Matthew O’Keefe

Wastewater reuse in the shale gas industry reduces firms' private costs and mitigates many of the local environmental harms associated with fracking. Most reuse occurs within the firm boundary, but rival operators often exchange (or “share”) wastewater prior to reuse. I study the effect of wastewater sharing on reuse rates, transportation efficiency, and other outcomes. I find substantial private benefits from wastewater sharing, and modest external benefits. However, these benefits are diminished by the presence of large transaction costs. I explore the sources of these transaction costs and consider potential policy interventions to improve sharing markets and incentivize reuse.