BP’s Deepwater Horizon oil spill caused US$17.2 billion in environmental damage
Seven years ago on April 20, a blowout at a well operated by British oil giant caused an explosion on the offshore drilling rig and ultimately led to 134 million gallons of oil spewing into the Gulf of Mexico
New research to be published in the journal Science on April 21 quantifies for the first time the damage done to the Gulf of Mexico’s natural resources by the 2010 Deepwater Horizon disaster.
Seven years ago today, a blowout at an ultra-deepwater well operated by British oil giant BP in the Gulf of Mexico caused an explosion on the Deepwater Horizon offshore drilling rig, which BP had leased from Swiss drilling services contractor Transocean. The rig sank 5,000 feet to the Gulf floor two days later. Oil spewed from the well for 87 days until it was finally capped.
Ultimately responsible for an estimated 134 million gallons of oil pouring into the Gulf of Mexico, the Deepwater Horizon disaster is considered the largest marine oil spill in United States history. And the researchers behind the Science study estimate that it inflicted US$17.2 billion in damages on the Gulf’s natural resources.
In order to arrive at a monetary value for the harm done to the Gulf, 18 researchers, commissioned by the US National Oceanic and Atmospheric Administration in May 2010, surveyed a large, random sample of American adults. The survey took three years to develop and included information on the negative impacts to animals, beaches, coral, fish, and marshes.
While market transaction data can be used to establish how much privately owned assets are worth, determining the value of the public services provided by natural assets, which are not exchanged on markets, is much more difficult.
“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,” the authors of the study write.
“Valuation based on such surveys has been criticized because the respondents are not engaged in real transactions. Our research in the aftermath of the 2010 BP Deepwater Horizon oil spill addresses these criticisms using the first, nationally representative, stated preference survey that tests whether responses are consistent with rational economic choices that are expected with real transactions.”
After being given information on conditions in the Gulf of Mexico before and after the spill, survey respondents were told that they could help preempt future oil spills by funding a prevention program that could be viewed as 100% effective, and without which another spill would occur within the next 15 years.
Based on the survey responses they received, the researchers determined that the average US household is willing to pay US$153 for such preventive measures, and this figure was used to extrapolate the final US$17.2 billion estimate of how much the Gulf’s natural resources are worth.
“The results were eye-opening in that we could tell how much people really value marine resources and ecosystems,” Kevin Boyle, a professor of agricultural and applied economics at Virginia Tech and a co-author of the study, said in a statement.
“And even more meaningful because we did additional analysis that proved the legitimacy of oft-criticized values for environmental resources.”
Boyle added that “This is proof that our natural resources have an immense monetary value to citizens of the United States who visit the Gulf and to those who simply care that this valuable resource is not damaged.”
In September 2014, US District Judge Carl Barbier in New Orleans ruled that BP’s “reckless” operations, willful misconduct, and gross negligence led to the Deepwater Horizon disaster, and assigned 67% of the fault for it to the company.
Barbier found that Transocean and Halliburton, which was contracted to do cement work on the well, were merely negligent, and apportioned 30% and 3% of the fault to those companies, respectively.
The federal judge approved a US$20 billion settlement with BP last year, the largest environmental settlement in US history, which included US$8.8 billion for natural resource damage and a US$5.5 billion fine under the Clean Water Act.
The settlement also resolved all legal actions brought against the company by the US federal government and several state governments.
While BP’s legacy in the Gulf of Mexico will forever be tarnished by the US$17.2 billion worth of environmental damage done by the Deepwater Horizon disaster, there have been some less negative outcomes.
BP also agreed to pay US$500 million over 10 years to fund independent research into the marine environment of the Gulf of Mexico, which has so far resulted in the discovery of more than 60 species of fish that hadn’t been previously known to reside in the Gulf.
At least seven of those species have never before been described to science. And money from the settlement is also helping fund research into innovative new methods for managing fish populations in the Gulf.
Boyle suggests that the estimate he and his colleagues arrived at can be used by policy makers and the oil industry to help guide decisions on how much to spend on restoration efforts for the damage done to the Gulf’s natural resources by the Deepwater Horizon oil spill, as well as how much to invest in protections against damages from future spills.
“People value our natural resources, so it’s worth taking major actions to prevent future catastrophes and correct past mistakes,” he said.
Mike Gaworecki is a journalist based in Brooklyn, NY. He has covered environmental science, forests, and climate issues for over a decade.
Mongabay seeks to raise interest in and appreciation of nature and wildlife, while examining the impact of emerging trends in climate, technology, economics, and finance on conservation and development.