Economic aspects of technological accidents: An evaluation of the Exxon Valdez oil spill on southcentral Alaska

• Main Author: Cohen, Maurie Jeremy
• Format: Text
• Language: English
• Published: ScholarlyCommons 1993
• Subjects: Urban planning|Area planning & development|Geography|Ocean engineering|Environmental science|Aquaculture|Fish production; Pacific; Sockeye; Pink salmon; Alaska; Tanner crab
• Online Access: https://repository.upenn.edu/dissertations/AAI9331767

The potential of natural disasters to generate short-term economic benefits for impacted populations has become an accepted social science notion. However, the economic dimensions of human-made disasters such as radiation releases, toxic exposures, and oil spills have not received sufficient examination to justify a similarly conclusive determination. An impression persists that human-made disasters are transient events that impose no adjustments on fundamental economic variables. Two analyses are conducted to examine the economic aspects of the Exxon Valdez oil spill on the communities of southcentral Alaska. First, a stochastic time-series model is employed to forecast the aggregate earnings that would have been achieved in the absence of the oil spill. This evaluation indicates that while the accident's proceeds were not distributed evenly across all communities in the affected region, this catastrophic event generated substantial aggregate monetary benefits in the short term. This analysis is followed by an examination of the oil spill's ex-vessel revenue impacts on each of southcentral Alaska's major fishery products (chinook, sockeye, coho, pink, chum, king crab, tanner crab, Dungeness crab, Pacific herring sac roe, Pacific halibut, and sablefish). It is concluded that the economic boom motivated by the oil spill obscured a decline in the profitability of commercial fishing and exacerbated the deterioration of international market conditions for the region's fishery products. Specifically, the accident reduced ex-vessel revenue for southcentral Alaska's commercial fishers during 1989 by an estimated amount ranging between $6.1--\$43.6 million. This analysis indicates that the oil spill's ex-vessel revenue impacts in 1990 were between $11.2--\$44.9 million. In both years ex-vessel revenue reductions were greatest for sockeye and pink salmon, while increased ex-vessel prices for Pacific halibut and sablefish marginally mitigated these declines. Employing 1988 as a baseline, these amounts represent between 1.6-11.1 percent of the ex-vessel value of southcentral Alaska's commercial fishing economy. Given the considerable imprecision inherent in economic impact analysis of complex perturbations such as the Exxon Valdez oil spill, more explicit evaluation is not readily possible. In spite of this indeterminacy, this evaluation provides a bounded interval in which one measure of the accident's economic dimensions can be considered.