Market-based Approaches to Mitigating Environmental Damage from Fracking by norman

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James Greyson

Apr 9, 2013
06:24

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The EU did something similar with its WEEE (waste electronics) directive requiring financial liability for the cost of recycling products. They offered a choice of a blocked bank account or 'recycling insurance'. The attractiveness is that future liability costs get transferred into current product prices - and consequently also investor decisions. With fracking there seem to be at least 2 challenges: 1. The liabilities could be unlimited; for example the cost of replacing polluted water with fresh water in whole regions. Insurance is designed for capped liabilities. 2. Despite 40 years of sustainable development rhetoric, markets are virtually untamed for their externalities (unaccounted negative impacts). Most of the costs of these impacts are transferred away to the future or to other places, with the public/ecosystems/vulnerable picking up the tab. The mindset that ignores externalities will also ignore/obstruct proposals for fracking liability. Could be implemented as part of a broader paradigm shift? Implementing sustainability for real in markets rather than just as aspiration on paper... Could consider this related proposal for an insurance-like tool to correct externalities in markets (precycling premiums), https://www.climatecolab.org/web/guest/plans/-/plans/contestId/4/planId/15101#_des_fin

2013frackingjudges 2013frackingjudges

Jul 1, 2013
03:16

Judge

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This proposal suggests a potentially promising direction to head. Market-based approaches have proven to be fruitful strategies for addressing environmental problems in other contexts, so attempting to harness market forces could be a useful avenue for addressing the climate impacts of hydraulic fracturing. However, many key sections of this proposal were not fleshed out, including what specific actions would be taken, who would take them, the timeline, and the projected costs, so it was difficult to evaluate the merits of the idea. An additional consideration is that this contest is focused specifically on the climate impacts of hydraulic fracturing, rather than other considerations like chemical contamination of drinking water sources, so a more focused discussion of the application of market-based approaches to the climate impacts of hydraulic fracturing would have helped illustrate the value of the idea for this contest.