Jesse Backstrom, UChicago

Abstract:
During the last two decades, oil and gas firms have learned to extract more hydrocarbons from unconventional geologic formations by increasing the amount of water, among other inputs, used in hydraulic well stimulations. Since many of these resources are located in relatively arid regions, the industry’s increasing water use has created concerns over the impacts on local availability. In this paper, I study two interrelated issues regarding the water use of the unconventional oil and gas industry in Texas. Using a unique dataset of well-level reports on input use, I show that firms’ propensity to disclose details on water use worsens when a well is located within a groundwater conservation district, and a causal link between reported water use in hydraulic fracturing treatments and declining local groundwater levels. The findings contribute to a growing literature studying responses to disclosure laws and are helpful to inform a variety of discussions on resource management. But welfare questions remain, given that significant mineral owner absenteeism suggests the beneficiaries of development are often not the same individuals facing its negative effects.