Working Paper

Lost Ecosystem Goods and Services as a Measure of Marine Oil Pollution Damages

May 20, 2010 | James W. Boyd

Abstract

The paper addresses the definition and measurement of liability for marine oil pollution accidents. The economic value of lost or injured ecosystem goods and services is argued to be the most legally, economically, and ecologically defensible measure of damages. This is easier said than done, however. Calculating lost ecological wealth with any precision is an enormous scientific and economic undertaking. The paper proposes practical ways to improve our futureability to calculate such losses.

As the full scope of injuries arising from the BP Deepwater Horizon oil spill in the Gulf of Mexico becomes more apparent, issues of liability will play a critical role in the cleanup. But what is the best way to measure the damages caused by the spill, in ecological and economic terms?  A disaster of this scale will quickly push our powers of ecological assessment to their limits.

In a new discussion paper, "Lost Ecosystem Goods and Services as a Measure of Marine Oil Pollution
Damages," RFF Senior Fellow James Boyd explains the concept of lost ecological wealth and its relevance to measurement of natural resource damages, showing how the gulf coast oil spill could change the equation.

Boyd says that complex natural systems, like those on the gulf coast, stymie the search for clear causal relationships between a spill and many of the damages they cause. The public should expect protracted and wasteful conflict over the injuries caused by the Deepwater Horizon spill, largely because the data and science necessary to resolve such conflicts is simply unavailable. A meaningful penalty is surely called for, says Boyd, but economic and scientific limits in this area mean the scale of that penalty is more likely to be resolved through political judgment than technical calculation. Research on ecosystem goods and services and their role in assessment of natural resource damages is a growing science and deserves more support from both the private and public sectors.  Without that support, we will be as blind to the social costs of future accidents as we are about the costs of the current tragedy.

For more analysis on this issue, visit RFF's deepwater drilling page.