A DYNAMIC MODEL OF CLEANUP: ESTIMATING SUNK COSTS IN OIL AND GAS PRODUCTION
研究油气井临时关闭以避免环境修复的激励，通过动态离散选择模型评估重新激活的可能性，发现临时关闭选项被广泛用于规避环境责任。
The environmental remediation required to permanently decommission most industrial projects is an expensive, irreversible investment. Real options literature shows that temporary closure has value under uncertainty. However, even if there is no intention to restart operations, there is an incentive to label a closure as “temporary” to avoid having to remediate ongoing or future environmental externalities. I estimate a dynamic discrete choice model of closure under price and quantity uncertainty to evaluate the likelihood of reactivation. The model reveals that the option to temporarily close is being widely used to avoid environmental remediation of oil and gas wells in Canada.