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Environmental justice and Coasian bargaining: The role of race, ethnicity, and income in lease negotiations for shale gas

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  • Timmins, Christopher
  • Vissing, Ashley

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, and that weak lease restrictions are not generally offset by strong local ordinance restrictions.

Suggested Citation

  • Timmins, Christopher & Vissing, Ashley, 2022. "Environmental justice and Coasian bargaining: The role of race, ethnicity, and income in lease negotiations for shale gas," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).
    • Handle: RePEc:eee:jeeman:v:114:y:2022:i:c:s0095069622000353
    DOI: 10.1016/j.jeem.2022.102657
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    References listed on IDEAS

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    Cited by:

    1. Winikoff, Justin B. & Maguire, Karen, 2024. "The Role of Commercial Energy Payments in Agricultural Producer Income," Economic Information Bulletin 342468, United States Department of Agriculture, Economic Research Service.
    2. Yuan, Huaxi & Zou, Longhui & Feng, Yidai, 2023. "How to achieve emission reduction without hindering economic growth? The role of judicial quality," Ecological Economics, Elsevier, vol. 209(C).
    3. Max Harleman & Pramod Manohar & Elaine L. Hill, 2022. "Negotiations of Oil and Gas Auxiliary Lease Clauses: Evidence from Pennsylvania’s Marcellus Shale," NBER Working Papers 30806, National Bureau of Economic Research, Inc.
    4. Bakkensen, Laura A. & Ma, Lala & Muehlenbachs, Lucija & Benitez, Lina, 2024. "Cumulative impacts in environmental justice: Insights from economics and policy," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    5. Lucas Cain & Danae Hernandez-Cortes & Christopher Timmins & Paige Weber, 2023. "Recent Findings and Methodologies in Economics Research in Environmental Justice," CESifo Working Paper Series 10283, CESifo.

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    More about this item

    Keywords

    Shale gas; Hydraulic fracturing; Mineral rights; Lease negotiation; Coasian bargaining; Environmental justice; Heterogeneous effects; Bayesian Improved Surname Geocoding; Chaid moment forest;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law

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