One month after crude oil began gushing into the Gulf of Mexico in April 2010, the US National Oceanic and Atmospheric Administration commissioned research to gauge the environmental cost of the BP Deepwater Horizon spill, which would ask American households what they'd pay to prevent similar damage in the future. The results are now in, with scientists placing a US$17.2 billion price tag on the damage to natural resources.
Plenty has been said about the monumental costs of the BP oil spill, which spewed 134 million gallons of oil into ocean. Last year a judge approved a $20 billion settlement over the 2010 catastrophe, which would be paid out to the Gulf states and local governments over a 16-period. BP itself concluded its own analysis soon after, placing the total costs at around $62 billion, a figure that includes payouts, cleanup and legal costs.
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But what about the damage costs to the environment specifically? How do you put a value on beaches, marshes and coral? Seeking answers to these questions, the US government-commissioned researchers took a forward-thinking – and kind of strange – approach to determining the cost of the spill's damage to natural resources. This meant placing American adults in a scenario where they could pay money to stop damage of the same magnitude occurring in the future, in an effort to attach a dollar value to individual natural resources.
The first three years of the study were dedicated to developing a survey to that effect, and the remainder was spent carrying out face-to-face talks with trained interviewers and completing further surveys via mail. Participants were informed about the conditions in the Gulf of Mexico before and after the spill, including descriptions of damaged beaches, animals and fish, along with what caused the spill in the first place. The prevention program, they were told, would be 100 percent effective in stopping damages from a future oil spill, which would occur sometime in the next 15 years.
They were then made to vote yes or no for the prevention program, which would incur a one-time tax on their households. The results of the study show that on average each household was happy to pay $152 for such a program. The researchers then multiplied this figure by the number of households sampled to get their $17.2 billion figure.
"Our estimate can guide policymakers and the oil industry in determining not only how much should be spent on restoration efforts for the Deepwater spill, but also how much should be invested to protect against damages that could result from future oil spills," said Kevin Boyle, a professor of agricultural and applied economics at Virginia Tech and one of the study's authors. "People value our natural resources, so it's worth taking major actions to prevent future catastrophes and correct past mistakes."
The research was published in the journal Science.
Source: Virginia Tech