In addition to direct tax or regulation, recent research has shown how powerful the impact of mandated public disclosures can be. In a recent working paper, “Internalizing Externalities: Disclosure Regulation for Hydraulic Fracturing, Drilling Activity and Water Quality”, Bonetti, Leuz and Michelon, examine the impact of post-2010 US state level disclosure rules for newly fractured wells. By examining ground surface water around wells they show that after these disclosure rules were introduced there has been an improvement in water quality. Moreover, they show the improvement is greater in:

  • counties with more local newspapers
  • areas with more environmental NGOs
  • states with a greater concentration of publicly listed operators

This all suggests that public pressure brought about by an increase in public disclosure has an impact. To borrow a famous quote from the paper, “…Sunlight is said to be the best of disinfectants.“

This excellent paper can be found here