Working Paper: NBER ID: w23855
Authors: Thomas R. Covert; Ryan Kellogg
Abstract: We study policies that aim to “keep carbon in the ground” by blocking fossil fuel infrastructure investment. Our analysis relies on a model of hydrocarbon production and transportation, incorporating substitution between pipeline infrastructure and flexible alternatives, like crude-by-rail. We apply the model to the Dakota Access Pipeline (DAPL), which moves oil from North Dakota to Texas and was controversially completed in 2017. Had DAPL’s construction been enjoined, we estimate that 81% of the blocked pipeline flows would move by rail instead. This substitution induces both private costs and local environmental damage, since rail transport imposes greater local externalities than pipelines.
Keywords: hydrocarbon infrastructure; environmental policy; fossil fuels; Dakota Access Pipeline; rail transport; pipeline transport
JEL Codes: L13; L71; L95; Q35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Blocking DAPL (H77) | Increased rail transport (L92) |
| Increased rail transport (L92) | Higher local pollution emissions (F64) |
| Blocking DAPL (H77) | Higher local pollution emissions (F64) |
| Blocking DAPL (H77) | Some oil remains in the ground (L71) |
| Blocking DAPL (H77) | Increased producer surplus costs (L11) |
| Blocking DAPL (H77) | Increased local emissions costs (Q52) |