Association Webinars: Do You See a Natural Resource Curse in Texas?



With the advances in oil and gas drilling and recovery techniques that have occurred in the last decade, the State of Texas recently experienced another oil and gas boom. This recent explosion in oil and gas production in Texas is attributable to the application of horizontal drilling and hydraulic fracturing technologies that have enabled oil and gas extraction from shale deposits.

Economic research in the 1990s consistently found evidence that resource dependent economies exhibit slower long-term growth than more diversified economies. This phenomenon came to be called the the Natural Resource Curse. While various reasons have been proposed for this resource curse, most researchers conclude that natural resource driven economic booms draw resources from non-booming export activities, lead to higher prices of non-tradables, and contribute to greater regional specialization. Most of the research in this area has focused on cross-country comparisons, but similar results have been found at both the state and county levels in the United States.

We investigate the localized economic effects of this recent oil and gas boom among non-Metropolitan Statistical Area (MSA) counties in Texas. Unlike most of the previous research that considers total regional employment, we investigate employment changes in terms of regional industrial composition and the likely inter-industry spillovers that a resource boom might engender. This is important since one explanation for the resource curse is regional specialization and the re-allocation of labor toward the booming industry.

Further, unlike earlier research on the effects of resource booms at small geographical scale, which has focused on natural gas production, this paper also examines possible effects from the rapid increase in petroleum production that occurred more or less concurrently in many counties in Texas. Additionally, we analyze oil and gas boom effects on both median and per capita county income for comparative and interpretive purposes. Lastly, our paper undertakes an analysis of the effects of the boom on property tax bases and public school finance at the school district level.

We find that, at best, direct and indirect employment effects are modest while increases in per capita county personal income can be important. However, given that we also find lesser effects on county median income, we find it likely that gains in personal income have been rather more concentrated at higher income levels. As expected, we find that the value of county property tax bases increases with increases in production levels. Also, school districts appear to benefit from the higher levels of oil and gas activity in the post-shale boom as school tax rates are lower and per pupil expenditures higher in counties with higher levels of oil and gas production.

This paper is the first, to our knowledge, to investigate the economic effects of both oil and gas extraction in relatively small geographies (counties and school districts) and to consider the effects of natural resource extraction on public finances. It is our view that increased resource mobility within small geographies, as opposed to state or national level economies, should accelerate the collateral economic impacts of a sharp expansion in natural resource extraction and facilitate identification of the ingredients that lend themselves to a natural resource curseover the longer term, if they occur, within a relatively shorter time frame. We do not find the short term response of county economies to the oil and gas boom to be predictive of a resource curse over the longer term.

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Anita R. Schiller, a National Science Foundation's Integrative Graduate Education and Research Traineeship fellow from 2006 to 2009, received her Ph.D. in Wind Science and Engineering with a concentration in Economics from Texas Tech University (TTU) in 2009. She was a Post Doctoral Research Associate at the Wind Science and Engineering Research Center at TTU (now the National Wind Institute). She was a faculty member at the Centre for Energy, Petroleum and Mineral Law and Policy, University of Dundee, UK from 2013 to 2018. Since 2018, she is an Assistant Professor (Lecturer) of Economics at Lancaster University, UK. Her research and teaching focus on environmental and natural resource economics, energy economics, natural hazards, and urban and regional issues.

In the field of environmental economics, she examines environmental justice (EJ) and willingness-to-pay (WTP) for green goods. She has published some of her EJ research in the American Journal of Agricultural Economics and the European Economic Review. A paper on WTP paper appears in the Energy Journal (2016). In urban and regional issues, Anita examines the effects of migration on regional economics and the impact of natural hazards on societies. These papers appear in American Economic Review – P&P, Regional Studies, and Natural Hazards.

Her research in the fields of energy economics and natural resource economics focused on the effects of renewable and non-renewable energy policies and the effects of extraction technologies on local economies. "Do Localities Benefit from Extraction of Local Natural Resources?" a paper co-authored with Dakshina G. De Silva and Robert P. McComb, was awarded the IAEE's Energy Economics Education Foundation's "Best Paper" award as the most outstanding paper published in The Energy Journal in 2020.

Dakshina G De Silva, Professor of Economics at the Lancaster University Management School, UK since 2012, worked at Texas Tech University from 2002 to 2011. He has held visiting or affiliated positions at University of Illinois at Urbana-Champaign, Université Paris-1, Maastricht University, Korea Institute for International Economic Policy, Wind Science and Engineering Research Center at Texas Tech University (TTU), and Economic Development Resource Center at TTU. He received his Ph.D. from the University of Oklahoma in 2002.

Dakshina does research in varied fields such as Industrial Organization, Environmental and Natural Resource Economics, Bond Markets, Networks, Regional and Urban Economics, and Applied Microeconomics. He analyses how strategic interactions of firms and policy changes affect bidding behavior in auctions. In the field of networks, he examines how a board director's past environmental performance affects their appointment to a board and affects the firm's environmental performance. In the field of urban economics and regional science, he has focused on environmental economics, the effects of university knowledge spillovers on high-tech firm start-ups, geographic concentration and firm survival, agglomeration and firm growth, the effect of migration on regional wages, and spatial correlation on bidding behavior in procurement auctions.

He was the founder and now is co-organizer of the annual Auctions, Competition, Regulation, and Public PolicyConference in Lancaster, UK. He was a co-organizer of the Network of Industrial Economists (UK) Winter Conference in Lancaster, UK in December 2013. 

In interdisciplinary research with the Wind Science and Engineering Research Center at TTU (now the National Wind Institute), he has studied topics related to labor, energy, natural hazards, and environmental economics. These projects have attracted federal and local funding. "Do Localities Benefit from Extraction of Local Natural Resources?" a paper co-authored with Robert P. McComb and Anita R. Schiller, was awarded the IAEE's Energy Economics Education Foundation's "Best Paper" award as the most outstanding paper published in The Energy Journal in 2020.

Robert P. McComb is an Associate Professor in the Department of Economics at Texas Tech University. He has been a research associate of the TTU Wind Science and Engineering Research Center since 1997, serving as Associate Director from 2005-2013. He spent five years as Assistant Vice President for Research focusing on promoting university-driven regional economic development. During this time, he promoted community wind as an economic development strategy and has continued working on the regional economic impact of wind powered electricity generation. Since that time, his research has expanded into urban and regional economics, energy, and environmental economics, yielding publications in American Economic Review – P&P, the European Economic Review, Regional Science and Urban Economics, and Regional Studies, including the paper entitled "Do Localities Benefit from Extraction of Local Natural Resources?" co-authored with Dakshina De Silva and Anita R. Schiller, which was awarded the IAEE's Energy Economics Education Foundation's "Best Paper" published in The Energy Journal in 2020.

Dr. McComb was a member of the National Institute of Building Sciences Wind Advisory Committee, advising on economic issues pertinent to the development of a national wind loss estimation methodology for FEMA. Dr. McComb received his Ph.D. in Economics from the University of Illinois in 1989. While teaching courses in Public Economics, he has also authored or co-authored numerous journal publications in the areas of deregulation and privatization, and regional economics.

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Event Date: August 25, 2021

Event Time: 10:00 - 11:00 AM Eastern Time

Topic: Do You See a Natural Resource Curse in Texas?

Speakers: Anita R. Schiller, Dakshina G De Silva, and Robert P. McComb

Price: FREE

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