Oil and Regional Development in Chad: Impact Assessment of Doba Oil Project on the Poverty in Host Region

In 2003, Chadian authorities passed the Law N° 001/PR/1999, establishing rules for allocating and managing the expected oil royalties from the Doba Oil project. The oil producing region's share amounts to 5% of oil revenues under this law in addition to other benefits related to its status in order to mitigate negative effects of the oil project. Many field studies attempted to assess poverty situation in this region. Yet, no rigorous method of impact assessment has been employed. The goal of this paper is to evaluate the poverty profile in this region, by combining a double difference estimator with propensity score matching methods. Using data from the «Survey on Consumption and the Informal Sector in Chad» carried out in 2003 and 2011, our results tend to show that the monetary poverty increased in the oil producing region compared to control regions. We find no evidence that the nonmonetary poverty decreased in the producing region, as the important investments in social infrastructures could have implicitly suggested. In addition, we notice that household expenditures for temptation goods increased in this region compared to the others. Finally, we observe that there are spillover effects. Especially the neighboring regions of the oil producing region are more likely to experience poverty. These results raise the issue of the efficiency of the law and of its enlargement to newly discovered oil fields.