREATE EXTENSION postgis SCHEMA postgis

gemfile

gem 'pg'
gem 'jquery-rails'

# Gems for geospatial data
gem 'activerecord-postgis-adapter'
gem 'rgeo-shapefile'
gem 'squeel'