Costs of Inefficient Regulation: Evidence from the Bakken

Gabriel Lade () and Ivan Rudik

No 24139, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Efficient pollution regulation equalizes marginal abatement costs across sources. Here we study a new flaring regulation in North Dakota's oil and gas industry and document its efficiency. Exploiting detailed well-level data, we find that the regulation reduced flaring 4 to 7 percentage points and accounts for up to half of the observed flaring reductions since 2015. We construct firm-level marginal flaring abatement cost curves and find that the observed flaring reductions could have been achieved at 20% lower cost by imposing a tax on flared gas equal to current public lands royalty rates instead of using firm-specific flaring requirements.

JEL-codes: L71 Q3 Q4 (search for similar items in EconPapers)
Date: 2017-12
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
Note: EEE
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Published as Gabriel E. Lade & Ivan Rudik, 2020. "Costs of inefficient regulation: Evidence from the bakken," Journal of Environmental Economics and Management, .

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Related works:
Journal Article: Costs of inefficient regulation: Evidence from the Bakken (2020)
Working Paper: Costs of inefficient regulation: Evidence from the Bakken (2020)
Working Paper: Costs of Inefficient Regulation: Evidence from the Bakken (2018)
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