The impact of intensity on perceived risk from unconventional shale gas development

Abstract

The recent boom in the extraction of natural gas from subsurface shale deposits due to advances in hydraulic fracturing and horizontal drilling technologies has raised concern around environmental risks. Reliable measures of how residents view these risks are therefore a necessary first step in evaluating policies that regulate the industry through risk mitigation measures. We conduct a choice experiment targeting residents in an area of Ohio with significant shale drilling activity, and find that households are willing to pay to avoid high intensities of shale development and truck traffic. Our analysis presents new policy-relevant evidence of preferences associated with unconventional shale gas reserves, and highlights the tradeoffs between activity intensity at each site and the number of sites in aggregate.

Keywords: Choice experiment; Development intensity; Unconventional shale gas.