Tag: "ground water"

Fracking Bans Continue to Proliferate

The city government of Denton, TX has recently voted to impose a temporary moratorium on any new fracking wells until September of this year, and it is looking to make it permanent. They would not be the first community to do so.

Food and Water Watch, a non-profit NGO, tracks the number of communities across the nation that ban fracking operations. Three states (New Jersey, New York and Vermont) and the District of Columbia have all banned fracking. Indeed, over 400 counties and municipalities across 21 states have also passed anti-fracking measures.

Such bans arise from safety concerns, including groundwater contamination. Yet, an Institute of Energy Resource report reveals that even though over 1 million fracking wells having been drilled in the U.S., the EPA has not found any confirmed incidents of groundwater contamination from fracking. Even Lisa Jackson, then head of the EPA, has stated, “In no case have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.”

While the risks from fracking operations are often overblown, the benefits of fracking to the American economy and the environment are not:

  • A Penn State University study found that between 2007 to 2010, Pennsylvania state sales tax revenues declined by 3.8%. While state sales taxes increased by 11.4% on average among those counties with high numbers of fracking wells, it decreased by 6.6% on average in those counties without any fracking wells.
  • The Institute for Energy Research estimates that in the near-term, over half a million jobs and $32 billion in wages will be added to the nation’s payrolls annually, which is an average income level of nearly $60,000. State and local tax revenues would increase by more than $10 billion annually. Further, the federal government stands to add $24 billion dollars in tax revenues annually, which would help offset our persistent federal deficit spending problem.
  • A U.S. Energy Information Administration report reveals that oil and gas industry employment grew by 40% between 2007 and 2012, which far outpaced the 1% rate of employment growth in the U.S. economy during that same period.
  • An EPA report estimates that greenhouse gas production from power generation has fallen by 11%, due largely to energy companies switching to burning natural gas for power generation instead of burning coal and oil. Aggregate U.S. carbon dioxide emissions have fallen from a peak of 7.3 billion metric tons emitted in 2007 to 6.5 billion metric tons emitted in 2012. This is a market response to lower natural gas prices caused by increased gas production from fracking.

One can only hope that the remaining communities located over oil shale areas will weigh the benefits and costs more carefully before considering a local fracking ban.

Real Water Markets: Another Leadership Imperative

Political and economic freedom plus the rule of law and free enterprise yields the prosperity that we enjoy, and its absence explains why most of the world lags so far behind us. Its absence also explains why some sectors of our economy lag so far behind the rest. We use our resources more wisely than most of the rest of the world because market-determined prices guide most of our resource use decisions.

Changing market prices are a powerful information and incentive system. That system has an impressive track record because every price is the result of a serious, continuous, money-where-your-mouth-is indirect conversation about priorities and costs. It involves the entire population, so it harnesses much more information than the central planning alternative, which is just guesswork by a handful of over-extended public officials spending someone else’s money. Central planning has an awful track record, not just for economic inefficiency and poverty, but for creeping tyranny.

Market-determined prices will address Texas’ water management challenges more effectively than our current system of limited markets and central planning. Willing buyer — willing seller exchange of privately-owned water rights will tell us what each basin’s lowest value water uses are worth. Until we know what price existing users would sell water for, we cannot tell which potential water projects are wise investments. Price differences between water basins tell us if inter-basin transfers make economic sense, and tell us what restrictions on inter-basin transfers cost. The same price information is an essential element of water conservation planning.

Texas surface water law allows water rights’ exchanges, but transfers are over- regulated. For example, water rights holders cannot change water uses without state permission. Water rights are just revocable permission to use state water; a factor that undermines exchange, investment in water-related infrastructure, and promotes wasteful use-it-or-lose-it usage. Let’s hope for the wisdom and leadership to fix that before our drought and recent referendum push us to waste billions of dollars and the environmental disaster of unnecessarily flooding thousands of acres under new reservoirs.

Texas groundwater law has not even come that far. Many groundwater basins have long since reached the point where recharge can no longer keep up with unlimited pumping, which means that efficient use requires quantified pumping rights and a price system. Only the Edwards Aquifer area of South Central Texas has quantified pumping rights, but even there, water users cannot trade directly. Much of the Edwards Aquifer permitted pumping is locked into historic and mostly low water uses. Those are very expensive restrictions. How expensive? Only a system of market-determined prices can reveal the true amount.

The legal infrastructure needed to foster market-determined surface- and ground- water prices will have to incorporate numerous geologic, hydrologic, and historic use details that are beyond the scope of this commentary. But nothing about issues like third-party claims, drought management, and environmental values preclude the government from severely curtailing its costly micro-management of water use. Getting there is just a matter of leadership; selling the correct, limited government policies to a general public interested in freedom-based new ideas.