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Environment & Energy Report

INSIGHT: Are the Trade-Offs Worth It? Natural Gas Extraction From Appalachia Increased Jobs, Premature Deaths

Jan. 21, 2020, 9:01 AM

The energy system in the United States has changed considerably over the last 15 years. For example, natural gas supplanted coal as the fuel producing the largest share of electric power generation.

We recently analyzed, at a systems level, multiple impacts across the supply chain of natural gas from the Appalachian Basin, the largest basin in the U.S. Our goal was to provide a balanced assessment of some of the benefits and the costs associated with gas extraction to enable better-informed decision-making by governments, firms, and the lay public.

We focused on impacts in three areas: employment, air pollution emissions and health impacts, and releases of greenhouse gases. (We did not consider other impacts, such as water, nor did we look at interactions among energy sources and uses.)

More Jobs, Increased Premature Deaths

Between 2004 and 2016, gas extraction in the Appalachian Basin was associated with 469,000 new job-years. If each job lasted for five years, this corresponds to 94,000 new jobs. These estimated employment effects are inclusive of those within the natural gas industry as well as spillovers into other economic sectors. Each additional job within the natural gas industry is associated with about two jobs in other sectors of the regional economy. These new jobs comprise $20 billion in wages and income. Employment effects from extraction are overwhelmingly concentrated in rural counties in the Appalachian Basin.

While providing appreciable employment stimulus, gas extraction also produced significant social costs. Beginning with air quality, our work suggests that between 1,200 and 4,600 premature mortalities occurred between 2004 and 2016 because of emissions across the natural gas supply chain—from extraction to end use.

About 60% of these premature deaths are due to emissions from end use, inclusive of power generation. Using standard valuation techniques, the cumulative mortality risk borne by populations exposed to air pollution emissions amounts to $23 billion in damage. We note that the magnitude of these impacts essentially offsets the employment benefits.

A key finding of this research is the spatial disparity between employment and air quality impacts. The former, jobs, is essentially rural stimulus. Combining direct and associated jobs from natural gas activity amounts to as much as 60% of the labor market in rural areas near the West Virginia panhandle, southwestern Pennsylvania, and eastern Ohio.

Conversely, premature deaths are concentrated in urban counties particularly in southwestern Pennsylvania and in the large cities on the east coast. Specifically, about three-quarters of these natural-gas-associated premature mortalities occur in cities.

The fact that the impacts from emissions cross county and state boundaries is a clear indication of the need for federal management of natural gas extraction and use. If left to lower jurisdictions, decisions will likely reflect the impact that dominates locally. We urge a broader perspective that includes both employment and adverse health consequences.

Greenhouse Gases

The third impact area we assessed is emissions of greenhouse gases. The amount of emissions from natural gas-related sources in our region of study is appreciable. Methane and carbon dioxide emissions amount to about 10% of the national total from the natural gas industry.

Relative to both the employment and air quality consequences, the impacts from greenhouse gas emissions persist far beyond the short run, boom-and-bust-cycle of natural gas development. Methane remains in the atmosphere for a decade or more. Carbon dioxide persists for centuries.

Using the social cost of carbon (an estimate of the total monetary damage from emitting one ton of carbon dioxide) we find that the damages from greenhouse gas emissions amount to $34 billion. This figure is roughly 50% larger than either the air quality damages or employment benefits.

An important feature of our research is that it enables a series of evocative comparisons between employment benefits and environmental and health costs. For example, using our cumulative estimates of premature mortality from air pollution and employment, the implied trade-off is roughly 220 job-years created per premature mortality incurred.

Multiple years of life are lost with each death from air pollution. Taking this into account suggests that three job-years are produced per life-year lost. It is also important to remember that these are primarily rural jobs and urban deaths.

In dollar terms, premature mortality risk deducts roughly $20 billion in damage from the welfare of exposed populations while the cumulative wage and income benefits from employment stimulus contributes about the same amount. The monetary trade-off is one-for-one. The costs of impacts from greenhouse gases are 50% more.

Our contention is that society must determine whether these trade-offs are, in effect, worth it. The purpose of this research was to present stakeholders with the information needed to make informed decisions about future gas extraction.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Jared Cohon is a professor of civil and environmental engineering at Carnegie Mellon University. He served as the president of CMU from 1997-2013 and as director of the Scott Institute for Energy Innovation from 2014-2017. Prior to joining CMU, Cohon held positions at Johns Hopkins University and Yale University.

Allen L. Robinson is a professor in engineering and public policy, the David and Susan Coulter head, and Raymond J. Lane Distinguished Professor of mechanical engineering at Carnegie Mellon University. He joined CMU in 1998 after working for two years as a postdoctoral fellow at the Combustion Research Facility at Sandia National Laboratories.

Ines Azevedo is an associate professor of energy resources engineering and senior fellow at the Woods Institute for the Environment at Stanford University. She joined Stanford in July 2019, where her work focuses on how to transition to sustainable, realistically feasible, and equitable energy systems and assessing how energy systems are likely to evolve. Prior to joining Stanford, Azevedo served as a professor at Carnegie Mellon University for more than 10 years.

Erin Mayfield is a postdoctoral research associate at Princeton University. She works on environmental-engineered system transitions and the social equity of energy systems. She has worked as an environmental consultant on natural resource damages litigation and ecosystem service modeling.

Nicholas Z. Muller is an associate professor of economics, engineering, and public policy at Carnegie Mellon University. He works at the intersection of environmental policy and economics, and his research focuses on comparing air pollution and climate damages from electric vehicles to conventional vehicles, estimating air pollution damage from energy production, measuring the impact of transporting freight on air pollution and climate, and analyzing the inequality in market and measures of income.

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