The price tag of oil spills : valuing temporal and spatial stability to prevent environmental damage from oil spills from ships

Abstract

Oil spills from ships can cause environmental damage along shorelines as the oil will float and eventually reach the shoreline. This damage threatens marine life. Further, it influences the recreational experiences on the beach and other marine activities. Thus, it creates a temporary loss of welfare. Ecosystem services do not have a market price but do possess a value. This study conducts econometric analyses of two existing contingent valuation data sets of similar oil spill environmental damage scenarios from 2015 and 2020. The benefit transfer methods used are the unit transfer with income adjustments and different specifications of the value function transfer, both temporal over a five-year period and spatial. The results contribute to improving the validity of the cost-benefit analyses of measures to reduce the occurrence of marine oil spills from ships. The study finds that the different payment methods have an unexpected outcome as the willingness to pay for the 2020 data set is much higher than expected. It shows that a budget constraint affects the willingness to pay for one-time payments if the damage scenario is extra-large and gives a policy recommendation to avoid a high number of protest bidders. Further, the study could not prove an expected Covid-19 pandemic effect on people’s willingness to pay.