Environmental regulation and safety outcomes: Evidence from energy pipelines in Canada

W. Walls and Xiaoli Zheng

Resource and Energy Economics, 2021, vol. 64, issue C

Abstract: This paper investigates the effects of more stringent environmental regulation—specifically, paying amortized abandonment fees as accrued and absolute liability for adverse events—on the safety performance of Canadian oil and gas pipelines. We construct a comprehensive dataset that includes pipeline adverse events, throughput, and regulatory intensiveness for fourteen federally-regulated energy pipelines in Canada. We find that abandonment fees are significantly and positively associated with pipeline events. On average, a 1% increase in abandonment fees is associated with 1.3 more events per month. In contrast, establishing absolute liability is associated with significant decreases in the number of pipeline events: on average, absolute liability is responsible for eliminating 80% of quarterly events for Canadian major oil pipelines and 20% for smaller pipelines.

Keywords: Environmental regulation; Pipeline safety (search for similar items in EconPapers)
JEL-codes: L95 L98 Q35 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:resene:v:64:y:2021:i:c:s0928765520304243

DOI: 10.1016/j.reseneeco.2020.101215

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