Are the models used to evaluate the costs and benefit of natural mineral extraction reliable? Do they accurately account for the most important benefits and costs communities are likely to experience during a process like fracking?
In Sara Lynn Hess’s 2014 thesis, Extracting the Economic Benefits of Natural Resources in the Marcellus Shale Region, she highlights the key challenges associated with valuing the impacts and products of shale extraction. Focusing on West Virginia and Pennsylvania, Sara compares the benefits of resource extraction with their capture and distribution costs. In addition, she develops a simple framework that communities can use to assess whether their utility companies and regulators are focusing on the “right” costs and benefits prior to allowing drilling to begin.
In her case studies of Virginia and Pennsylvania, Sara illuminates the natural resource curse, wherein areas rich in resources often fail to realize the economic and social gains associated with extraction while bearing substantial immediate costs. Both Virginia and Pennsylvania have experienced severe environmental damages while realizing limited economic booms. Both states have approached shale gas mining with the hope of limiting damage and ensuring the sustainability of the natural gas industry. However, Sara’s analysis shows that uncertainties abound, both in terms of the long term commitments of the companies involved and in the ability of regulators to limit environmental damage. To learn more about these uncertainties read Sara’s thesis, here.
Thanks to technological advances in natural gas exploration, many rural American towns are now confronted by a puzzle with which they have little experience: how to regulate gas drilling in their backyards. The reactions of local jurisdictions to natural gas have varied widely, as officials have considered the tradeoff between economic rewards and environmental risks. What explains the disparity in the approaches that local governments take to gas drilling? How do they decide about local policy?
Jessie Agatstein (MCP ’13) takes on this question in her thesis, which looks at local responses to natural gas drilling in three communities—Erie, CO, Washington County, ID, and Dryden, NY—all with populations under 20,000. These localities have adopted markedly different approaches to natural gas exploration. Erie has pursued negotiated agreements with specific developers, Washington County has utilized special use provisions to define where and how drilling may occur, and Dryden has banned the practice all together.
Much of this difference, Jessie notes, can be explained by two things. The first is the delegation of regulatory authority over natural gas exploration in many states to local governments, producing a wide array of policy approaches across countless jurisdictions. The second is what Jessie terms “problem diffusion.” It results from differences in how gas issues are viewed on the ground in different geographic contexts. Instead of copying the policies that other nearby jurisdictions have taken, local officials respond mostly to the problems that their neighbors have encountered and formulate policies that are intended to counteract these difficulties.
Jessie also notes the high level of sophistication with which local officials in the communities she studied with have approached natural gas exploration. Contradicting the stereotype of outmatched and incapable small town governments, officials have deftly navigated many complex issues. In some cases they have charted new policy territory. She cites the wealth of public information available online about natural gas impacts and local regulatory policy as strong contributors to the effectiveness of local officials in dealing with natural gas.
What insights can you share about how communities have reacted to natural gas exploration? Post a comment below, or read more in Jessie’s thesis.
About 10,000 feet below much of the United States lurks a wealth of natural gas. This high-profit resource is accessed by “fracking,” or piping pressurized chemicals and water into a deep bore in order to break apart compressed layers of shale, releasing the gas between them, and pumping the gas to the surface.
As part of Tushar Kansal’s thesis (MCP 2012), he asked whether the states or the federal government is better able to regulate the risks and environmental and community impacts associated with fracking.
Tushar’s analysis hinges on four concerns:
1) the geographic distribution of costs and benefits associated with shale gas development
2) the regulatory capacity at the federal level and at the state level
3) what it takes to foster innovation, flexibility, and adaptability, and
4) which level can better provide efficiency, certainty, and stability.
Tushar finds that in most cases, states are the more capable regulators, and he includes advice to both federal and state-level agencies regarding on-going efforts to control the adverse impacts of shale gas development. Read his full thesis here.
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