A study commissioned by the US National Oceanic and Atmospheric Association (NOAA) claims the BP Deepwater Horizon spill on April 20, 2010 caused $17.2 billion in damage to the Gulf Coast’s natural resources.
According to Kevin Boyle, one of the study’s authors, the group surveyed people in order to determine how much they would be willing to pay to prevent a future occurrence of an oil spill; this number would essentially assign a value to the Gulf Coast’s resources.
The study interviewed a large random sample of American adults who were told about (i) the state of the Gulf before the 2010 accident; (ii) what caused the accident; (iii) injuries to Gulf natural resources due to the spill; (iv) a proposed program for preventing a similar accident in the future; and (v) how much their household would pay in extra taxes if the program were implemented.
The average surveyed participant said they would be willing to pay $153 for a prevention program to keep a spill from happening again. The sum total would would equal $17.2 billion, the researchers concluded.
The researchers explained their method was designed to address criticism of way damages are assessed after a disaster.
Although market transactions for privately owned assets provide information about how valuable they are to the people involved, the public services of natural assets are not exchanged on markets; thus, efforts to learn about people’s values involve either untestable assumptions about how other things people do relate to these services or empirical estimates based on responses to stated-preference surveys.
Valuation based on such surveys has been criticized because the respondents are not engaged in real transactions.
The blowout and resulting explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico killed 11 workers and spilled approximately 4.9 million barrels (50,000-70,000 barrels per day) of oil into the Gulf Coast.
The incident is the largest oil spill in US history.
In July 2015, BP settled pollution claims with the federal government and the states of Louisiana, Mississippi, Alabama, Texas and Florida. The company agreed to pay $18.7 billion in damages caused by the oil spill, the largest environmental penalty in US history.
Transocean, the owner of the rig, paid $1.4 billion to the federal government in 2013 for violations of the Clean Water Act.