Managing the Risks of Shale Gas Development Using Innovative Legal and Regulatory Approaches

Sheila Olmstead () and Nathan Richardson ()
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Sheila Olmstead: Resources for the Future
Nathan Richardson: Resources for the Future

RFF Working Paper Series from Resources for the Future

Abstract: Booming production of oil and gas from shale, enabled by hydraulic fracturing technology, has led to tension between hoped-for economic benefits and feared environmental and other costs, with great associated controversy. Study of how policy can best react to these challenges and how it can balance risk and reward has focused on prescriptive regulatory responses and, to a somewhat lesser extent, voluntary industry best practices. While there is undoubtedly room for improved regulation, innovative tools are relatively understudied. The liability system predates environmental regulation yet still plays an important—and in some senses predominant—role. Changes to that system, including burden-shifting rules and increased bond requirements, might improve outcomes. Similarly, new regulation can and should incorporate modern understanding of the benefits of market-based approaches. Information disclosure requirements can benefit the liability system and have independent benefits of their own. Policymakers faced with a need for policy change in reaction to shale development should carefully consider alternatives to regulation and, when regulation is deemed necessary, consider which tool is best suited.

Keywords: shale; shale gas; liability; market-based tools; burden shifting; information (search for similar items in EconPapers)
Date: 2014-07-18
New Economics Papers: this item is included in nep-ene, nep-env, nep-law and nep-reg
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Citations: View citations in EconPapers (6)

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