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Look Before You Lease

Reducing Fossil Fuel Dominance on Public Lands by Accounting for Option Value

By Jayni Hein, Joy Kim, and Sam Smith
January 7, 2020

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Filed under Climate Change and Energy Policy, Natural Resources, Reports, Jobs and Regulation, Safety and Consumer Protection

While the Trump administration’s goal of “energy dominance” has increased the public lands available for oil and gas development, no effort has been made to modernize the leasing system, even in the face of climate change. Our report explains how option value—which accounts for the informational value gained by delaying leasing decisions—can and should be factored into the Bureau of Land Management’s land use planning processes. Accounting for option value at multiple stages of the land use planning process would significantly improve BLM’s public lands stewardship, better protect the environment, and regain some of the economic and strategic advantages it has ceded to private developers. The report also describes case studies where BLM’s failure to consider option value has led to costly litigation and missed opportunities.