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Regulate fracking by coupling legal liability for environmental damage to individual operating companies. This imposes risks/costs on them.



There are many ways one might insure that the true risks and costs of any environmental damage from fracking becomes the responsibility of the fracking companies. A market-based approach to regulation would assign these a priori to those who seek to exploit fracking to generate income from the sale of its product.

One example: require each fracking operator to include a chemical indentifier, unique to it, in its fracking fluids and traceable in ground water. If it ends up in the ground water then government intervention in the operation could be automatic (e.g cease and desist) and financial costs imposed immediately. The regulation could require that a portion of all sales of fracking gas be placed in escrow to assure against a bankruptcy escaple.

This would not necessarily detect all damage incidents but would require operators to factor the costs of future penalities into the costs of their operations. The approach would be analogous to requiring all nuclear power operations to include the cost of spent fuel disposal in their production costs and then letting the market decide if it is a viable source for power.

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