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Monday August 19th 2019

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That's what she said

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Phased Energy Development and the Precautionary Principle: Good for Critters and Communities


photo and graphics courtesy Pete Morton

The following is a summary of a presentation to PLAN-Boulder County on November 12th, 2012. To view the accompanying slides, click here.

“All ethics so far evolved rest upon a single premise that the individual is a member of a community of interdependent parts… The land ethic simply enlarges the boundaries of the community to include soils, waters, plants, and animals, or collectively: the land.

In short, a land ethic changes the role of Homo sapiens from conqueror of the land-community to plain member and citizen of it. It implies respect for his fellow-members, and also respect for the community as such.”

Aldo Leopold (1949), A Sand County Almanac.

High quality outdoor recreation, open space and scenic vistas, clean air, clean water, abundant wildlife and biodiversity are representative of the “natural amenities” that have been major drivers of economic development in the Rockies over the last 30 years. While the economic role of natural amenities varies across the “new western” landscape, in many communities like Boulder protecting the environment is a prerequisite for sustainable economic success.

Natural amenities, when combined with community amenities, can attract a highly skilled labor force, small businesses and entrepreneurs, recreation and tourism-based businesses, and retirees who bring their accumulated wealth. Job trends for the Rockies are shown in the figure below.

click to enlarge

In Colorado and other western states, public concerns are increasing about oil and natural gas drilling generally and hydraulic fracturing specifically.  These concerns include:

  • The large quantities of water consumed during fracking
  • The quality of recycled fracking water
  • Local air pollution (NOx, VOCs, haze)
  • Fugitive emissions and the health of kids and asthmatics
  • Impacts on roads and property values
  • Lack of inspections, monitoring and enforcement
  • Inadequate disclosure
  • The economic displacement of natural amenity-based jobs and income

While oil and natural gas development does generate economic benefits, as the pace and scale of drilling increases so do the cumulative risks.  While Colorado has some of the strongest laws in the US—many residents and local elected officials do not believe they go far enough—as evidenced by the intra-jurisdictional legal battles currently brewing.  One strategy for moving forward is to implement phased energy development guided by the precautionary principle and backed by a suite of economic instruments.

click to enlarge

Under a phased development strategy, the pace and scale of drilling is regulated in order to manage our exposure to harm.   The precautionary principle implies a social responsibility to do no harm and to protect the public health by requiring full disclosure, baseline data collection, monitoring, inspections, enforcement, and financial assurance.  The precautionary principle redistributes risk by requiring drilling decisions to be based on good data which prove no harm—placing the burden of proof on the oil and natural gas industry rather than requiring county residents to prove harm.

Fiscal responsibility and recessionary economic conditions call for a suite of new and updated economic instruments to increase revenue, create jobs, and to provide market-based incentives for technology-driven regulatory compliance by oil and natural gas companies. Examples include:

  • Performance bonds
  • Site specific performance bonds
  • Impact fees
  • Contingency fund
  • Mitigation credits
  • Carbon-Methane tax
  • Severance taxes
  • Royalty rates
  • Market forces

One of the goals of responsible energy development should be to control and internalize into drilling decisions the hidden costs (negative externalities) to communities, to human health, to biodiversity, to our climate, and to our natural amenities.  Consumers can more fully express their preferences and markets will operate more efficiently when all costs—public and private—are included in our energy supply curve.

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