Cost-Benefit Analysis of Gas Flaring Reduction Policies in Nigeria: Implications for Environmental Sustainability and Public Health

Abstract

This study examined the cost–benefit implications of gas flaring reduction policies in Nigeria using an econometric approach. The study quantified the economic and environmental costs of gas flaring, evaluated the revenue potential of gas utilization alternatives including liquefied natural gas (LNG), gas-to-wire (GTW), and gas-to-methanol (GTM), and assessed the overall cost–benefit relationship of transitioning from flaring to gas commercialization. Secondary time-series data were analyzed using econometric techniques, including Ordinary Least Squares regression, cointegration analysis, and cost–benefit modeling.The findings revealed that gas flaring imposes significant economic losses, with gas flaring volume and gas prices exerting strong positive effects on the cost of flaring. Oil production was also found to contribute to increased flaring, while gas utilization significantly reduced associated costs. The analysis of gas utilization pathways showed that LNG offers the highest revenue potential but is highly capital-intensive, whereas GTW provides a more feasible and efficient option for domestic energy needs. GTM was found to be moderately viable but constrained by market and scalability factors. The cost–benefit analysis indicated that the benefits of gas flaring reduction substantially outweigh the costs, with a high benefit–cost ratio and positive net present value.The study concludes that gas flaring reduction in Nigeria is both economically and environmentally beneficial, and that the continued practice of flaring reflects policy and infrastructural challenges rather than economic infeasibility. It recommends strengthened regulatory enforcement, targeted investment in gas utilization infrastructure, and enhanced public–private collaboration to promote sustainable gas commercialization.