The Economic Contest Between Coal Seam Gas Mining and Agriculture on Prime Farmland: It May Be Closer than We Thought

There is substantial market impetus behind the expansion of coal seam gas (CSG) in Australia, driven by buoyant international demand for liquefied natural gas. The benefits of CSG development come in the first few decades, followed by a potentially long period in which the agricultural and environmental costs dominate. We identify the key drivers influencing the economic contest of CSG versus agriculture on prime farmland, and undertake a Darling Downs case study using evidence from primary and secondary sources. Despite the momentum driving CSG development, under some plausible scenarios, the long-term economic net benefits from agriculture-only exceed those from CSG-only and CSG-agriculture coexistence.

[1]  David Gerard,et al.  The law and economics of reclamation bonds , 2000 .

[2]  Patricia Grogan-Hurlick,et al.  Working Paper 6 , 1979 .

[3]  P. J. Chilton,et al.  Groundwater: the processes and global significance of aquifer degradation. , 2003, Philosophical transactions of the Royal Society of London. Series B, Biological sciences.

[4]  Nicola Swayne.  Regulating coal seam gas in Queensland: lessons in an adaptive environmental management approach? , 2012 .

[5]  Tapan Mitra,et al.  Intergenerational Equity and Efficient Allocation of Exhaustible Resources , 1983 .

[6]  Peter Buchholz,et al.  Assessing the long-term supply risks for mineral raw materials—a combined evaluation of past and future trends , 2009 .

[7]  W. Nordhaus.  The "Stern Review" on the Economics of Climate Change , 2006 .

[8]  D. Jacks.  From boom to bust: a typology of real commodity prices in the long run , 2013, Cliometrica.

[9]  David J. Pannell,et al.  Sensitivity Analysis of Normative Economic Models: Theoretical Framework and Practical Strategies , 1997 .

[10]  David Healy,et al.  Hydraulic Fracturing or ‘Fracking’: A Short Summary of Current Knowledge and Potential Environmental Impacts: A Small Scale Study for the Environmental Protection Agency (Ireland) under the Science, Technology, Research & Innovation for the Environment (STRIVE) Programme 2007 – 2013 , 2012 .

[11]  W. Schulze.  The optimal use of non-renewable resources: The theory of extraction , 1974 .

[12]  A. Randall.  Risk and Precaution , 2011 .

[13]  Allan H. Meltzer,et al.  Statement on Monetary Policy , 1976 .

[14]  The Public Interest in Resource Rent , 2007 .

[15]  Gas Market Report , 2022 .

[16]  R. Garnaut.  Principles and Practice of Resource Rent Taxation , 2010 .

[17]  M. Weitzman,et al.  Stern Review : The Economics of Climate Change , 2006 .

[18]  John M. Hartwick,et al.  Intergenerational equity and the investing of rents from exhaustible resources , 2017 .

[19]  Emery N. Castle,et al.  Land resources and land markets , 1985 .