| Article ID | Journal | Published Year | Pages | File Type |
|---|---|---|---|---|
| 10483878 | Resource and Energy Economics | 2005 | 14 Pages |
Abstract
The social net benefit of drilling for oil in the Arctic National Wildlife Refuge (ANWR) has been a contentious policy issue since 1998. This paper applies real option theory to the issue and asks “What price for crude oil would justify the investment in field development and the loss of an amenity (wilderness) dividend?” Trigger prices are identified for two stochastic processes; when crude oil prices evolve according to geometric Brownian motion (GBM) and when crude oil prices are mean-reverting (M-R).
Related Topics
Physical Sciences and Engineering
Energy
Energy (General)
Authors
Jon M. Conrad, Koji Kotani,