The results illustrate the impact of compliance with environmental regulations on (a) annual cash flows; (b) ATNPV; (c) economic rent and its distribution;(34) and (d) minimum field size.
The first set of results is used to illustrate how economic rent and its distribution as royalty, state and Federal taxes, ATNPV, and bonus payments changes for a range of water depths in the without-regulation case.
Using the ratio of total payments, defined as the sum of bonus, royalty, Federal and state taxes (all in present value), to ATNPV indicates the relative distribution of economic rent between government and the firm.
The comparative impact of various combinations of environmental regulations on ATNPV for fields of different sizes is illustrated in Figure 4.
Comparing the relative impact of different regulations, the greatest impact on ATNPV is due to zero discharge of muds ("Mud 2").
Less obvious is the fact that the proportionate effect of regulations on ATNPV is much greater for smaller fields as compared with larger fields.
The results illustrated in Figure 6 suggest that in the without-regulation case, ATNPV is positive for royalty rates up to 25 percent under the conditions specified.