I had been meaning to introduce this new environmental economics blog, courtesy of my colleague Lori Bennear, who is an Assistant Professor in the Nicholas School of the Environment here at Duke.
In one of her first posts, Lori looks at the externalities from fracking in relation to the Coase Theorem:
There are many potential externalities associated with fracking. An excellent analysis of potential externalities from methane contamination of groundwater by Osborn, Vengosh, Warner, and Jackson, all from Duke, can be found in this paper. Today’s blog will focus on a different aspect of the fracking debate — the negative externalities associated with radioactive wastewater.
Time for some economics. In last week’s post I argued that economists don’t think free markets can solve environmental problems and we needed regulation. So far, nobody has called me on that one. Probably because this is an environment school and I’m preaching to the choir. But, it turns out, that there is a strain of economics dating back to 1960s that argues regulation is not always necessary. The economist who first articulated this argument was Ronald Coase and he eventually won a nobel prize for this research. Coase would argue that if property rights are well-defined, the actors in my stylized fracking example could sort the problem out themselves through negotiation.
If you are interested in environmental policy, the RSS feed for Lori’s blog is here.