ECONOMIC EVALUATION OF THE ENVIRONMENTAL EFFECTS OF OIL POLLUTION—A PRACTICAL LESSON USING THREE CASE HISTORIES1

Abstract

ABSTRACT In connection with proposed measures to retrofit the existing oil tanker fleet with segregated ballast tanks, the Organization for Economic Cooperation and Development undertook a cost-benefit evaluation. The examination indicated that for the areas analyzed the availability of data on physical damage is severely limited. This is due partly to the fact that environmental damage data is site-specific and cannot be generalized for other areas. This makes data collection difficult and expensive and the physical evaluation of worldwide measures uncertain. The evaluation also indicated that while marginal changes in oil pollution levels might be insignificant at any particular time, their cumulative, long-term effect could be important. This cumulative effect may not necessarily be measurable with any precision. The paper also concludes that because only the short-term effects can be measured and only few of them can be valued in monetary terms, the use of “cost-benefit” analysis in the chemical sense could lead to misleading results. Finally, an argument is made for more frequent application of a modified type of quantitative analysis, which would make the evaluation process a formal one and ensure that all the relevant factors are considered.