Kolloquium: Oil Spills, Water Networks, and Local Development

Abstract:
We estimate the local economic costs of oil spills in Nigeria using a hydrological network model and a staggered difference-in-differences design. Combining over 13,000 georeferenced spill in Nigeria from 2006--2019 with high-resolution information on river networks and drainage-basin topology, we construct a panel of 5 square km hexagonal cells and use their hydrological position both to measure exposure and to define the counterfactual. Cells hosting a spill or located downstream along the directed river network are treated, while nearby upstream cells provide the comparison group. Exposure reduces nighttime luminosity by 16\%, lowers the probability that a cell remains lit by 10 percentage points, and raises the share of unlit settlements by about 10 percentage points. Effects are largest at the spill site and attenuate as the exposure footprint broadens, consistent with waterborne propagation. Vegetation indices, including mangroves coverage and cropland, decline and begin to deteriorate before the largest economic changes, consistent with environmental degradation representing an early transmission channel. Complementary household evidence shows declines in consumption per capita and in employment in cells affected by the spill.