Christian Leuz's Transparency Solutions to Fracking Pollution

Breaking the Wall of Pollution with Transparency

Winner Interview 2024: Social Sciences and Humanities

Christian Leuz's innovative research bridges natural and social sciences to tackle the environmental impact of hydraulic fracturing (fracking). By analyzing extensive water quality and drilling data, Leuz provided the first systematic evidence linking fracking to increased contaminant concentrations in US surface waters. This groundbreaking work prompted a deeper investigation into how transparency can mitigate environmental damage. Leuz demonstrated that disclosing fracking fluids and well details significantly improved water quality by empowering local social movements to hold operators accountable. His findings underscore the power of transparency in driving environmental protection and policy change.
 

Which wall does your research or project break?

The impacts of corporate activities on the environment and society are often poorly understood and at times even shrouded in secrecy. This project aims to break this barrier created by opacity and to study how data and transparency can be used in policy and for the betterment of society. The idea to use transparency as a solution to societal and environmental problems is not new; after all, sunlight is famously said to be the best of disinfectants. However, there is not much scientific evidence for this claim and only emerging recently. In particular, it is not clear that the transparency mechanism works when corporate activities have dispersed or not immediate environmental impacts, as is the case with carbon emissions or surface water pollution. 

To answer this question, we set out to examine whether and how a transparency mandate for hydraulic fracturing changed drilling practices and water pollution. The project combines natural and social science and involves two studies. In the first, we examine the impact of hydraulic fracturing on surface waters (e.g, rivers). This effect was a major concern about fracking but scientific evidence of widespread impact did not exist. The US Environmental Protection Agency reviewed the scientific literature in 2016 and concluded that impact of fracking is limited to isolated instances. Our research shows that this assessment is too optimistic. We leveraged large amounts of water quality and drilling data in geo-spatial designs along with empirical techniques from economics to provide the first systematic evidence that fracking increases contaminant concentrations in US surface waters across several shales and in many watersheds. 

Armed with this link between fracking and water pollution, we pursue the second question of what transparency can do to reduce environmental impact. We show that state disclosure regulation for fracking wells and the chemical fluids used in fracking led to significant and lasting improvements in water quality. Moreover, we show that transparency regulation did so by enabling social movements that put pressure on operators locally. Consistent with the idea that transparency creates public pressure, we document increases in local news coverage of fracking-related environmental impacts, in the number of volunteers at local anti-fracking NGOs, and in the occurrence of local anti-fracking protests.

What are the three main goals of your research or project?

The main aim of the project is to better understand how we can leverage data and transparency in policy and for the betterment of society. Data enables us to provide scientific evidence of the environmental or societal impacts of corporate activities. This is a critical first step and key to environmental policies. Moreover, transparency can enable the public to exert pressure, assign blame, or quantify damages. Doing so should in principle incentivize firms to reduce pollution or their impacts. But disclosure rules do not always work as intended. Whether they are effective depends on the accessibility and dissemination of the information and the extent to which the publicity creates sufficient pressure, i.e., allows users to take actions that are indeed costly to firms. 

Our first project on the surface impact of fracking is a good illustration for the power of data. Until we leveraged large amounts of water quality and drilling data in geo-spatial designs, it was not known that fracking had systematic impact on U.S. surface waters. Our second project analyzes the effectiveness of targeted transparency for corporate activities with dispersed externalities and, specifically, how transparency regulation creates public pressure. In addition, it provides a long-run assessment of the environmental impact of HF on U.S. surface water quality as well as the first empirical analysis of state environmental disclosure rules with respect to water pollution. Lastly, our aim is to present evidence on the environmental impact of fracking on U.S. surface waters for an extended time period that covers much of the fracking boom. Such evidence is not only important in light of the public controversy about fracking, but also when considering its role for U.S. energy supply. 

Fracking is considered the most important innovation in the energy sector since the introduction of nuclear energy, and it has dramatically increased U.S. energy production and lowered consumer prices. But the rise of fracking has also been very controversial due to associated health and environmental risks, including air and water pollution. Chief among them are concerns about the chemicals in the fracking fluids and the large amounts of wastewater that fracking generates, despite claims by the industry that environmental and health risks are limited.

What advice would you give to young scientists or students interested in pursuing a career in research, or to your younger self starting in science?

Be curious and ask lots of questions. Read very broadly and don't be afraid to venture into neighboring domains or even domains that seem completely outside your main field of interest or study. New ideas or insights are often created "at the fringe" of fields or when we combine insights from different fields of study. Invest in the foundations of your field and its methods, and train yourself broadly. Start early on to exchange your ideas with others. This makes the scientific process much more fun.

What inspired you to be in the profession you are today?

It was a combination of factors. For one, the academic freedom - the idea to pursue questions and ideas, to go wherever my mind goes. And also my academic advisor, Dieter Ordelheide, who provided an inspiring example (but sadly passed away too soon).  

What impact does your research or project have on society?

It helps us better understand how we could leverage transparency in environmental policy, but also what its limitations are.

What is one surprising fact about your research or project that people might not know?

It is probably surprising for people to learn that we were able to produce and publish our study on the surface water impact of fracking in Science even though we are social scientists. But we received generous advice and valuable feedback from colleagues with the relevant scientific backgrounds along the way.

What’s the most exciting moment you've experienced over the course of your research or project?

The exchange with other scientists in fields that are quite far from my own. It was exciting but also humbling to see how willing they were to help us (social scientists) to work on something that was quite far from our core area of expertise and how open they were to engage with us.