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Quantifying Market and Non-market Benefits and Costs of Hydraulic Fracturing in the United States: A Summary of the Literature

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  • Loomis, John
  • Haefele, Michelle

Abstract

We quantify the monetary market and non-market environmental benefits and costs of hydraulic fracturing in the 14 U.S. states whose oil and gas production is dominated by hydraulic fracturing. By far the largest market benefit is $75 billion ($46–$95 billion) in consumer surplus from lower natural gas prices to residential, commercial, and industrial consumers. There are also environmental benefits resulting from the switch by some electric utilities from coal to natural gas ($13.25 billion, range $3.9–$21.9 billion). However, there are also substantial environmental costs associated with hydraulic fracturing. These are dominated by $27.2 billion ($12.5–$41.95 billion) health damages from air pollution. Costs also include $3.8 billion ($1.15–$5.89 billion) in greenhouse gas emissions, $4 billion ($3.5–$4.45 billion) in wildlife habitat fragmentation, and $1 billion ($0.5–$1.6 billion) in pollution of private drinking water wells. Opportunity costs of water usage and property value losses are less than one-quarter of a billion dollars. The market and non-market benefits of hydraulic fracking are widespread geographically but many of the non-market costs are concentrated in the areas of drilling, creating a distributional disconnect that we believe drives much of the controversy over hydraulic fracturing.

Suggested Citation

  • Loomis, John & Haefele, Michelle, 2017. "Quantifying Market and Non-market Benefits and Costs of Hydraulic Fracturing in the United States: A Summary of the Literature," Ecological Economics, Elsevier, vol. 138(C), pages 160-167.
  • Handle: RePEc:eee:ecolec:v:138:y:2017:i:c:p:160-167
    DOI: 10.1016/j.ecolecon.2017.03.036
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    References listed on IDEAS

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    1. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
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    3. Catherine Hausman & Ryan Kellogg, 2015. "Welfare and Distributional Implications of Shale Gas," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 71-139.
    4. Richard E, Just & Darrell L. Heuth & Andrew Schmitz, 2004. "The Welfare Economics of Public Policy," Books, Edward Elgar Publishing, number 3342.
    5. Stephen P. Holland & Erin T. Mansur & Nicholas Z. Muller & Andrew J. Yates, 2016. "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors," American Economic Review, American Economic Association, vol. 106(12), pages 3700-3729, December.
    6. Fry, Matthew & Briggle, Adam & Kincaid, Jordan, 2015. "Fracking and environmental (in)justice in a Texas city," Ecological Economics, Elsevier, vol. 117(C), pages 97-107.
    7. Swanepoel, G.D. & Hadrich, Joleen & Goemans, Christopher, 2015. "Estimating the Contribution of Groundwater Irrigation to Farmland Values in Phillips County, Colorado," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015, pages 1-14.
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    Cited by:

    1. Hill, Elaine L., 2018. "Shale gas development and infant health: Evidence from Pennsylvania," Journal of Health Economics, Elsevier, vol. 61(C), pages 134-150.
    2. Hess, Joshua H. & Manning, Dale T. & Iverson, Terry & Cutler, Harvey, 2019. "Uncertainty, learning, and local opposition to hydraulic fracturing," Resource and Energy Economics, Elsevier, vol. 55(C), pages 102-123.
    3. repec:eee:enepol:v:111:y:2017:i:c:p:281-296 is not listed on IDEAS

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