Three Essays on the Environmental Economics of the Shale Gas Boom

Natural gas is an increasingly important part of US climate and energy policy. While natural gas is a relatively clean source of energy, there are still concerns surrounding the potential for environmental damages associated with natural gas production. Further, the policies that evolve to support natural gas may have unintended environmental consequences due to the behavior of energy markets. This dissertation presents three essays on the environmental economics of natural gas -- and of the shale gas boom. The first essay examines the change in fracking safety over time, and finds that changes in the size distribution of firms within the fracking industry are responsible for substantial reductions in risks. The second essay presents a multi-market model of the electricity and natural gas sectors and finds that a marginal increase in natural gas consumption in the transportation sector will increase total US carbon emissions due to the market-induced increase in coal consumption in the electricity sector. Finally, the third essay estimates the effect of domestic natural gas prices on coal exports and finds that a substantial portion of displaced US coal will be exported to foreign markets. These essays combine to further refine the environmental considerations of the shale gas boom.