Fracking impossible in a libertarian system

The TV is full of pictures of people affected by Fracking, not just in the UK but from around the world. It occurred to me that a proper respect for property would stop Fracking in it’s tracks.

First this was bad TV because it invites people to compare costs and benefits based on all possible costs added together, like deciding not to buy milk because the price might be 50p or £1 and you can’t afford £1.50, but I digress.

The solution the UK government went for was effectively to licence the Fracking company to cause a certain amount of earthquake, effectively permitting the Fracking to go ahead on behalf of local people as long as those people can’t observe the earthquakes with their own senses. This smells a little like licensing fraud because it is not as if the earth is being interfered with any less, just less obviously.

Contrast a rights based solution in which property is an absolute right and polution and disruption to the enjoyment of that property must be licensed by it’s owner. The role of Government is restricted to enforcing the licences, effectively the contracts governing pollution. If there is no contract in place, and pollution occurs improperly then the role of Government would be to end the Fracking immediately and imprison company executives. Land owners would be free to set their own particular limits on the amount of earthquake they want to occur under their land and decide if the instrument used was human senses or artificial monitoring equipment. Owners would also be free to bargain collectively via associations and form their own companies to install monitoring equipment. They would also set out the penalties that would apply if the standards were breached and the procedures for claiming damages. All the different kinds if problem could be included, earthquakes, methane pollution etc.

Since Fracking is big business and penalties might be large, it is likely that specialist firms would be formed to trade upon their expertise in the new industry of Fracking Monitoring and Enforcement. Commercialisation and a gobal market would drive down prices and ensure the complex details are made accessible to homemakers and land owners of all kinds. The fee payable for the licence itself would also be a matter for the market and up for negotiation by organised landowners.

How likely is all this? Well, anyone with a phone line knows about the modern parallel of enforcing rights to compensation after the PPI scandal. There are firms cold calling people over PPI constantly, all chasing ambulances long after the original fraud took place. A large enterprise like Cuadrilla would want certainty before starting to build infrastructure for the extraction process and, knowing that an absolute right could be enforced at any time, causing them to be thrown in gaol, and would actively encourage collective bargaining to begin. If agreement could not be reached under a licence then Cuadrilla would have been forced to buy out the land-owners or give up the project completely. However, if local land owners were respected, perhaps incentivised, and saw the benefits of Fracking outweighed the costs then Fracking might stand a chance.

Tags:

Development, Fracking, Property

Date:

April 17, 2012

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9 responses to “Fracking impossible in a libertarian system”

Rob Waller

April 17, 2012 at 10:06 am

The problem being Licensing and Tax allow the State to take their cut, and bugger the consequences.

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Paul Marks

April 18, 2012 at 3:03 pm

Interesting post.

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Ed Joyce

April 25, 2012 at 9:11 pm

This is not a clear position for all libertarians. From a geolibertarian perspective businesses must pay unimproved land rent for the land they use. Gas/mineral companies pay this into the common pool and it is distributed to all citizens. In this school land is a common asset. I am not clear of the logic of the approach described here. If there is an oil well on some land then according to the ‘compound’ libertarian (ie libertarians who live in a compound over which the state has no rights) approach a single individual could clain damage to their land and prevent the development of that asset.

I would be concerned if this position was allowed to stand. Would each individual require the permission of their neighbour to do any rebuilding work ? This work can be noisy and disruptive. How would airports operate ? The geolibertarian position is more coherent.

Ed Joyce

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1. Simon Gibbs
  
  April 25, 2012 at 9:29 pm
  
  Hi Ed
  
  In geolibertarianism, what would stop me buying and paying the tax on a small plot but causing earthquakes under a very large area around the plot? The tax on unimproved value could be very low in comparison the the value of land I’m blighting.
  
  When I say that the property right is absolute, that means a court could protect me from the violation of that right, but I might have to pay costs and the damage would need to be proved. So, for a bit of minor building work the neighbour is unlikely to be affected and the builder unlikely to ask permission. Basically, it has to worth fighting about to fight about it.
  
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  1. Ed Joyce
    
    April 25, 2012 at 11:19 pm
    
    The position is similar to that of a company wanting to build an airport. The airport would require land which has an unimproved land value. If the aeroplanes make noise the ‘polluter pays’ principle applies, generally through compensation/free double glazing. Those who are harmed must be compensated, but a single objector cannot block the airport. The community has the right to determine whether the airport should be allowed to operate. In ‘compound libertarianism’ noise from the aeroplanes would not be allowed to take place over the compound without prior agreement by the owner of the land/compound. This would allow developments such as airlines to be blocked by a single objector. This would reduce the land rent and in geolibertarianism that would unreasonably restrict the ability to extract value from land depriving value which is the natural right of the community.
    
    In the case of fracking the same principle applies. A single individual landowner cannot block fracking (in geolibertarian thinking).
    
    Not all libertarians are geolibertarians. Some libertarians have a more absolutist view of land rights.
    
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  2. Ed Joyce
    
    April 25, 2012 at 11:22 pm
    
    In the first case you state
    
    If agreement could not be reached under a licence then Cuadrilla would have been forced to buy out the land-owners or give up the project completely
    
    This would surely mean that building work could be stopped if a neighbour did not give agreement (or get bought out)
    
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  3. Simon Gibbs
    
    April 26, 2012 at 10:50 am
    
    If Cuadrilla wanted certainty upfront, they could buy out the land-owner. After the fact, a land-owner would need to seek enforcement from a court and prove his property is damaged. Prison would be available when the drilling company’s actions were clandestine or dishonest.
    
    Re: single objectors, they would be subject, equally, to social pressure and sympathetic support from the community and would not be able to object on a whim or over some easily remedied inconvenience.
    
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Devil’s Kitchen

May 3, 2012 at 11:38 am

The government’s decision was based on the fact that the earthquakes were tiny, did no damage, and were unlikely to do so.

“Contrast a rights based solution in which property is an absolute right and polution and disruption to the enjoyment of that property must be licensed by it’s owner. The role of Government is restricted to enforcing the licences, effectively the contracts governing pollution. If there is no contract in place, and pollution occurs improperly then the role of Government would be to end the Fracking immediately and imprison company executives.”

This is not a property rights solution, and most certainly not a libertarian one.

If the government were to be involved at all, it would be to assess any damage that might occur and set a level of taxation equivalent to said damage—a so-called Pigou Tax. This would internalise the external costs and, as such, possibly make the fracking uneconomical.

In a proper right-based solution, the fracking company would contract privately with the landowners for the rights to operate on or under their land. They would also undertake to offer compensation for property if, in fact, any damage did occur through, e.g. earthquakes.

This would all be done through private contract and, as such, the directors could not be sent to prison since it their breach would be a civil, not a criminal, offence.

Surely, as libertarians—for whom the Harm Principle should be a core belief—we would only want people to pay for harm caused. Which, in the case of the Cuadrilla earthquakes, was precisely stuff all.

The trouble is, of course, that you can get really involved here. Fracking represents a considerable store of cheaper energy: should those who stop the fracking offer compensation to everybody who must pay higher prices because of their intransigence?

After all, one of the reasons that we are seeing water shortages is because the planning permission for the four new reservoirs that were deemed essential in a 2004 report was blocked.

DK

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Simon Gibbs

May 3, 2012 at 1:26 pm

DK, If I came to you and said “Can I drill under your land?” and you said “No, stuff off”, and I said “Alright then, we’ll stop short of your land” then went ahead and undermined your home then you would not have a contact to enforce civilly, so I guess you’re left with tort law? Would that be adequate?

On prison terms: if, after I lie to you and undermine your land, your house falls down, then would you not want me to go the heck to gaol?

Also, I don’t think the criticism of the idea as “certainly not a libertarian one” or not a “proper right-based solution” is exactly justified, given we only seem to differ on who enforces the contracts. I think private law is interesting, but a long way off and did not ommit to consider it out of prejudice, but rather for efficiency of action. Otherwise I think our ideas are pretty similar no?

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