There’s a fun set of posts up at the Environmental Economics blog that I highly recommend checking out. In the first post John Whitehead constructs a fantastic little model for relating trigger price (the price of oil at which it becomes economically viable to drill in the Arctic National Wildlife Refuge) to household willingness to pay (or existence value) for lost profits due to environmental concerns. In the second post he builds in a ten year gap between the decision to drill and the commencement of drilling and explores the effect of different discount rates. At the very end John also offers a link to the spreadsheet that he used to make his calculations, so if you’re inclined to tinker, you can play with the model yourself.

Happy drilling!