ABSTRACT
This chapter considers the political decisions governing shale gas development, primarily at the state level, and explores the municipal politics of fracking. One of the consequences of the polycentric system of governance in the USA is the diversity of responses to shale gas development. The government of Pennsylvania responded to new opportunities by encouraging shale production and by adapting regulations to new challenges arising with unconventional gas extraction. Quebec’s shale is located near the St. Lawrence River, near most of the fertile farmland and where most people live. Shale gas development provides an alternative that seems less costly to the environment and there are no comparable costs to workers such as Black Lung Disease. Welfare economics is mostly concerned with efficiency considerations. However, the choice of rules governing economic and political development is often guided by political considerations that have little to do with economic efficiency.
