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Natural resource ownership, financial gains, and governance: The case of unconventional gas development in the UK and the US

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  • Harleman, Max
  • Weber, Jeremy G.

Abstract

Who owns an area's natural resources affects the local financial gains from extraction and participation in resource governance. We develop a typology of ownership regimes using two dimensions of ownership, private versus public and local versus absentee, and apply it to unconventional natural gas development in the United Kingdom (UK) and the state of Pennsylvania in the United States. We find that local residents in Pennsylvania own 53% of the acreage leased for development and capture an estimated 8.5% of the value of production of the typical well, more than double what is expected from a well in the UK's public-absentee regime despite revenue-sharing policies. The dollar amount of local payments is also larger in Pennsylvania, with the difference reflecting policies and institutions, not differences in the value of production. The Pennsylvania case provides a benchmark for public-absentee owners considering policies to direct payments to communities hosting extraction: it gives the local payments corresponding to the case where subsurface owners voluntarily negotiate lease terms with energy firms and roughly half of ownership revenues accrue locally.

Suggested Citation

  • Harleman, Max & Weber, Jeremy G., 2017. "Natural resource ownership, financial gains, and governance: The case of unconventional gas development in the UK and the US," Energy Policy, Elsevier, vol. 111(C), pages 281-296.
    • Handle: RePEc:eee:enepol:v:111:y:2017:i:c:p:281-296
    DOI: 10.1016/j.enpol.2017.09.036
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    Cited by:

    1. Max Harleman, 2023. "Compensating communities for industrial disamenities: The case of shale gas development," Economic Inquiry, Western Economic Association International, vol. 61(1), pages 10-34, January.
    2. Wang, Qiang & Li, Shuyu & Li, Rongrong & Ma, Minglu, 2018. "Forecasting U.S. shale gas monthly production using a hybrid ARIMA and metabolic nonlinear grey model," Energy, Elsevier, vol. 160(C), pages 378-387.
    3. Max Harleman & Pramod Manohar & Elaine L. Hill, 2022. "Negotiations of Oil and Gas Auxiliary Lease Clauses: Evidence from Pennsylvania’s Marcellus Shale," NBER Working Papers 30806, National Bureau of Economic Research, Inc.
    4. Corey Young, 2023. "Between a Rock and a Hard Place: Governing Unconventional Natural Gas at the Local Level in the United States," Sustainability, MDPI, vol. 15(7), pages 1-14, March.
    5. Jason P. Brown & Timothy Fitzgerald & Jeremy G. Weber, 2019. "Does Resource Ownership Matter? Oil and Gas Royalties and the Income Effect of Extraction," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(6), pages 1039-1064.
    6. Keeler, Zachary T. & Stephens, Heather M., 2020. "Valuing shale gas development in resource-dependent communities," Resources Policy, Elsevier, vol. 69(C).

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