Effects of Stricter Environmental Regulations on Resource Development

66 Pages Posted: 18 Jul 2018

See all articles by Ian Lange

Ian Lange

University of Stirling - Department of Economics

Michael Redlinger

Colorado School of Mines

Date Written: June 01, 2018

Abstract

This analysis seeks to understand whether changes in oil regulation brought about by the shale revolution have restricted the pace of drilling and production. This hypothesis is tested using data on North Dakota and Montana both before and after North Dakota increased the level of bonding required. Results generally find that the new regulations had no statistical impact on the pace of drilling and production, however it is found that smaller operators reduced their production and exited. These results are instructive for policymakers who weigh the loss of economic welfare against improved environmental quality when deciding on new regulations.

Keywords: oil and gas regulation, shale oil, drilling, firm exit

JEL Classification: L510, L710, Q350, Q530

Suggested Citation

Lange, Ian and Redlinger, Michael, Effects of Stricter Environmental Regulations on Resource Development (June 01, 2018). CESifo Working Paper Series No. 7053, Available at SSRN: https://ssrn.com/abstract=3208603 or http://dx.doi.org/10.2139/ssrn.3208603

Ian Lange (Contact Author)

University of Stirling - Department of Economics ( email )

Stirling, FK9 4LA
United Kingdom

Michael Redlinger

Colorado School of Mines ( email )

Golden, CO 80401
United States

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