Understanding Local Regulation of Hydro-Fracking: A Spatial Econometric Approach

High volume hydraulic fracturing (HVHF, or fracking), the fracturing of underground shale gas deposits to capture natural gas, is a controversial practice, but one that is thriving in many areas of the United States. Thirty home-rule states (and 9 others with “limited” status) in the U.S. retain the ability for local communities to pass laws beyond the minimums established by their state legislature. We use a comprehensive dataset on local bans and endorsements in New York State, together with local-level census data, and spatial characteristics, linked through GIS, to undertake a spatial econometric analysis of local fracking policies. These data allow us to explore the determinants of local regulation allowing (or banning) fracking activities in New York, our test case state. Our analysis suggests that there are several factors which influence whether or not a local municipality implements a ban or moratorium on fracking. Factors which increase the probability of local restrictions on fracking include a community’s presence in the Utica shale region, the relative leaning of the community to the Democratic Party, and the education level of the local population. Alternately, the degree of local land development, location in highly productive areas of the Marcellus, the number of extant oil and gas wells, presence in priority drinking-water watersheds, if the community is an incorporated village (as opposed to town), and the percentage of wetlands all have a negative impact on the likelihood of a ban or moratorium. In addition, we find, in our spatial lag model, that there are significant spillover effects across communities, pointing to the importance of our spatial econometric approach.