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Internalizing Externalities: Disclosure Regulation for Hydraulic Fracturing, Drilling Activity and Water Quality

SSRN, ISSN: 1556-5068
2023
  • 0
    Citations
  • 1,397
    Usage
  • 35
    Captures
  • 2
    Mentions
  • 0
    Social Media
Metric Options:   Counts1 Year3 Year

Metrics Details

  • Usage
    1,397
    • Abstract Views
      1,104
    • Downloads
      293
  • Captures
    35
    • Readers
      34
    • Exports-Saves
      1
      • SSRN
        1
  • Mentions
    2
    • News Mentions
      2
      • 2
  • Ratings
    • Download Rank
      208,461

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Article Description

The rise of shale gas and tight oil development has triggered a major debate about hydraulic fracturing (HF). In an effort to mitigate risks from HF, especially with respect to water quality, many U.S. states have introduced disclosure mandates for HF wells and fracturing fluids. We use this setting to study whether targeting corporate activities that have dispersed environmental externalities with disclosure regulation to create public pressure reduces their environmental impact. We find significant improvements in water quality, examining salts that are considered signatures for HF impact, after the disclosure mandates are introduced. We document effects along the extensive and the intensive margin, though most of the improvement comes from the latter. Supporting this interpretation, we find that, after the disclosure mandates, operators pollute less per unit of production, use fewer toxic chemicals, and cause fewer spills and leaks of HF fluids and wastewater. We also show that disclosure enables public pressure and that this pressure facilitates internalization.

Bibliographic Details

Pietro Bonetti; Christian Leuz; Giovanna Michelon

Elsevier BV

Multidisciplinary; Environmental regulation; Fracking; Real effects; Disclosure; Water pollution; Sustainability; Corporate social responsibility; Externalities; Unconventional oil & gas development

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