Many people view oil spills as grossly disadvantageous to everyone. In reality, there are benefits gained by some sectors from disasters like this. Read and find out how could this be so.
There was a lot of concern about wasted lives and property due to the collision of a cargo vessel and a passenger ferry last August 16, 2013 in Cebu in central Philippines. Aside from lost lives due to the accident, there were also concerns on the ill-effects of oil leaked into the environment. The sunken passenger ferry spilled thousands of liters of diesel and bunker oil that affected around 5,000 hectares of nearby coastal areas.
The oil spill in Cebu, although locally significant, pales in comparison to major oil spill disasters in human history. Among those that gained worldwide attention were the oil leaks due to a ruptured well in the Timor Sea in 2009 and a similar incident in the Gulf of Mexico in 2010. The latter one is considered the worst US environment disaster, second worldwide to the intentional oil spill during the gulf war in 1991.
Externality: Cost and Benefit of Oil Spill
These oil spills have both negative and positive externalities. An externality is a cost (negative effect) or benefit (positive effect) to a third-party as a result of an activity, transaction, or event like the oil spill. The third-party is originally not a part of the transaction, activity or event.
Oil spills are usually perceived negatively owing to the overwhelming impact to the environment and people’s livelihood especially those who are natural resource dependent. But viewing it more objectively, benefits accrue to other parties as it opens new opportunities to some sectors. While companies responsible for the disaster incurred millions of dollars to contain the spill and make reparations, benefits accrued to those tasked to do the clean-up, support services, and associated activities.
Here are lists of positive and negative externalities based on reports about the oil spill in Cebu, Timor Sea, and the Gulf of Mexico.
Negative Externalities of Oil Spill
- Fishing opportunities for thousands of fisherfolk lost due to mangrove contamination
- Reduced marine productivity due to disruption of the food chain
- Opportunity cost due to government dispatch of ships and aircraft to conduct clean-up operations
- Loss of marine and coastal wildlife (e.g. fish, birds, turtles, sea snakes, mammals)
- Loss of tourism revenue (affects surfers, beach goers, sports fishing, SCUBA diving)
- Loss of ecological function of marshlands and mud flats
- Lost income for tourism industries
- Decline in aquaculture production (e.g. seaweed farms, fish cages, shellfish beds)
- Oil price hike due to lost oil production
- Health costs for those engaged in clean-up operations
Positive Externalities of Oil Spill
- Research opportunity – universities dispatched research ship to collect samples and analyze toxicity of water; monitoring project
- Containment technology development – improved devices or techniques to contain oil spills in extremely high pressures underwater
- Local materials development to contain oil spills (e.g. coconut husks, sawdust, chicken feathers, and hair)
- Increased profit from sale of dispersants and chemical compounds that break the oil into smaller molecules
- Work for thousands of workers addressing the spill
- Income from treatment and storage of retrieved oil
- Consultancies for oil spill experts
- Better oil field operation practices to prevent future disasters
- Thousands of scoopers and respirators sold to the benefit of manufacturers
- Income from rentals of portable toilets and bedrooms
While these lists of the negative and positive externalities of the oil spill are not exhaustive, these highlight the importance of viewing things objectively. These negative and positive externalities may be valued to see the overall impact of the disaster.
It must be pointed out, however, that the expected net benefits from oil spill will likely be negative because the effect of the oil spill to the environment can last for years. And the natural environment as life support systems is priceless.
1. Rappler. (2013, August 19). Oil spill: Cebu under state of calamity. Retrieved August 29, 2013, from http://www.rappler.com/nation/36787-oil-spill-cebu-under-state-of-calamity
2. Al Jazeera. (2009, October 30). Timor sea oil leak continues. Retrieved August 29, 2013, from http://www.aljazeera.com/news/asia-pacific/2009/10/200910307564274566.html
3. Arup, T. (2009, November 3). (2009, November 3). Mud to be used to stop oil rig fire today. In The Sydney Morning Herald. Retrieved August 29, 2013, from http://www.smh.com.au/environment/mud-to-be-used-to-stop-oil-rig-fire-today-20091102-htfp.html
4. Dell’Amore, C. (2010, May 13). Gulf oil leaks could gush for years. In National Geographic Daily News. Retrieved August 29, 2013, from http://news.nationalgeographic.com/news/2010/05/100513-science-environment-gulf-oil-spill-cap-leak/
5. BBC News. (2010, May 30). Gulf of Mexico oil leak ‘worst US environment disaster.’ Retrieved August 29, 2013, from http://www.bbc.co.uk/news/1019433
© 2013 August 30 P. A. Regoniel