Governance of Shale Gas Development: Insights from the Bloomington School of Institutional Analysis
Originally published in Review of Austrian Economics
The boom in shale gas production has been accompanied by concerns that polycentricity, whereby multiple levels of government share regulatory authority, has resulted in an inefficient and ineffective governance. The Bloomington School of institutional analysis suggests otherwise. Drawing on the work of Elinor and Vincent Ostrom, we clarify a diverse regulatory response to shale gas development within federations may be appropriate depending on the physical context of shale gas development, local demand for economic development (including geology, geography, and the built environment), the regulatory capacity of local governments, uncertainty about the appropriate regulations to address externalities from shale gas production, and the extent of inter-jurisdictional coordination problems. We apply the framework to regulation of shale gas development two fracking federations: the US and EU. In each context, letting a thousand regulatory flowers bloom is more sensible than uniform standards.