Economic impacts of early unconventional gas mining: Lessons from the coal seam gas industry in New South Wales, Australia

• Published in: Energy policy 2019-02, Vol.125, p.338-346
• Main Authors: Marcos-Martinez, Raymundo, Measham, Thomas G., Fleming-Muñoz, David A.
• Format: Article
• Language: English
• Subjects: Algorithms; Causal inference; Clean energy; Climate; Coal; Coal industry; Coal mines; Coal mining; Coal seam gas; Coalbed methane; Consumption; Decision analysis; Econometrics; Economic change; Economic conditions; Economic development; Economic growth; Economic impact; Economic spillovers; Economics; Employment; Energy; Energy consumption; Energy development; Energy policy; Energy sources; Environmental health; Health care policy; Human capital; Impact analysis; Impact assessment; Income; Mining; Mining industry; Multiplier; Natural gas; Oil and gas industry; Petroleum industry; Public health; Regional analysis; Regional development; Regression analysis; Resource economics; Trade policy; Water security; Welfare
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2018.10.067

Globally, the development of the unconventional natural gas (UNG) industry is expected to continue as gas consumption increases in the transition to cleaner energy sources. However, social and regulatory factors may constrain UNG activity at regional scales. Robust impact assessments of the effects of the UNG industry at different phases of development could help reduce trade-offs of energy policy and promote overall welfare improvements. We assessed if the early phases of the coal seam gas (CSG, a type of UNG) industry in New South Wales, Australia produced regional economic changes between 2001 and 2011. We combined spatial econometrics, genetic matching algorithms and seemingly unrelated regressions with instrumental variables to control for multiple factors influencing regional economic patterns (e.g., climate, human capital) to estimate the effect of the CSG industry on local income and employment. Results show that regions with CSG activity had 7% (±5%, 95% C.I.) higher family income than regions without CSG mining. No statistical evidence of indirect employment multiplier effects from CSG activity were found. The analysis can inform social license and regulatory decisions related to the CSG industry that impact competing social priorities such as energy and water security, economic growth and environmental health. •We analysed economic effects of early coal seam gas (CSG) mining in NSW, Australia.•Early CSG mining activities can influence regional family income levels.•The results are robust to spatial autocorrelation and unobserved heterogeneity.•The estimates were also tested using genetic matching causal inference methods.•No indirect job multiplier effect from initial CSG mining was found.