To frack or not to frack? That is the question

After a year’s work between Texas and New York studying the science, politics, and ideology of natural gas development–my Master’s thesis is complete. The full text is available through the Bard Center for Environmental Policy and forthcoming for publication. In the meantime, here is the abstract:

To Frack or Not to Frack: The Ideological Roots of Support for and Resistance to Natural Gas Development

Abstract

The modern vision of the Good Life—indistinguishable from the idea of progress—is energy intensive. We go to extreme lengths to harness energy resources, conducting vast technological socio-environmental experiments to satiate the human demand for energy. But energy development is risk-laden, and people approach the risks of progress differently, which manifests as political contention.

Bookending the continuum of risk-related ideology, the precautionary and proactionary principles have become pillars of philosophic and political debate. Natural gas development—hydraulic fracturing for natural gas, or “fracking”—is particularly risky and, in turn, the politics of fracking have become correspondingly controversial. On one hand, precautionaries about natural gas development spurn fracking as guaranteed disaster, while on the other, proactionaries hail natural gas development as an ideal energy opportunity.

But why are people precautionary and proactionary about natural gas development? To Frack or Not to Frack explores this question using an international survey instrument and statistical causal analysis. Evidence indicates that precautionary and proactionary regulatory preferences about natural gas development are a function of relevant knowledge, values, and beliefs.

Precautionaries about natural gas development tend to be knowledgeable of the risk-related scientific literature on fracking and to especially value environmental stewardship and public health and safety. Proactionaries, on the other hand, tend to principally value economic growth, believe that technology is generally trustworthy, and believe that either plenty of scientific research has already been
done on natural gas development orthat more science is still needed.

When determining specific permitting and operating requirements for natural gas development, policymakers should directly engage the relevant knowledge, values, and beliefs that drive the precautionary and proactionary regulatory preferences of their constituents via regular, open participatory policymaking procedures and statistical analysis of risk-related preference data gathered through public polling. Natural gas development policy should reflect the moral nuances of its constituency. Natural gas development policy should also reflect that developers are morally responsible for researching and internalizing the risks of harm related to development, including literal physical or environmental harm and exposure to risk of harm.

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We need a knowledgeable nudge

Here Michael Levi of the Council on Foreign Relations argues that the SCOTUS ruling on the Affordable Care Act bodes well for the constitutionality of environmental policies that use taxes to influence our behavior. Of particular interest to me here is the idea that policies, like taxes, can nudge us to act ethically. Pigouvian taxes, for instance, aim to internalize the negative externalities of economic activity. A pollution tax, e.g., influences behavior by giving emitters a choice: “pay or don’t emit.” If regulators set the tax at the right level, where it’s cheaper for businesses to reduce their emissions rather than pay the tax, then we get economically efficient pollution reductions.

But setting a tax at the “right” level can be difficult. Policymakers must be sure not to over or under shoot the mark. If the tax is too low then there’s no incentive for polluters to reduce their emissions. If it’s too high then we end up using our already limited resources in an inefficient way. Neither is desirable. Why, then, don’t they just get it right?

The challenge policymakers face is informational. Making good pollution reduction policy takes “on the ground” knowledge, but this information is frequently wrong, unavailable, or non-existent. Estimations of the societal costs from pollution are often uncertain and the corporate costs of polluting tend to fall under the scope of “proprietary knowledge.” The result is that policymakers don’t know what the real damages to society from pollution are, nor do they know how much pollution abatement would cost businesses. So how can policymakers hit a target that they can’t see?

Some argue that the invisible hand should guide the shot using a market-based cap and trade system to reduce pollution. But, again, this assumes that policymakers know more than they often do. Cap and trade policies only work if policymakers know the marginal costs of pollution abatement for businesses and the marginal benefits of abatement for society. The former, however, is proprietary knowledge and the latter varies in estimation. Without that knowledge they risk setting an inefficient target, so we run into the same informational problem that we do with a tax policy.

Policymakers are in a tough spot here – they face a moral imperative to do something, but every option is risky (even and especially non-action). Hybrid policies that combine free market principles with taxation, like the one McKibbin and Wilcoxen suggest, help to hedge the risks of uncertainty by drawing from the virtues of both kinds of pollution abatement systems. But ultimately there is no substitute for knowing.

Moreover, policies like a pollution tax or a cap and trade system are fundamentally utilitarian. Perhaps a pragmatic tendency, policymakers like to look at the costs and benefits (today’s “utles”) of pollution abatement so to maximize efficiency in our use of resources. But it’s not clear that what is counted is everything that counts. Often cost-benefit analyses will altogether exclude any measure of nature’s intrinsic value rather than risk using an over or under estimation.

Even valuations of ecosystem services are inherently instrumental in their thinking. Despite sometimes including recreational enjoyment or aesthetics in ecosystem services accounting, each aspect is merely quantified and then considered only in terms of its utility. Regulatory decision-making processes tend to omit the entire dimension of intrinsicity in moral reasoning, and so, again, we encounter another informational deficiency that policymakers must confront.

In turn, there are several moral questions at work. How far should policymakers nudge our behavior when they themselves don’t have the information needed to understand the reality on the ground? What role should intrinsic value play in policymaking? How should we weigh the risks of acting without knowing against the risks of doing nothing? And how much information should businesses be allowed to withhold from policymakers in the name of proprietary knowledge?

Without complete information (or as complete as possible) to guide the policymaking process, moral nudges such as pollution taxes are like regulatory swings in the dark – we may miss the target entirely, and we may do more damage than good. But that’s not to say we should resign ourselves to inaction. On the contrary, doing nothing might prove more harmful than landing off the mark. We must simply keep in mind that we live in a world of imperfect information and knowledge, and that these are the conditions we must make decisions within. In the meantime we can take solace in Levi’s assessment that a carbon tax, should we go that route, will have constitutional precedent.

JM Kincaid

See this post also on the CSID blog.