UiS School of Business and Law Seminar: The Surprising Static and Dynamic Effects of Oil and Gas Flaring on Agriculture

Abstract:
Environmental conditions shape contemporaneous outcomes and induce longer-term economic consequences when non-environmental policy dis[1]torts investment incentives. We study this in the context of farmers’ re[1]sponses to flaring and venting of “associated gases” from oil reservoirs. Us[1]ing confidential crop insurance data from Alberta, Canada we document that: i) flaring and venting alter the productivity of crop production and ii) farmers respond to these contemporaneous shocks by altering the size of their operations due to incentives created by tax policy. Our results show that, because of pre-existing non-environmental policy, environmen[1]tal shocks influence allocative e