Economic Losses from Marine Pollution

by Ofiara, Douglas D.; Seneca, Joseph J.

• ISBN13: 9781559636094
• ISBN10: 1559636092
• Format: Hardcover
• Copyright: 2001-05-01
• Publisher: Island Pr

Summary

Marine pollution causes significant damage to fisheries and other economically productive uses of the ocean. The value of that damage can be quantified by economists, but the meanings of those valuations and how they are derived are often obscure to noneconomists.Economic Losses from Marine Pollutionbrings a fuller understanding of the variety and extent of marine losses and how they are assessed to scientists, lawyers, and environmentalists by systematically identifying and classifying marine losses and relating them to models and methods of economic valuation. The authors use a step-by-step approach to show how economists have used these methods and how they approach the problem of assessing economic damage.The book begins by describing the importance of economic valuation of marine damages, the history of concern over marine pollution, and the development of economic methodologies to assess damage from it. Following that, the book: considers types of marine pollution and their effects on organisms, ecosystems, and humans, and the corresponding economic effects of those biological impacts introduces the economic principles and methods needed to understand and to assess economic damages expresses losses from water quality impairments in terms of economic value introduces the basic economic techniques that have been developed and used to measure changes in economic value discusses how to apply those economic techniques, and presents a variety of practical examples explores limitations and problems that can arise in such applied work.Economic Losses from Marine Pollutionincludes all of the relevant economic theory together with specific examples of how that theory has been and can be applied. It offers environmental professionals with little or no background in economics the basic economic tools needed to understand economic valuations of environmental damage, and represents a unique handbook for environmental and marine scientists, lawyers, economists, policy professionals, and anyone interested in issues of marine water quality.

Author Biography

Douglas D. Ofiara is assistant professor of public policy and management in the Muskie School of Public Service at the University of Southern Maine and a visiting scholar at the Institute of Marine and Coastal Sciences, Rutgers University Joseph J. Seneca is University Vice President for Academic Affairs and professor of economics at Rutgers University

Table of Contents

Preface	xiii
Part I. Background
Introduction	3	(16)
New Bedford Harbor	3	(8)
The Economic Assessment	6	(1)
Legal Settlement	7	(1)
Cleanup and Restoration Actions	8	(2)
Conclusion	10	(1)
Introduction to the Book	11	(1)
Public Policy and Economic Assessments	12	(1)
Outline of the Book	13	(2)
Note	15	(1)
References	16	(3)
Primer on Welfare Economics and Environmental Economics	19	(26)
Background	19	(1)
Introduction to Welfare Economics	20	(5)
Prices and Distortions	21	(1)
Economic Value versus Economic Effects	22	(3)
Ex Ante Versus Ex Post Economic Measures and Perspectives	25	(3)
Introduction to Environmental Economics	28	(4)
Externality Theory	28	(3)
Economic Efficiency	31	(1)
Glossary of Economic Terminology, Measures, and Methods	32	(10)
Economic Terminology	32	(6)
Economic Measures	38	(2)
Economic Methods	40	(2)
Notes	42	(1)
References	42	(3)
Federal Legislation and Rulemaking: Marine Pollution and Economic Methods	45	(46)
Introduction	45	(1)
Federal Hazardous Substances Legislation	45	(9)
Water Quality---Clean Water Act (CWA)	46	(2)
Transportation and Ocean Dumping of Wastes (MPRSA [ODA])	48	(1)
Brownfields---Contaminated Sites (CERCLA)	49	(3)
Oil Spills (OPA)	52	(1)
Toxic Substances (TSCA)	53	(1)
Solid and Hazardous Wastes Disposal (RCRA)	53	(1)
Food and Drugs	54	(1)
Water Resource Development and River Basin Planning	54	(1)
Introduction	54	(1)
Federal Rulemaking	55	(5)
Analysis of Federal Water Resource Projects	55	(3)
Federal Economic Regulatory Analysis Procedures	58	(2)
U.S. DOI Procedures for Natural Resource Damage Assessments	60	(12)
Introduction	60	(2)
U.S. DOI NRDA Rules and Procedures	62	(10)
U.S. DOC (NOAA) Procedures for Natural Resource Damage Assessments	72	(6)
Introduction	72	(1)
NOAA NRDA Rules and Procedures	73	(5)
Summary of Federal NRDA Rules and Procedures	78	(3)
NRDA Procedures	78	(2)
Future Issues	80	(1)
Progress and Cases to Date	80	(1)
National Estuary Program Overview	81	(3)
Introduction	81	(2)
Approach to Estuary Projects Under the NEP	83	(1)
Notes	84	(1)
References	84	(7)
Water Quality Degradations in Marine Environments: Impairments and Effects	91	(22)
Introduction	91	(1)
Identifiable Substances	92	(1)
Types of Impairments	93	(1)
Ecosystem Health and Productivity: Impacts on Organisms	94	(3)
Present State of Marine Water Quality in the United States	97	(5)
Historical Evidence of Occurrence of Hazardous Substances: Evidence from the National Status and Trends Program	99	(2)
Unsafe Seafood and Fish Consumption Advisories	101	(1)
Marine Debris and Floatable Waste	102	(1)
References	102	(3)
Further Reading	105	(8)
Part II. Principles and Theory
Economic Damages and Losses: Principles and Methods of Assessments	113	(54)
Introduction	113	(1)
Economic Measures	114	(8)
Aggregate Economic Activity	115	(1)
Economic Impacts	115	(2)
Benefits in an Economic Welfare Context	117	(2)
Benefits in a Cost-Benefit Analysis Context	119	(3)
Economic Methods	122	(7)
Present Value Analysis	122	(4)
Economic Impacts: Economic Impact Analysis (Public Policy Analysis)	126	(1)
Economic Impacts: Input/Output Analysis	127	(2)
Economic Welfare Measures: Consumption Sector	129	(9)
Demand and the Concept of Economic Benefits	129	(2)
Ordinary Consumer Surplus as a Benefit Measure	131	(2)
Income and Substitution Effects of price Changes	133	(2)
Alternative Consumer Welfare Measures	135	(3)
Economic Welfare Measures: Production Sector	138	(3)
Profit as a Measure of Producer Welfare	138	(1)
Alternative Producer Welfare Measures	139	(2)
Economic Welfare Aggregation over Individual Consumers and Producers	141	(2)
Private Sector/Goods Aggregation	141	(1)
Public Sector/Goods Aggregation	142	(1)
Economic Losses versus Impacts: Measuring Net Losses due to Marine Pollution	143	(9)
Intertemporal Economic Losses	152	(1)
Scope of Analysis, Federal Criteria, and Transfers	153	(1)
Scope of Analysis	153	(1)
Federal Criteria	153	(1)
Transfers	153	(1)
Economic Value in a Total Valuation Framework	154	(1)
Simplified NRDAs (Natural Resource Damage Assessments)	154	(3)
Introduction	154	(1)
Economic Damage Assessments in Federal NRDAs	155	(2)
Technical Appendix to Chapter 5: Exact Hicksian Welfare Measures	157	(3)
Technical Appendix to Chapter 5: Economic Value in a Total Valuation Framework	160	(1)
Technical Appendix to Chapter 5: Problem of Sequencing Losses or Gains in Economic Welfare Given Multiple (Substitute) Sites	161	(2)
Note	163	(1)
References	163	(4)
Identification of Biological Effects and Subsequent Economic Effects and Losses from Water Quality Impairments and Degradations in Marine Environments	167	(30)
Introduction and Linkages	167	(3)
Linkages	168	(2)
Impairments in Marine Environments and Subsequent Economic Effects and Economic Losses	170	(23)
Damage to Habitat	170	(8)
Damage to Fish and Shellfish	178	(7)
Damage to Birds, Mammals, Sea Turtles	185	(1)
Damage to Public Health	186	(4)
Damage to Beach Use	190	(2)
Damage to Commercial and Pleasure Vessels	192	(1)
Damage to Property Value	192	(1)
References	193	(4)
Evaluation of Economic Techniques to Assess Economic Welfare Losses	197	(36)
Introduction	197	(1)
Direct Nonmarket Valuation Methods	198	(7)
Contingent Valuation Approach	198	(6)
Simulated Markets	204	(1)
Indirect or Imputed Market Valuation Methods	205	(6)
Travel Cost Approach	205	(1)
Household Production Framework	206	(1)
Travel Cost---Varying Parameter Model	207	(1)
Hedonic Travel Cost Approach	208	(1)
Random Utility Models	209	(2)
Property Valuation Techniques	211	(6)
Hedonic Price Approach	212	(3)
Repeat Sales Approach	215	(2)
Economic Methods to Value Morbidity and Mortality Health Effects	217	(3)
Human Capital or Cost-of Illness Approach	217	(1)
Willingness-to-Pay or Contingent Valuation Approach	218	(1)
Adjusted Health Value Approaches	219	(1)
Market Valuation of Rents in the Production Sector	220	(1)
Note	221	(1)
References	221	(12)
Part III. Applications
Application of Economic Techniques to Assess Economic Losses: Examples	233	(40)
Introduction	233	(1)
Contingent Valuation Approach	234	(6)
Application of the Contingent Valuation Approach	234	(2)
Contingent Valuation Approach---Examples	236	(4)
Travel Cost Approach	240	(11)
Application of the Travel Cost Approach	240	(3)
Travel Cost Approach---Examples	243	(8)
Hedonic Price Approach	251	(8)
Introduction	251	(1)
Structure of Approach	252	(5)
Hedonic Price Approach---Examples	257	(2)
Repeat Sales Approach	259	(5)
Introduction	259	(1)
Structure of Approach	259	(2)
Repeat Sales Approach---Economic Damage from PCB Contamination in New Bedford Harbor, Massachusetts	261	(3)
Insights on Use of Benefits Transfer	264	(4)
Future of Benefits Transfer	267	(1)
Applications: A Caution	268	(1)
Note	268	(1)
References	268	(5)
Case Studies: Damage to Fish-Shellfish, Public Health, Beach Use, Property Value, and Impairments to Estuaries	273	(52)
Introduction	273	(1)
Damage to Fish-Shellfish	274	(2)
Harvest Closures and Restrictions	274	(1)
Mortality---Fish-Shellfish Kills	275	(1)
Damage to Public Health	276	(2)
Unsafe Seafood---Demand Effects	276	(2)
Damage to Beach Use--Closures/Restrictions	278	(2)
Damage to Property Value---Housing, Real Estate	280	(1)
Detailed Assessments of Impairments to Resources or Improvements to Water Quality in Selected Estuaries in the U.S. EPA National Estuary Program	281	(36)
Long Island Sound Study	281	(4)
New York Bight Use Impairments	285	(16)
Buzzards Bay Project---New Bedford Harbor Impairments	301	(10)
Chesapeake Bay Program	311	(3)
Delaware Estuary Program	314	(2)
Narragansett Bay Program	316	(1)
Conclusion	317	(2)
Note	319	(1)
References	319	(6)
Restoration of Coastal Wetlands, the Role of Trustees, and Scaling Restoration Projects	325	(20)
Introduction	325	(1)
Insights on Wetlands Restoration Efforts	326	(6)
Factors and Considerations Based on NOAA-NRDA Rules	327	(1)
Parameters and Criteria in Evaluations of Wetlands Restorations	327	(1)
Restoration of a Coastal Salt Marsh---Exxon Bayway Arthur Kill Oil Spill	328	(4)
Insights on Overseers and Trustees in Restoration Efforts: Their Role, Arrangement, and Lifespan	332	(1)
Insights on Scaling Restoration Projects and Determining Optimal Size	333	(7)
Resource-to-Resource or Service-to-Service Scaling Approach	334	(2)
Valuation Scaling Approach	336	(1)
Further Insights in Scaling Projects	336	(4)
References	340	(5)
Policy Options and Future Directions: Effectiveness of Liability Rules and Future Directions for the NRDA Process	345	(6)
Introduction	345	(1)
Use of Liability Rules in Controlling Random Pollution Events	345	(1)
The Effect of Risk and Uncertainty in Liability Rules and Outcomes	346	(1)
Future Directions in NRDA and Assessing Losses from Marine Pollution	347	(1)
Note	348	(1)
References	348	(3)
Appendix A. NOAA's Damage Assessment and Restoration Program Settlements and Restoration Status (as of May 4, 1998)	351	(20)
Appendix B. Benefits Measures	371	(10)
Index	381