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The Financial Cost to Natural Resources of the BP Deepwater Horizon Spill

20 April 2017

Image credit: U.S. Coast GuardImage credit: U.S. Coast Guard

The financial value of the natural resources damaged by the 134-million-gallon BP Deepwater Horizon spill in 2010 is set at $17.2 billion. The valuation was determined by Virginia Tech researchers after a six-year study of the impact of the largest oil spill in U.S. history.

A survey developed to put a dollar value on the natural resources damaged by the event was determined by household willingness to pay for measures that would prevent similar damages should a spill of the same magnitude happen in the future. Survey information included descriptions of damaged beaches, marshes, animals, fish and coral.

The project team administered surveys to a large random sample of American adults nationwide after three years of survey development. The first round of surveys was administered face-to-face with trained interviewers while the remaining surveys were completed via mail.

Survey participants were informed of pre- and post-spill conditions in the Gulf of Mexico and what caused the oil spill. They were then told about a prevention program, which can be viewed as 100 percent effective insurance against future spill damages, and that another spill would occur in the next 15 years. With this information, participants were asked to vote for or against the program, which would impose a one-time tax on their household.

Final analysis showed that the average household was willing to pay $153 for a prevention program. This rate was then multiplied by the number of households sampled to get the final valuation of $17.2 billion.

The researchers say the 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.



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Discussion – 3 comments

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Re: The $ Cost to Natural Resources of the BP Deepwater Horizon Spill
#1
2017-Apr-20 4:10 PM

'...

Final analysis showed that the average household was willing to pay $153 for a prevention program. This rate was then multiplied by the number of households sampled to get the final valuation of $17.2 billion.

...'

.

Hmmmm. So they sampled over 110 million households? Really?

More importantly, what does the sample size have to do with the value/cost/damage? If they had limited the sample to 10 households, would the damage only have been $1,530.00?

.

And what about these corporations, now that they are officially people now, shouldn't wr count them as well. They should have to carry their weight. Want to be a person? Well get ready to contribute as much as they can get out of you.

Re: The $ Cost to Natural Resources of the BP Deepwater Horizon Spill
#2
2017-Apr-21 12:20 PM

It is a bit vague, but I think the "team administered surveys to a large random sample" means 'enough to establish an average for extrapolation to national scale', which would be about 110M households, no?

Re: The $ Cost to Natural Resources of the BP Deepwater Horizon Spill
#3
2017-Apr-21 2:34 PM

So using that logic, if 10000 people were willing to pay $1000 to see a man hung, as they did in the dark past, then that persons life is worth $10000000. But if they would only pay $2, his life is worth $20000. And, from the result achieved by such a survey, we could deduce the true value of a human life????? This is an equivalent statement to the post with a different subject matter.

I do believe I see some very flaky logic here. More reliable would be a study of what was required in dollars to correct as much as possible, plus estimates by fishermen of loss of income, plus...and so on. In reality, this is a non-determinable figure at this point, as we probably haven't seen the end of the effects.

Where did logic such as this originate? This isn't the first time I've seen such an application to determine a figure probably not attainable, but it has only been in the last few years that I've noticed such studies have been done.

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