Working Paper: NBER ID: w29487
Authors: Christopher Timmins; Ashley Vissing
Abstract: Using a unique combination of datasets and estimation techniques, we test whether private lease negotiations to extract oil and natural gas exhibit features of Coasian efficiency. We demonstrate that measures of wealth (including income, house square footage, and land acreage), typically determinants of willingness to pay for environmental quality, do affect bargaining outcomes. However, race, ethnicity, and language also play important roles after conditioning upon these variables, suggesting an environmental injustice and a breakdown of efficient Coasian bargaining. We further demonstrate that failure to negotiate protections in leases leads to increased risk of future drilling violations, which are not offset by local ordinance restrictions.
Keywords: Environmental Justice; Coasian Bargaining; Lease Negotiations; Shale Gas; Race; Income
JEL Codes: K32; Q40; Q51; Q58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| wealth (D14) | bargaining outcomes (C78) |
| lack of negotiated protections (F52) | risk of future drilling violations (L71) |
| restrictive contracts (L42) | drilling violations (L71) |
| race and ethnicity (J15) | negotiation outcomes (C78) |
| linguistic barriers + race (J15) | negotiation outcomes (C78) |