Economics Working Papers

Publication Date

12-2017

Number

NBER 24139

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 Classification

L71, Q3, Q4

Version History

Original Release Date: December 2017

Departments

Department of Economics, Iowa State University

File Format

application/pdf

Length

49 pages

Share

COinS