Incentives and Information in Methane Leak Detection and Repair

Abstract

Capturing leaked methane can be a win for both firms and the environment. However, leakage volume uncertainty can be a barrier inhibiting leak repair. We study an experiment at oil and gas production sites which randomized whether site operators were informed of methane leakage volumes. At sites with high baseline leakage, we estimate a negative but imprecise effect of information on endline emissions. But at sites with zero measured leakage, giving firms information about methane leakage increased emissions at endline. Our results suggest that giving firms news of low leakage disincentivizes maintenance effort, thereby increasing the likelihood of future leaks.

JEL Classification: Q35, Q53