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Neoclassical Gas
Mainstream, or “neoclassical,” economic theory considers itself to have
solutions to these problems—solutions centered as always on “free
markets.” The idea is that if firms create chronic health problems or
combustible tap water, market forces should drive up their costs, as
landowners learn of these firms’ practices and demand higher payment for
drilling. But as seen above, even households that have already leased
their land for gas development remain unaware of the identities and
effects of the obscure synthetic chemicals to which they are exposed.
This informational asymmetry—the firms know things the landowners
don’t—significantly attenuates the ability of landowners to make
informed choices.
On the other hand, households that are located near a drill pad but
uninvolved in licensing the drilling will experience the ill effects as
externalities. Neoclassicals suggest these can be fixed through a better
property-rights system, where surrounding individuals can sue drillers
for injuring their health. But this solution runs up against another
problem: proving cause-and-effect from a drilling pad to a particular
individual’s health problems is extremely difficult. The tobacco
industry notoriously made this point in court for many years, arguing
that it was impossible to prove if a man’s lung cancer was caused by a
four-pack-a-day cigarette habit, as opposed to, say, local auto exhaust.
If cause-and-effect is hard to prove in court for cigarettes, doing so
for air-delivered volatile organic compounds will be almost impossible.
full: http://dollarsandsense.org/archives/2013/0713larson.html
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