How Do Incentives Influence Local Public Support for the Siting of Shale Gas Projects in China?

Abstract

In 2016, China became the third largest producer of shale gas in the world. The Chinese central government has been supporting shale gas development since 2011. There are hopes that shale gas development, along with major efforts in renewable energy systems, can bring a fundamental change in the nation’s current coal-dependent energy system. Numerous challenges have slowed implementation including resistance to development of the industry by local residents living near shale gas sites. A significant body of research has examined the effectiveness of incentives in changing risk perceptions and attitudes toward the siting of industrial projects in the Western context. The present research identifies whether governmental incentives increase the extent of local support for shale gas projects in the Chinese context. Specifically, this paper strives to study two types of incentives: direct compensation to households bearing the potential negative impacts of shale gas projects and, household compensation accompanied by allocation of a portion of the shale tax revenues to local communities where the development occurs. An online survey with an embedded experiment was designed and conducted in August 2016 in five Chinese provinces where there are current or future shale gas projects. The experiment shows that household compensation alone or in combination with community reinvestment significantly increases local support of shale gas projects. Further, we found that the respondents most likely to be supportive after the experimental treatments are those who are young, more highly educated, have higher income, and perceive themselves as living close to a project. This research sheds light on how incentives might help contribute to resolution of siting controversies or prevent the onset of such controversies.