Estimation of the social costs of natural gas

This study determines the extent to which it is possible to develop monetary estimates of the marginal social cost of fuels, using natural gas to test a methodology that could be applied to other fuels. This requires review of previous estimates of both market and nonmarket costs to the extent that such are available. For some components of social cost, calculation of estimates from secondary data is required. The feasibility of using these estimates to develop marginal social-cost estimates for the country and for states or regions must then be evaluated. In order to develop estimates of marginal social cost for use in determining minimum life-cycle costs of building space conditioning, economic theory is used to develop a conceptual model of the market cost of fuel extraction and conversion. Then, estimation methodologies for each component of nonmarket costs are examined to assess the applicability and validity of each methodology. On the basis of this analysis, empirical estimates of both market and nonmarket components of social cost are aggregated to calculate a social-cost estimate for natural gas. 38 references.