The government has finally released the full report on the impact of shale gas drilling on the rural economy – 11 months after first publishing a heavily redacted version.
The full report, commissioned by the Department of Environment, Food and Rural Affairs, details the negative impacts of shale gas. These could include wiping up to 7% off houses prices, as well as increasing rents and insurance premiums, traffic congestion, declines in rural businesses, greater noise and air pollution, pressure on services, burdens on waste water treatment and industrialisation of the countryside.
Shale gas could bring benefits in new rural jobs, the report says, though it adds that local people may not be qualified to apply for some of them. The report also says rural communities could benefit from greater fuel security.
Overall, the report concludes, “the impacts are likely to be mixed with short-term positive economic gains from employment and energy that need to be balanced against the costs that may affect certain groups, such as businesses involved in tourism, local house price impacts and increased congestion.”
Criticism of redacted report
The redacted report, with more than 60 sections blanked out, was strongly criticised by the government’s opponents and campaigners against fracking.
The government consistently said it was against the public interest to release the full version because the report was not complete. But last month the Information Commissioner instructed Defra to release it in full.
Falling house prices
The report says local houses prices could fall because of shale drilling, though this will depend on a wide range of factors. “Residents owning property close to the drilling site may suffer from lower resale prices due to the negative perception being located near the facility and potential risks”, it says.
Evidence from the US found houses valued at more than $250,000 within 1,000ft of a well site saw values fall by 3-14%. The report says evidence is “quite thin and the results are not conclusive”. But it says: “There could potentially be a range of 0-7% reduction in property values within 1 mile of an extraction site.”
Properties up to five miles away “may also incur an additional cost of insurance to cover loses in case of explosion on the site”, the report says.
In the rental sector, an increase in demand for housing as operations expand and new workers arrive, could lead to rent rises and “affordability issues for rural residents seeking accommodation”.
The report estimates there would be 14-51 vehicle movements to a site each day during exploration and site preparation for a period of 32-145 weeks.
“This could have an adverse impact on traffic congestion, noise or air quality depending on existing roads, traffic and air quality” it said. The longer and more significant impact was likely to be on people next to the site or along the lorry route.
Leaks from fracking sites could contaminate surface water and affect human health indirectly even if drinking water was not affected, the report said, although it said regulation in the UK was “likely to be more robust” than in the US where contamination had occurred.
Noise and light
The report refers to evidence from the US that some residents experience deafening noise, light pollution that affects sleep and noxious odours from venting gases.
“Shale gas development may transform a previously pristine and quiet natural region, bringing increased industrialisation”, the report says. “As a result, rural community businesses that rely on clean air, land, water and/or tranquil environment may suffer losses from this change.”
The report quotes estimates in previous studies of job numbers that could be generated by shale drilling. It says the impact is likely to be positive but it is uncertain whether higher skilled jobs may be awarded to workers from outside local area.
It is also unclear, the report says, “how sustainable the shale gas investments will be in the future and whether rural communities have the right mix of skills to take advantage of the new jobs and wider benefits on offer.”
The report says some sectors may gain from drilling activity. But evidence from the USA suggests that much of the spending associated with drilling is made outside the local rural economy.
It also adds that other sectors “may lose business due to increased congestion or perceptions about the region. These behavioural responses may reduce the number of visitors and tourists to the rural area with an associated reduction in spend in the local tourism economy.” Losses from tourism may, however, be offset by increased demand for hospitality from new workers, the report suggests.
The experience in the US has been an expansion of economic activity followed by a significant contraction as drilling ends and income falls, the report says.
The long-term economic impact in the UK will depend on how revenue raised from shale gas is reinvested locally to create sustainable jobs for the future that do not rely on the shale gas sector, the report says..
Pressure on local services
New workers will demand local services, such as schools, doctors, dentists, libraries, and this may create additional pressures that can’t be met by existing capacity.
“Depending on where wastewater is treated, the additional volume could place a burden on existing wastewater treatment infrastructure capacity, and require further or new investment”, the report says. “However, if on-site treatment and recycling could occur, wastewater volumes could be reduced.”
The report says domestic shale gas production could help to reduce net greenhouse gas emissions associated with imports of liquefied natural gas (LNG). But it says if LNG or other fossil fuel displaced from the UK is used elsewhere, that could lead to an increase in global GHG emissions.
- Mandatory environmental risk assessment for all shale gas operations
- Recycling and reusing waste water to reduce water requirements
- Coordination of regulatory bodies and attention to how risks may scale up
- Increased regulatory capacity may be needed
- Regulatory scrutiny and enforcement of risk assessments
- Mandatory sharing of reports between operators to promote best practice
- Adequate provision and maintenance of local infrastructure to be included in plans for expanding shale gas drilling operations
- Operators should be encouraged to offer employment and training to residents
- Routine monitoring and evaluation of impacts to ensure they remain acceptable
- Long-term planning for withdrawal of the industry to allow tourism and other local businesses to benefit