Estimating the value of lost recreation days from the Deepwater Horizon oil spill

Abstract

The 2010 Deepwater Horizon oil spill in the Gulf of Mexico was the largest ever in U.S. waters, eclipsing the 1989 Exxon Valdez spill in terms of the sheer quantity of oil released and the scale and scope of activities impacted. We developed a recreation demand model to monetize economic damages associated with lost shoreline recreational user days attributable to the spill. The unprecedented magnitude of the spill disruption led to a variety of innovations. We estimate a model of shoreline recreation trips to the Gulf Coast region from the general population of the contiguous U.S., combining single and multiple-day trips, calculating travel costs that incorporate detailed information on flying costs and transportation mode choice, and using alternative-specific constants to control for site characteristics. Losses per recreational user day are assessed using utility adjustments that reproduce the decline in recreation observed through onsite counts. Sensitivity analyses demonstrate our lost user day value is robust to changes in income imputation, nesting structure, site aggregation and spill calibration, and show the importance of accounting for flying as a mode choice. Estimated losses from the primary shoreline study are $520 million (±166) out of the total recreational damages of $661 million (2015$).