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Natural Resource Damage Assessment: Methods and Cases

Natural Resource Damage Assessment: Methods and Cases


vulnerability and sensitivity scores for a variety of potentially injured resources are added together in a manner that forces the different uses to have identical weights. Thus, a spill that causes maximal damage to shellfish but leaves salmon untouched will be deemed as damaging as a spill of similar volume that causes maximal damage to salmon but leaves shellfish untouched. The equality of values implied by these formulas is questionable. How could the link to real economic damages be strengthened without sacrificing the great simplicity of the Washington compensation tables? One possibility would be to excise the implicit value judgments from the current method and use vulnerability scores solely to generate estimates of the quantity of resources likely to have been injured. Those quantity estimates could then be translated into monetary damages per-unit value estimates from meta-analyses of casespecific damage assessments of the resources in question. Meta-analysis involves the statistical analysis of previous research results to show how environmental values obtained from various studies vary with environmental characteristics, socio-economic characteristics or other particular features of these studies (see Loomis and White (1996) for an example). In this case, very simple analysis could be done to find the mean damage associated with a unit of injury to a type of resource. Those mean values could provide a link between proxies for extent of physical injury and estimates of monetary damages. In order to perform the relevant meta-analyses, more case-specific NRDAs would need to be done to provide accurate estimates of economic damages. The results of those studies then become the data for the meta-analyses. Analysts in Washington could at least use such a technique to verify whether per-gallon damages do, in fact, range from $1 to $50 in each of the four types of receiving environments enumerated by the regulations. Finally, with the exception of recreation vulnerability, there is no way for this assessment tool to produce larger damage estimates in situations where more people were using or otherwise benefiting from the resource that is injured. This weakness is present in all of the other assessment tools described in this paper, and is further discussed in the conclusions. B. Florida Florida has the nation’s second longest coastline, rich ecological resources, and a large number of oil spills and toxic chemical releases every year. Florida’s Department of Environmental Protection (DEP) is the agency vested with trustee responsibility and authority to assess and recover the damages to the state’s natural resources associated with oil spills and chemical releases. The agency has used relatively complex assessment methods (such as travel cost analysis, in conjunction with NOAA and consultants, and habitat equivalency analysis) in cases of large spills and groundings that led to coral-reef damage. However, the great majority of NRDAs in Florida are conducted using a simplified method set out in Florida law under Chapter 376, Pollution Discharge Prevention and Removal. Section 121 of that Chapter states the Legislature’s finding that PRPs should reimburse the public for damages to natural resources even when restoration is infeasible and lost values are difficult to quantify. It sets forth a compensation schedule that is designed to allow damages to be collected when resource values are lost as a result of a moderate or small discharge, while 36

preventing excessive expenditures on the assessment process. Most of the details of the compensation schedule and its proper use are stipulated in the law itself, except that the law charges the DEP with the task of ranking non-petroleum pollutants on a one-to-three scale of harmfulness. Section 121 grants rebuttable presumption in judicial and administrative proceedings to any NRDA performed in accordance with the rules established by this law. The statute claims that the compensation schedule is based upon both restoration costs and the loss of a wide range of use (economic, scientific, recreational, educational, consumptive, and aesthetic) and non-use (ecological and intrinsic) values associated with injured or destroyed resources. The law addresses damages due to discharges into coastal and offshore waters; the compensation schedule is not readily applied to land-based discharges that result in damages to terrestrial natural resources. While the schedule utilizes less data than would a full damage assessment, it does scale the required compensation on the basis of variation in the volume of the discharge, the harmfulness of pollutant discharged, proximity of the discharge to the Florida coastal shore and/or special management areas, the type and quantity of habitat affected, and the number of endangered or threatened species that are killed as a result of the discharge. When a discharge occurs, that discharge must be reported to the proper authorities (according, for example, to provisions in the Oil Pollution Act of 1990). A Pollution Discharge Report is completed within a very short time frame (roughly six working days). If the discharge is less than 30,000 gallons, the DEP uses the compensation schedule to assess the damages. In case of a discharge greater than 30,000 gallons, the PRP may choose either to pay the amount calculated with the compensation schedule or to have a case-specific damage assessment performed and pay the damages determined by that assessment. If the PRP wants to opt for the extended damage assessment, it must notify the DEP within fifteen days of the discovery of the discharge. That choice is irreversible, even if the damages estimated using the damage assessment are greater than the damages calculated by applying the compensation schedule. Even if the PRP opts for a full damage assessment, all payment is not delayed until the assessment is complete. Within 90 days, the PRP is required to pay an amount calculated by application of the compensation schedule to the discharge assuming a volume of 30,000 gallons. Once the damage assessment is complete, the PRP must pay the state for any damages in excess of the early payment that was made. However, that initial payment represents a lower bound on the total payment for which the PRP is responsible even if the assessment yields a lower value. The details of the Florida assessment method are as follows. 8 Basic parameters for the spill and its effects are determined, and values for each of a number of scaling factors are chosen. All of these numbers are entered into Equation 8 (this formulation tracks the language of the law very closely) to determine a dollar value for the natural resource damages: where: ( ( $ 1/ gal * V * LDF * SMAF ) + ( HF * H * SMAF ) ) PCF + E C Damages ($) = * + (8) V = Volume of spill (gallons) 8 This representation of the schedule and the boxed example of its use are courtesy of Nick Stratis from the Florida DEP. 37

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