The Distributional Justice of Oil Industry Social Development Projects and Oil Field Production Activities

Abstract

In order to share the benefits of oil production with people living in extraction areas, the oil industry targets social development investments and projects to communities most affected by production activities. Yet, the effectiveness of industry-led community development projects remains unclear and under explored. In this study, we use a benefit-sharing, distributional justice framework to assess the efficacy of social development projects among 11 municipal governments and 114 local communities in the Tampico-Misantla Basin, a major oil extraction region in Mexico. To test for distributional justice, we use geospatial, rapid rural appraisal, and government data to compare the spatial overlap of oil production, pipelines, recent drilling activity, well counts, state-funded public works, and social marginalization indexes to social development infrastructure (e.g. paved roads, schools, bridges). We explain the uneven distribution of risks and benefits among some rural communities as the result of premature investments in social development projects, party politics, corruption, community capacity, and proximity to urban areas. This study contributes an empirical approach to evaluate distributional justice in oil extraction areas. It also provides insights into Mexico’s oil sector during a period of significant neoliberal restructuring, most recently with the 2014 Energy Reforms.