Shale gas is a promising unconventional gas resource with clean-burning and efficient nature. Many countries show high interests in this new resource along with the success of shale gas revolution in the US. In recent years, China has raised a boom of shale gas development which may lead to air pollution, water pollution, ecological damage and other environmental issues, it is significant to determine exactly how shale gas development affects on the environment and how to measure quantitatively. This paper conducts the study by means of literature review, exchange conference, academic forums and combining methods of environmental economics, cost accounting, econometrics and other disciplines to build mathematical analysis model of environmental costs of shale gas development. Then we propose on strengthen the environmental cost management and control of shale gas development in China so as to achieve the sustainable development of shale gas.

The conclusions indicate that the evaluation results obtained by quantitative method of shale gas development environmental costs is objective, specific and more easily accepted by enterprise and government so that provide effective suggestions to strengthen environmental protection. From both technical and political levels, we propose that introduction of foreign advanced technology, comprehensive assessment of the environmental impact, strengthen the protection and regulation of oil and gas pipelines, improving the ecological resources compensation mechanism conducive to promoting shale gas development in China.

Additionally, the most important innovations are mainly reflected in: 1) in terms of the influence of shale gas development on water consumption, groundwater pollution, air pollution, ecological compensation, geological disaster compensation, we combine the theory of environmental costs and give econometric model of the environmental costs respectively. 2) considering various environmental cost factors we build econometric model of environmental costs of shale gas development to analyze the impact on the environment. 3) In order to minimize the potential environmental impact to realize the sustainable development of shale gas resources, China should strengthen environmental protection from aspects of both technology and policy.

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