Drilling Like There's No Tomorrow: Bankruptcy, Insurance, and Environmental Risk

• 成果类型: Article
• 署名作者: Boomhower, Judson
• 署名单位: University of California System; University of California San Diego
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20160346
• 发表日期: 2019
• 页码: 391-426
• 关键词: ABANDONED OIL; liability; LAW; methane; CHOICE; POLICY; wells

摘要

This paper measures the effects of bankruptcy protection on industry structure and environmental outcomes in oil and gas extraction. Using administrative data from Texas, I exploit variation in an insurance requirement that reduced firms' ability to avoid liability through bankruptcy. Among small firms, the policy substantially improved environmental outcomes and reduced production. Most production was reallocated to larger firms with better environmental records, but high-cost production where social cost may have exceeded social benefit decreased. These results suggest that incomplete internalization of environmental costs due to bankruptcy is an important determinant of industry structure and safety effort in hazardous industries.