Cornell planning professor studies costs of the boom-bust cycle in natural gas extraction

Christopherson

New York state may permit shale gas drilling after recently lifting a yearlong moratorium. In addition to environmental concerns over water and air quality, there are significant economic questions to consider, says economic geographer Susan Christopherson. These include projected vs. actual job creation, the burdens on local infrastructure in drilling regions, and affected communities’ long-term economic prospects.

Typically, resource extraction industries go through boom-bust cycles and produce costs to communities that remain after the boom is over, says Christopherson, a Cornell professor of city and regional planning who is leading a team of researchers in analyzing the economic consequences of natural gas extraction in the Marcellus Shale.

During the boom, "you may have a lot of tax money coming in, but you also have to provide additional people with services -- public health, public safety, roads, schools -- and when the bust comes, you lose that population, but you still may have [to pay for] the infrastructure that you built up," Christopherson says. "Once you extract all the gas from a particular county, it’s done; all the drilling rigs leave, and it appears that communities may be worse off than when they started."

Besides current gas drilling and hydraulic fracturing operations in Pennsylvania, the team looked at other states where shale gas extraction has occurred, including Wyoming and Colorado.

"Our aim has been to provide a more realistic picture of what to expect if natural gas drilling happens in New York and to learn from what is happening in Pennsylvania," she says.

Recent figures on actual employment in Pennsylvania have been much lower than the industry estimates, Christopherson says. "We are trying to develop a model with more accurate and transparent assumptions, and also educate the public about how to evaluate any model used to project jobs numbers."

A natural resource extraction operation moving into a region "may crowd out other industries by raising labor costs or creating conditions adverse to industries such as tourism or dairy farming," Christopherson says.

The pace of the drilling cycle is also important, she says: "How fast will it occur, how many people will it draw into a region, how much pressure will there be on local resources and services?"

Christopherson’s research is supported by the Park Foundation and the Heinz Endowments, who "wanted the broader economic consequences to be part of the conversation, and to inform policymakers and the public about what they could expect," she says.

Her suggestions to policymakers in New York include establishing a state severance tax to help mitigate the costs of drilling to local communities.

"You have to think ahead, deal with the boom, and try to ameliorate the damage that comes with it," Christopherson says.

A forthcoming report for Cornell’s Community and Regional Development Institute (CaRDI) "will contain eight policy briefs we’ve done, on everything from implications for public health providers to economic development," she says. "I think we’ve been influencing the debate, getting people to look at the cost-benefit aspects."

Working papers by the Marcellus Shale team are available at http://www.greenchoices.cornell.edu.

Their findings have been disseminated through online forums, including a CaRDI Sustainable Communities webinar in May. This fall, Christopherson is teaching an economic development course that encourages students to work on research "that might be useful in a policy framework."

Christopherson has given policy and research presentations to local organizations, to state legislators in Albany, at Cornell Law School and to academic audiences at Oxford University and Newcastle University in the U.K.

Her continuing research will assess "local government responses to the challenges of shale gas drilling," such as zoning regulations or bans.

"We’ve managed to get a national and international audience for this research," Christopherson says. "This is really an international subject."