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Economic impacts of early unconventional gas mining: Lessons from the coal seam gas industry in New South Wales, Australia

Marcos-Martinez, Raymundo, Thomas G. Measham and David Fleming ()

Energy Policy, 2019, vol. 125, issue C, 338-346

Abstract: Globally, the development of the unconventional natural gas (UNG) industry is expected to continue as gas consumption increases in the transition to cleaner energy sources. However, social and regulatory factors may constrain UNG activity at regional scales. Robust impact assessments of the effects of the UNG industry at different phases of development could help reduce trade-offs of energy policy and promote overall welfare improvements. We assessed if the early phases of the coal seam gas (CSG, a type of UNG) industry in New South Wales, Australia produced regional economic changes between 2001 and 2011. We combined spatial econometrics, genetic matching algorithms and seemingly unrelated regressions with instrumental variables to control for multiple factors influencing regional economic patterns (e.g., climate, human capital) to estimate the effect of the CSG industry on local income and employment. Results show that regions with CSG activity had 7% (±5%, 95% C.I.) higher family income than regions without CSG mining. No statistical evidence of indirect employment multiplier effects from CSG activity were found. The analysis can inform social license and regulatory decisions related to the CSG industry that impact competing social priorities such as energy and water security, economic growth and environmental health.

Keywords: Coal seam gas; Coalbed methane; Causal inference; Economic spillovers; Resource economics; Impact assessment (search for similar items in EconPapers)
Date: 2019
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