Valuing Environmental Impacts of Development - Paper Example

Introduction

There needs to be a valuation of the economic benefits of fracking in North Dakota regarding the local and state economic growth in terms of job creation and generation of government revenues. In essence, appropriately regulated and managed hydraulic fracking leads to economic benefits to communities, including locally contracted goods, employment, services, improved infrastructure, and revenue generation (Ward & Nicol, 2016).

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The value of the benefits can also be calculated by economic revenues associated with fracking on the park and the local community. The value can be calculated by analyzing the money from fracking that is subsequently used to pay for healthcare, infrastructure, and education. Other methods include the number of job and business opportunities created and how it has helped reduce unemployment, including indirect jobs. However, the best measurement that can be used for economic policy formulation is by valuing the revenues that are associated with the fracking activity. It is the absolute valuation that can be used for measuring the environmental benefits of fracking. This includes considering the fiscal implications of oil sands investments by the state of North Dakota. It is a good method of valuing the environmental benefits as it incorporates the per capita share of federal revenues, as well as direct state revenues. This will also highlight the benefits owing to the tax revenues due to the amount paid by companies in the fracking business. For this reason, by all measures, fracking is considered beneficial for the local population if the value of revenues and jobs created surpass the value of the environmental costs. As such, policy recommending fracking should be upheld if the adverse externalities are mitigated, include the environmental costs.

Additionally, the value of the benefits owing to use of an unconventional source of energy should be evaluated. Unconventional energy sources, including natural gas, has the potential of decreasing emissions of some of the environmental pollutants (Jackson et al., 2014). This is related directly to when these sources are used to replace coal with natural gas for generating power. Natural gas burned for electricity usually produces half the carbon dioxide than coal does during the process of combustion. Additionally, once leaks of natural gas are significantly reduced, the GHG benefits of this transformation is particularly substantial, which can be used to bridge renewable-based energy in the future (De Gouw, Parrish, Frost, & Trainer, 2014; Venkatesh, Jaramillo, Griffin, & Matthews, 2012). About 1-3 kg NOx per MWh and 2-10 kg SO2 per MWh are emitted from coal-fired power plants, and once natural gas replaces coal, a significant reduction is achieved as almost no SO2, and NOx are emitted when burning natural gas (De Gouw et al., 2014; Venkatesh et al., 2012). The value of replacing coal with natural gas can be arrived at by measuring the air quality benefits from the generation of electricity using natural gas as opposed to coal-fired power. Besides, natural gas does not emit tonnes of toxic coal ash on an annual basis, which can adversely affect air and water quality. Moreover, reducing leak associated with oil and natural gas helps improve air safety and quality. As such, valuing the difference of the volume of GHG emissions associated with natural gas compared to coal can be used to justify the environmental benefits of fracking.

Additionally, wastewater from fracking can be used for agricultural activities. For instance, North Dakota can allow wastewater from hydraulic fracturing to be sent to municipal water-treatment facilities, even though the facilities may not be unprepared to handle numerous chemicals involved (Jackson et al., 2014). A beneficial-use clause established by the Environmental Protection Agency (EPA's 40 CFR 435.50) in the US allows fracking operators to release wastewater directly to the environment if the wastewater is used in wildlife propagation or agriculture, as well as watering cattle. However, this practice is relatively uncommon but still occurs. For this reason, North Dakota can apply similar methods, which are beneficial to the environment, but caution needs to be taken in treating the wastewater as it can lead to adverse environmental effects, such as forest destruction (Adams, 2011). As such, the value of using such water can be valued by the amount of water from fracking that is saved for agricultural activities, which would otherwise be used from other clean sources.

Environmental Costs and Valuation Analysis

Hydraulic fracturing causes water contamination if the water used in the fracking process leaks, which affects the water quality at the park and the surrounding areas of North Dakota. The leaking fluids can reach shallow groundwater or even the atmosphere. Contaminated water is not safe to drink and it can burn children's skin. Additionally, contaminated water adversely affects agricultural activities in the surrounding regions that have experienced spills. Besides, once a spill reaches water resources, such as lakes, it poses a danger to aquatic life. Water contamination and pollution can be valued by the amount of money used in treating diseases associated with people drinking contaminated water. For instance, methanol, which is considered as the simplest alcohol can trigger blindness and permanent nerve damage among humans when consumed in sufficient quantities. In addition, the value of water contamination on land can be valued using land reclamation costs, which are associated with making the land usable again, including covering the mining open mine pits and holes as in the case of rat hole mining.

The fracking activities also contribute to (GHG) emissions. In consequence, this directly contributes to climate change. Additionally, other externalities include noise generated from drilling and hydraulic fracturing, which can contribute to annoyance and sleep disturbances, as well as risks of accidents and injuries. In effect, workers cannot arrive at work early, as well as poor work performance, which substantially can negatively impact the profitability of businesses. To value this impact, it is vital to analyze the amount of money and profits that companies in the surrounding areas lose owing to poor performance and absenteeism as a result of GHG gas and water contamination complications.

For instance, in the fracking of shale gas, various compounds are released to the atmosphere that have potentially harmful effects on people, as shown in Table 1 below.

Table 1

Air pollutants that are associated with shale gas production and their adverse health effects

The above complications can lead to an influx of patients in hospitals. The cost of treatment is usually high, and thus, valuing the cost of this externality by the amount of money used by patients and locals in treating diseases and complications associated with the GHG agents is paramount.

In addition, the impact of fracking on wildlife should be evaluated. In the park, it can lead to habitat fragmentation. In fact, fracking leads to forest fragmentation owing to the construction of pipelines and roads, which adversely impacts the biodiversity. For instance, fracking leads to loss of migratory routes, increased illegal hunting and predation (Doherty, Naugle, & Evans, 2010; Mason, Muehlenbachs, & Olmstead, 2015). However, on the optimistic side, the use of horizontal drilling allows for multiple wellbores that can be drilled on the same well, which results to less forest fragmentation compared to when diffuse vertical wellbores are used. The cost of using strategies that advocate for the development and species preservation, habitat offset programs, as well as agglomeration bonuses is vital to value the effect of fracking on the park (Doherty et al., 2010; Mason et al., 2015). The cost is valued by totaling the costs that are associated with the habitat reclamation. In addition, due to the reduction of the number of animals in the park, it can be valued by species population. However, the best method is calculating the loss that is associated with dwindling number of tourists to the park, as well as the loss of local business that mainly relies on the business. This is because the measure can be used to determine the economic impact of habitat degradation.

Conclusion

In conclusion, the impact of the fracking activities can only be measured by subtracting the total costs associated with the fracking activities from the benefits. This can be broken down into the cost and benefits of the park, as well as the local population. If the benefits surpass the cost, then fracking can be recommended. However, reducing adverse effects and negative externalities is vital.

References

Adams, M. B. (2011). Land application of hydrofracturing fluids damages a deciduous forest stand in West Virginia. Journal of Environmental Quality, 40(4), 1340-1344.

De Gouw, J. A., Parrish, D. D., Frost, G. J., & Trainer, M. (2014). Reduced emissions of CO2, NOx, and SO2 from US power plants owing to switch from coal to natural gas with combined cycle technology. Earth's Future, 2(2), 75-82.

Doherty, K. E., Naugle, D. E., & Evans, J. S. (2010). A currency for offsetting energy development impacts: horse-trading sage-grouse on the open market. PLoS One, 5(4), 1-9.

Jackson, R. B., Vengosh, A., Carey, J. W., Davies, R. J., Darrah, T. H., O'sullivan, F., & Petron, G. (2014). The environmental costs and benefits of fracking. Annual Review of Environment and Resources, 39, 7.1-7.36.

Mason, C. F., Muehlenbachs, L. A., & Olmstead, S. M. (2015). The economics of shale gas development. Annu. Rev. Resour. Econ., 7(1), 269-289.

Ward, H. & Nicol, A. (2016). Understanding the public health implications concerning shale gas production and hydraulic fracturing. National Collaborating Centre for Environmental Health. Retrieved from http://www.ncceh.ca/sites/default/files/Public_Health_Implications_Shale_Gas_Hydraulic_Fracturing_Jan_2016.pdfVenkatesh, A., Jaramillo, P., Griffin, W. M., & Matthews, H. S. (2012). Implications of near-term coal power plant retirement for SO2 and NOx and life cycle GHG emissions. Environmental science & technology, 46(18), 9838-9845.