CSG: Have we overlooked the risk of catastrophic events?

I was going to write about something else (the recently exposed further evidence of the problems with the subsidies on solar panels) when I saw this article in today’s paper about the suspected effects of fracking on increased seismic activity in Oklahoma, US.
Now, I lived in Oklahoma for few years, and I know we were worried about tornadoes, but earthquakes… Naah! However, the number of tremors that can be felt in that state has apparently increased significantly since the start of the CSG (or shale gas, as they call it over there) boom 5-6 years ago. Scientists think that this is to do with the disposal of the excess water from gas drilling, which in the US is allowed to be pumped under pressure back into the underground aquifers. This water is believed to act as a lubricant along fault lines, and causing increased incidence of tremors. Apart from the nuisance from these smaller tremors, people in OK are worried about the possibility that a ‘big one’ comes, with devastating consequences.
Perhaps this worry about increased seismic activity due to CSG development is less significant in NSW, as the excess water is not pumped back underground. However, the possibility that CSG technologies could result with events that are very unlikely, but can bring possibly devastating consequences springs to mind when reading about the quakes in the US. These catastrophic events are even subject to ambiguity, i.e. we don’t know what these events might exactly be, and we are not able to characterize the probability of them occurring. Nevertheless, they should be taken into account in the CSG debate. Otherwise, we may be overlooking some possibly devastating consequences to the whole society!
Note: More on economics of catastrophic events in articles by Chichilnisky, and Weitzman

Author: Tiho Ancev

Tiho Ancev is a Professor of Agricultural and Resource Economics in the School of Economics, University of Sydney. His main research areas are agricultural, environmental, natural resource and energy economics. Tiho’s main contributions have been in water economics and policy, economics of energy, economics of air pollution and climate change policies, and economics of precision agriculture and agricultural input use. He has published widely on these topics in top international peer reviewed journals. Tiho has led and contributed to national and international research projects in these research areas. He is currently the Managing Editor-in-Chief of the Australian Journal of Agricultural and Resource Economics.