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Technological Disasters and Natural Resource Damage Assessment: An Evaluation of the Exxon Valdez Oil Spill

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Abstract

Ex-post analysis can enhance assessment of the social costs of technological disasters. This paper employs a market model to evaluate the economic losses of the 1989 Exxon Valdez oil spill on southcentral Alaska's fisheries. The upper bound of the accident's first-year social costs on these resources is $108 million, approximately 27 percent of ex-vessel value. Second-year effects may have been as high as $47 million. More probable estimates of the oil spill's actual social costs are likely less than these amounts. Precise determination of the accident's impacts is constrained by the dynamic interaction of numerous biological and economic variables.
... They acknowledged that the model was difficult to validate as it is based on empirical results and past accidents. Cohen (1995) employed a market model to assess the economic impacts of the Exxon Valdez oil spill, but it does not consider the social implications of the oil spill. Kim et al. (2014), on the other hand, described the potential approach to evaluate the social and ecological impact of the Hebei Spirit oil spill on the west coast of South Korea. ...
... According to Cohen (1995), the cost of an oil spill can be categorized as follows, (i) response, (ii) natural resource damage, (iii) economic loss, (iv) legal cost, and (v) social cost. The response cost entails the containment of the spill which is geared toward reducing further oil spillage and spreading of the slick. ...
... The studies conducted by Cohen (1995), Anon (2007), and the other EIA works presented earlier have all attempted to evaluate the impact of natural disasters, such as oil spills. However, none of them possess the capacity to comprehensively evaluate the impact of an oil spill in the Arctic from shipping using provisions of specific Canadian indigenous regulations, like the LCA, and also capture the impact on the culture of the people. ...
Article
As the rate of ice melt in the Arctic increases, the potential for shipping activities is also in-creasing. However, infrastructure along the northwest passage (NWP) in Canada’s Arctic isalmost nonexistent. This presents major challenges to any response efforts in the case of anatural disaster. Also, the Arctic is home to many indigenous communities, as well as floraand fauna. Thus, it is of vital importance to protect the livelihood of the rights holders in thisarea and the Arctic marine environment. To do this, it is necessary to develop a decision-making tool to assess the potential risk of pollutants arising from increased shipping activity.Understanding such, this article assesses the impacts of a potential oil spill on communities inthe Canadian Arctic. The consequences of risk are presented using a multiperiod model whilethe likelihood is analyzed using Bayesian Network. The output of the multiperiod model isincorporated into an influence diagram for risk assessment purposes. The Bayesian modelbenefits from expert elicitation from the crew aboard a research ship passing through theNWP. Information was also obtained from marine insurance companies, government repre-sentatives, and other Arctic specialized professionals. The risk-based model is subsequentlyapplied to the Canadian Arctic area, with the aim of evaluating the impact of a potential oilspill through shipping.
... Source: a Amezcua-Linares et al. (2014); Restrepo et al. (1982); Energy Resources Co. Inc (1982); b Carson and Hanemann (1992); Cohen (1995); c Goodlad (1996); d Martinelli et al. (1995);International Oil Pollution Compensation Fund (1994); e Edwards and White (1999); Moore et al. (1998) Table 17-4 ...
... Due to concerns about contamination, many fisheries were subject to partial or full season closures following the spill. Cohen (1995) constructed a market model to estimate changes in commercial fisheries' ex-vessel revenues as a result of the spill. Specifically, Cohen (1995Cohen ( ) modeled exvessel prices and landings in 1989Cohen ( and 1990 for all southcentral Alaska fisheries in a hypothetical scenario absent the spill and compared the model forecasts to actual prices and landings. ...
... Cohen (1995) constructed a market model to estimate changes in commercial fisheries' ex-vessel revenues as a result of the spill. Specifically, Cohen (1995Cohen ( ) modeled exvessel prices and landings in 1989Cohen ( and 1990 for all southcentral Alaska fisheries in a hypothetical scenario absent the spill and compared the model forecasts to actual prices and landings. Based on these modeling results, Cohen (1995) estimated that the spill reduced ex-vessel revenues by approximately $200 million (45% reduction) in 1989 and $83 million (20% reduction) in 1990 (adjusted to year 2019 dollars). ...
... Fuente: Cohen (1995) La metodología propuesta por la autora se explica en la Figura 7. S 1 es la oferta agregada que existía antes del derrame de petróleo, mientras que S 2 es la reducción ocurrida cuando el derrame se produjo. Se asume que las curvas de oferta son casi perfectamente inelásticas dadas las cualidades propias del recurso siendo que el volumen agregado para cada tipo de pescado extraído deberá ser la misma dentro de cada estación sin importar el número de pescadores. ...
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Este artículo presenta el desarrollo que se está dando en la valoración económica de los servicios ecosistémicos y cómo la misma se relaciona como una herramienta para tomar decisiones sobre la conservación del ambiente. Para ello en primer lugar se revisa la legislación nacional al respecto, se presenta una breve descripción de la concepción teórica de la valoración económica, se definen los servicios ecosistémicos y a partir de ello se analizan algunos casos de valoración por tipos de servicios ecosistémicos. Se exponen algunas limitaciones que esta tiene para finalmente plantear hasta dónde podemos avanzar con ellas.
... Fuente: Cohen (1995) La metodología propuesta por la autora se explica en la Figura 7. S 1 es la oferta agregada que existía antes del derrame de petróleo, mientras que S 2 es la reducción ocurrida cuando el derrame se produjo. Se asume que las curvas de oferta son casi perfectamente inelásticas dadas las cualidades propias del recurso siendo que el volumen agregado para cada tipo de pescado extraído deberá ser la misma dentro de cada estación sin importar el número de pescadores. ...
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Este artículo presenta el desarrollo que se está dando en la valoración económica de los servicios ecosistémicos y cómo la misma se relaciona como una herramienta para tomar decisiones sobre la conservación del ambiente. Para ello en primer lugar se revisa la legislación nacional al respecto, se presenta una breve descripción de la concepción teórica de la valoración económica, se definen los servicios ecosistémicos y a partir de ello se analizan algunos casos de valoración por tipos de servicios ecosistémicos.
... Ex post evaluations can help people understand the scope and distribution of the social costs associated with technical disasters. In circumstances where culpability is a concern, such valuations can be used to establish compensation estimates (Cohen, 1995). ...
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Environmental economics aims to ensure that ecosystems are recognized as major contributors to human well-being and economic growth goals. Ethiopia has a degraded and deteriorated environment. This is worsened by lack of implementation of environmental economics theories to mitigate the problems. This study is a qualitative research study, which mainly depends on document analysis and the observations and personal experiences of the authors. We explore and critically analyze the theories of the environmental economics and identify a relevant theory that suits for sustainable use and management of ecosystem in Ethiopia. The justification is provided using a systematic review of the theoretical literature regarding environmental protection. The study concludes that these theories are applicable and there are inspiring reasons for Ethiopia to adopt in order to protect the continuing degradation of ecosystem, ensuring socioeconomic progress, creating equitable, just society and achieving sustainable development.
... In addition, following a major oil spill the cost of repairing damaged equipment, and remedying the affected environment and the health and safety of staff represent a huge economic loss to the oil and gas sector and the national economy (Ronza et al., 2009). There is always an aftermath of decreased production and downtime resulting in financial losses, and thus a major impact on the company's profits (Cohen, 1995). ...
Article
Environmental contamination by hydrocarbons has negative effects on human health and other receptors including air, water and land resources. Following a United Nations Environment Programme report in 2011 which concluded that remediation strategies adopted in Nigeria did not meet international best practice, the Nigerian Government is attempting to develop a fit for purpose model of managing oil-contaminated land and wetlands. It has established the Hydrocarbon Pollution Remediation Project (HYPREP) to coordinate the environmental remediation and the restoration of livelihoods of local communities in the Niger Delta, starting with Ogoniland. HYPREP has been implementing the remediation process for more than five years with limited expected sustainable outcomes. It is now 11 years following UNEP’s recommendations for environmental and livelihood restoration in the region. The challenges of effective land remediation and restoration of traditional livelihoods are explored in the context of the Niger Delta, Nigeria’s hub of oil and gas production. The preliminary appraisal indicates that HYPREP operations are bureaucratic, suffering from capacity gaps and a weak stakeholder engagement strategy. Other extant challenges include the slow implementation of recommended emergency measures, corruption and the absence of infrastructure for hazardous materials management. Additionally, HYPREP has not optimized quality assurance by engaging internationally accredited laboratories for chemical analysis of environmental samples. Opportunities exist for HYPREP to learn lessons from other regimes for effective contaminated land management. Roles for different stakeholders working towards sustainable contaminated land management in Ogoniland and the wider Niger Delta are outlined. These recommendations would benefit regions with similar contexts and contaminated land issues.
... Various studies have investigated the impacts of large oil spills on fisheries and tourism (Bonnieux and Rainelli, 2003;Cheong, 2012;Cohen, 1995;Depellegrin and Blažauskas, 2013;García-Negro et al., 2009;Garza-Gil et al., 2006;Grigalunas et al., 1986;Hill and Bryan, 1997;McCrea-Strub and Pauly, 2011;Ritchie et al., 2013;Suris-Regueiro et al., 2007). The majority of these studies observed immediate short-term losses. ...
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The MV Rena ran aground on the 5 October 2011 off the coast of New Zealand, releasing over 350 t of heavy fuel oil. The environmental effects of this spill are well documented, however, little research has been undertaken regarding the short term economic losses observed because of the spill. By looking at pre- and post-spill trends for commercial fisheries and tourism in the area, as well as the clean-up and restoration costs, the direct costs associated with the MV Rena oil spill can be estimated. Overall, net losses of NZD 45,479,017 were observed. This research adds to the limited economic reports regarding small/medium oil spills, and demonstrates that even these smaller spills are capable of having a sizeable impact on local economies.
... However, as the mechanisms, the accountability, and the way of manifesting the effects of technological disasters differ from natural disasters (Gill and Ritchie 2018), the evidence found for natural disasters is not necessarily automatically appropriate for technological disasters. Cohen (1995), when investigating the social costs arising from the 1989 Exxon Valdez oil spill on fishing, identified a social cost of more than USD 100 million. According to Zhu (2016), the Fukushima nuclear accident in 2011 caused an 18% drop in land prices within a 40 km radius of nuclear power plants one month after the event. ...
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This article analyzes the short-term economic impacts of the collapse of the ‘Fundão’ mining tailings dam, located in the Brazilian state of Minas Gerais. This event is known as the ‘Mariana Tragedy.’ It affected several municipalities in the states of Minas Gerais and Espírito Santo and can be classified as a human-made disaster. We investigate the effects on production, examining the sectors of economic activity (agriculture, industry, and services). The research design consisted of the estimation of spatial-difference-in-differences models. The results showed a negative direct effect on the total GDP ( − 6.81%), on the gross value added of agriculture ( − 12.12%), and industry ( − 15.57%). Regarding indirect effects, the positive impact on the total GDP (+ 2.69%) was a robust effect observed. No effects of the disaster were found on the service sector. The research findings contribute to the discussion on how human-made disasters affect developing economies and may provide support to build public policies for disaster prevention, mitigation, and remediation.
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Since the 1960s, social science research has distinguished technological from natural disasters. Empirical evidence on disaster-related stress, social impacts of disasters, and risk has advanced our understanding of natural and technological disasters. However, there remains a critical need for synthesis of key concepts to advance theoretical development. This dissertation explores the capacity of social capital theory to integrate important conceptual elements of technological disaster research. Focusing on the community of Cordova in Prince William Sound, Alaska, this research examines persistent social impacts of the 1989 Exxon Valdez oil spill (EVOS). Employing a mixed-method approach to explore relationships between social capital and existing technological disaster concepts, I analyze primary qualitative data collected through in-depth personal interviews and participant-observation, as well as extant quantitative data on social and psychological impacts of the EVOS. This analysis reviews different conceptualizations of social capital, highlighting issues related to the following concepts: (1) the ecological-symbolic perspective; (2) renewable resource community; (3) recreancy; (4) collective trauma; (5) corrosive community; (6) lifestyle and lifescape change; (7) ontological security; and (8) secondary disasters. Research findings suggest that social capital theory integrates existing research on technological disasters. Findings also suggest that the EVOS initiated a social capital loss spiral, hindering Cordova’s ability to take effective collective action to address local social and economic issues. Social capital loss spirals are related to: (1) individual stress and collective trauma, (2) a corrosive community, and (3) changes in lifestyle and lifescape. Although Cordovans do not attribute all of the community’s ills to the EVOS, narratives described how initial social impacts depleted stores of social capital that have yet to recover. From this perspective, diminished social capital is a secondary disaster. Communities experiencing technological disasters can employ social capital theory to enhance recovery by focusing on efforts to rebuild trust, associations, and norms of reciprocity. Conceptualizing social impacts using language of social capital theory can: (1) reduce stigma; (2) enhance survivors’ beliefs about their ability to do something to restore social capital; and (3) improve opportunities for broader public support and policy change. Finally, social capital theory holds promise for natural disaster research.
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This study assessed levels of depressive symptomatology in a household probability sample of Alaskan Native (N = 188) and Euro-American (N = 371) residents of 13 communities in Alaska. Our objective was to examine ethnic differences in both the association between depressive symptomatology and exposure to the Exxon Valdez oil spill and subsequent cleanup efforts, and in the role of family support as a moderator of exposure to this technological disaster. Level of exposure was significantly associated with mean Center for Epidemiological Studies-Depression Scale scores in both Natives (p less than .05) and Euro-Americans (p less than .01). Both ethnic groups also reported significant declines in traditional relations with increasing levels of exposure (p less than .001). However, Natives had a significantly higher mean Exposure Index score than Euro-Americans and were more likely to report working on cleanup activities, damage to commercial fisheries, and effects of the spill on subsistence activities. Depressive symptomatology was associated with reported participation in cleanup activities and other forms of contact with the oil in Natives, and reported damage to commercial fisheries, use of affected areas, and residence in a community in geographic proximity to the spill in Euro-Americans. Perceived family support was not directly associated with depressive symptoms in either ethnic group, but did serve to buffer the effects of exposure on depressive symptoms in Euro-Americans. The results suggest that cultural differences play an important role in determining the psychosocial impacts of a technological disaster, particularly with respect to exposure, appraisal of an event as stressful, perceived family support as a moderator of stress, and expression of depressive symptomatology.