Study Shows Local Benefits From “Fracking” Outweigh the Costs

Here at the Product Liability Monitor, we have analyzed the well-stimulation technique known as hydraulic fracturing (aka, “fracking”) from a number of angles. These include everything from alleged health effects, seismic activity and earthquakes, to increased traffic and noise concerns.  We can add economic pro’s and con’s at the local level to the mix, with a recent study from the Energy Policy Institute at the University of Chicago (“EPIC”).  The study, titled “The Local Economic and Welfare Consequences of Hydraulic Fracturing,” looked at “the costs and benefits of hydraulic fracturing on local communities in nine shale basins throughout the United States, making it the most comprehensive assessment of its kind to date.”

The study concluded, based on the findings discussed below, that “the average local benefits from hydraulic fracturing outweigh the costs.”  It cautioned, though, that “this may change as more information about the environmental and health impacts of hydraulic fracturing is revealed.”  The authors further noted that the conclusions are based on averages and that each shale region fares differently (with North Dakota’s Bakken shale and Pennsylvania’s Marcellus shale seeing the largest benefits).

Here are the study’s key findings:

1. Shale development generates significant revenue in communities where drilling takes place (up to $400 million in additional revenue in counties with a high level of hydraulic fracturing).

2. Shale development improves the local economy. The study found up to a 7% increase in average income and a 10% increase in employment (with a 40% increase in natural resources and mining jobs).  Construction and transportation jobs also increased.  Local governments saw slight boosts in revenue (revenue increases were limited by additional expenses, including public safety, infrastructure, utilities, and medical care).

3.  Shale development did impose costs. Despite the boost to the economy, residents saw decreases in quality of life (most notably an increase in crime).

4. Housing prices increased (on average by about 6%).

As the study notes, there is a “passionate debate” over the pro’s and con’s of shale development and the authors state that the study’s analysis should assist local policymakers when deciding whether to permit shale development within their jurisdictions.