Introduction and Overview
Huge oil spills capture the attention of the public and policymakers alike. The recent spill off the coast of Spain involving the tanker Prestige engendered active discussion within the European Union about liability rules and the measurement of damages. This same discussion arose in the United States more than ten years earlier when the Exxon Valdez tanker spill, the largest tanker spill in U.S. waters, prompted the United States Congress to pass the Oil Pollution Act (OPA) in 1990 to help prevent the pollution of coastal waters and seas by oil.1 At about the same time, California, the country’s largest producer and consumer of petrochemical products, enacted the Lempert-Keene-Seastrand Oil Spill Prevention and Response Act (OSPRA) to help protect the State’s 1,000 miles of coastline from oil spills.2 The potentially devastating environmental and economic impact of oil spills mandates that we discover how much it is worth to prevent oil spills.
KeywordsIncome Beach Hull Barge Culmination
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- 1.OPA provisions include the establishment of tanker-free zones in environmentally sensitive areas, the use of tug escorts in certain busy tanker lanes, and the requirement that all tankers operating in U.S. waters be equipped with double-hulls by the year 2015. The act also addresses liability issues.Google Scholar
- 2.OSPRA expanded the authority, responsibility, and duties of the Department of Fish and Game for marine oil spills, emphasizing oil spill prevention as well as contingency planning, enforcement, and response. It also created the Office of Oil Spill Prevention and Response (OSPR) within the California Department of Fish and Game. OSPR works closely with the U.S. Coast Guard, the Department of Commerce’s National Oceanic and Atmospheric Administration (NOAA), and the Department of Interior’s Fish and Wildlife Service and Minerals Management Service.Google Scholar
- 3.The U.S. Coast Guard maintains several extensive databases on oil spills occurring in U.S. waters. A 1993 report by Mercer Management Consulting, Inc. for OSPR provides detailed information on California’s marine facilities and tank vessel traffic, oil spills, spill clean-up and damage costs, and coastline characteristics.Google Scholar
- 4.See Mitchell and Carson (1989) and Bateman et al. (2002) for comprehensive reviews of the theoretical and empirical basis of CV. Carson (2000) provides a non-technical overview of CV for policymakers who are considering the use of results from a particular CV study.Google Scholar
- 5.The first reported application of this methodology appears to be a 1957 study commissioned by the National Park Service ( Audience Research, Inc., 1958 ).Google Scholar
- 6.See Hanemann (1992) and Carson (forthcoming) for brief reviews of the history of CV.Google Scholar
- 7.The term passive use value was first used in Ohio v. U.S. Department of the Interior,880 F.2d 432 (D.C. Cir. 1989), and is synonymous with or inclusive of a number of other terms that have been used in the economic literature including non-use values, existence values, stewardship values, bequest values, and option values. See Carson, Flores, and Mitchell (1999) for a review of the theoretical and empirical issues related to passive use values.Google Scholar
- 8.See the series of articles in the American Agricultural Economic Association’s journal Choices (Carson, Meade, and Smith, 1993; Desvousges et al.,1993; Randall, 1993) and in the American Economic Association’s Journal of Economic Perspectives (Portney, 1994; Diamond and Hausman, 1994; Hanemann, 1994).Google Scholar
- 9.The Exxon-sponsored volume edited by Jerry Hausman (1993) serves as a comprehensive source critiquing CV. We address various issues raised by CV critics in a number of recent papers, e.g.,Carson (1997, 2000), Carson et al. (1997),Carson, Flores, and Hanemann (1998), Carson, Flores et al. (1996), Carson, Flores and Meade (2001), Carson, Flores and Mitchell (1999), Carson, Groves and Machina (1999), Carson, Hanemann et al. (1998), Carson and Mitchell (1993b; 1995), Flores and Carson (1997), Hanemann (1994; 1995; 1999), Hanemann and Kanninen (1999) and Mitchell and Carson (1995). In addition, a critique of the study reported on in this volume was funded by an unspecified group of companies and submitted to the government as a regulatory comment (Dumford et al.,1996). Our detailed response to that critique is found in Appendix L.Google Scholar
- 10.The original proposal for this estimator was by Turnbull (1976) in the biometrics literature. Carson and Steinberg (1990) and Kristrom (1990) first used variants of the estimator in a CV context. Recent contributions include Haab and McConnell (1997; 2002) and Hanemann and Kanninen (1999).Google Scholar