What price an amphipod?

One way of valuing the damage caused by the Sea Empress disaster is to look at the claims lodged with the International Oil Pollution Compensation Fund. The latest official figures show these to range between £32 and £37 million. Clean-up costs (£22-23 million) dominate the total, followed by claims from the fishing industry (£8-11 million) and the tourist industry (£2-3 million).

These figures are defined by the Fund's compensation rules, and inevitably tell only part of the story. A fuller picture is emerging from a study commissioned by the Environment Agency from Risk & Policy Analysts (RPA). Preliminary findings were presented to the Cardiff conference by Lesley Moore of the Norfolk-based consultancy.

RPA has drawn on a wide range of information, both from Pembrokeshire and further afield, to estimate both the financial and wider economic costs of the disaster. Some costs in both categories were estimated by borrowing the results of other studies in which people were questioned about their "willingness to pay" (WTP) for particular environmental assets.

Valuing environmental costs and benefits is "not an exact science", Ms Moore cautioned, and comes with many uncertainties. Lower and upper bound costs were calculated in an attempt to cater for these.

The most readily quantified costs of the Sea Empress affair are the costs of cleaning up the oil spill, repairing the tanker and the loss of cargo. The latter two are estimated at £26-30 million, while the overall costs in this category are put at £46.5-59 million.

RPA valued the costs to the local tourist industry higher than the amounts submitted in compensation claims - in part because many smaller businesses serving tourists have not made claims. Its best estimate is £18-20 million. Costs to commercial and recreational fisheries came in much lower.

Placing values on other forms of damage caused by the spill took RPA into trickier waters. In calculating the loss of recreational value, for instance, the consultants drew on a British WTP study which elicited the values people place on access to beaches.

The values used were £1.03-5.50 per visit - interestingly, less than the £7.50 figure used by the Coastguard Agency in its cost-benefit analysis of salvage tugs (see p 25 ). Multiplied by an estimated 450,000 visits to the beach lost as a result of the pollution of the Pembrokeshire coast, these figures translate into a cost of £0.46-2.5 million. Similar procedures were used to estimate the losses to swimmers and land-yachtsmen.

Putting a price on the damage which the spill caused to the wider environment - to so-called "non-use" values - was the most difficult and controversial part of the study. Two approaches were used by RPA.

One method was to calculate the cost of replacing the marine fauna killed by the spill. This was relatively straightforward for the organisms killed in the mass "strandings" on some beaches, since the numbers involved were known. RPA's figure for this was a tiny £55,000.

But things got a little trickier when the same approach was tried with amphipods - the small crustacea virtually wiped out along the length of the Milford Haven waterway and some other areas, and which are showing few signs of recovery.

Millions of these creatures were probably killed by the spill. RPA discovered that buying replacements would cost £1.24 per head - a figure with interesting repercussions for the overall cost assessment had the numbers killed been known.

RPA eventually recoiled from the logic of the replacement cost approach, and decided not to include the figures in its overall assessment on the grounds that society would probably not be willing to pay for the probably relatively short-lived loss of small crustacea. This begs the question whether the method is applicable to any kind of damage caused by oil pollution.

The approach has other limitations. Amphipods form part of a wider food web, and valuing their loss in isolation would not take account of ecosystem effects entailing damage to local biodiversity - a general worry among local naturalists about the less visible consequences of the spill.

The alternative used by RPA has its own limitations. The consultants drew on three WTP studies to derive estimates of the "non-use" impacts: a British study of people's willingness to pay for protection of beaches against sewage pollution, a Canadian study of willingness to pay for avoidance of a moderate oil spill, and a US study of willingness to pay to avert another Exxon Valdez disaster.

There are significant questions about the legitimacy of these "benefit transfers". Sewage pollution of beaches scarcely ranks alongside the wide environmental impacts of a major oil spill. The two North American studies were the only examples RPA was able to find of the application of WTP techniques to oil spills, but even so it is a moot point whether borrowing money values from a different culture and societies with different incomes is appropriate.

A deeper question is whether WTP techniques can ever deliver results which deserve to be treated seriously. People are likely to attach "non-use" values to environmental assets in part on the basis of what they know about them - which may not be very much at all - and their current income. The suggestion that decisions on how much to spend on protecting a country's prized environmental features should be based on such foundations is to some a dangerous course.

Ms Moore did not have time to explain in detail how values obtained from the three studies were transferred to the Sea Empress research. But the final numbers were impressive, at a present value of £60, £75 and £158 million, respectively.

These figures, in fact, dominated the overall assessment of costs. RPA estimates the total financial costs at £53-109 million, while the lower and bounds of the overall economic costs were £106 and £226 million, respectively.

As the Coastguard Agency's Chief Executive Chris Harris observed, the £150 million average of the latter figure is equivalent to the cost of maintaining the Agency's salvage tugs and the Marine Pollution Control Unit for the 12 years in which a major oil spill is expected to hit the UK coast.

SEEEC Chairman Ron Edwards followed up by suggesting that, while ecologists may know the value of what was lost as a result of the spill without needing to see it expressed in financial terms, "the people who have to make the decisions and have the power do need the figures."

That was on 13 February. But three days earlier, the Government had announced what it was prepared to pay for providing emergency salvage tugs around the UK coast - and paid no attention whatever to the full findings of the cost-benefit analysis prepared expressly to inform the decision.

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