Should We Drill in the Arctic National Wildlife Refuge? An Economic Perspective

Matthew Kotchen and Nicholas Burger

No 13211, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper provides model-based estimates of the value of oil in Alaska's Arctic National Wildlife Refuge (ANWR). The best estimate of economically recoverable oil in the federal portion of ANWR is 7.06 billion barrels of oil, a quantity roughly equal to US consumption in 2005. The oil is worth $374 billion ($2005), but would cost $123 billion to extract and bring to market. The difference, $251 billion, would generate social benefits through industry rents of $90 billion as well as state and federal tax revenues of $37 billion and $124 billion, respectively. A contribution of the paper is the decomposition of the benefits between industry rents and tax revenue for a range of price and quantity scenarios. But drilling and development in ANWR would also bring about environmental costs. These costs would consist largely of lost nonuse values for the protected status of ANWR's natural environment. Rather than estimate these costs and conduct a benefit-cost analysis, we calculate the costs that would generate a breakeven result. We find that the average breakeven willingness to accept compensation to allow drilling in ANWR ranges from $582 to $1,782 per person, with a mean estimate of $1,141.

JEL-codes: Q3 Q4 Q5 (search for similar items in EconPapers)
Date: 2007-07
New Economics Papers: this item is included in nep-ene and nep-env
Note: EEE PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Published as Kotchen, Matthew J. & Burger, Nicholas E., 2007. "Should we drill in the Arctic National Wildlife Refuge? An economic perspective," Energy Policy, Elsevier, vol. 35(9), pages 4720-4729, September.

Downloads: (external link)
http://www.nber.org/papers/w13211.pdf (application/pdf)

Related works:
Journal Article: Should we drill in the Arctic National Wildlife Refuge? An economic perspective (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:13211

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w13211

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().