BP recently announced that the cost to its company of the 2010 Deepwater Horizon oil spill had reached $61.6 billion. As the Washington Post reported, this is an astonishing figure — bigger than the value of Ford, Honda or General Motors.
Economists have long tried to put an economic value on our natural environment, often without clear results, but the cost to BP of the Deepwater Horizon spill is an indication of the immense value of just one environmental resource — the Gulf of Mexico. How so? The $61.6 billion paid in response to the spilling of more than 3 million barrels of oil into the gulf over 87 days includes the costs of trying to contain and clean up the mess; the economic damage to tourism, fishing and other businesses and individuals, and to governments, all of whose work was disrupted or halted by the spill; the cost of restoring natural resources after the spill; and fines for the impacts of the spill on gulf.
Each of these components makes a different point about the value of the gulf's environment:
• It is unacceptable to our society to allow substances like crude oil to befoul beaches and marshes and to kill fish and wildlife, hence the need to rapidly contain and clean up the spilling oil.
• Many thousands of people depend on a healthy gulf for their livelihoods. Tourists do not visit oiled beach resorts to spend money on hotels, restaurants and souvenirs. Commercial and recreational fishermen cannot fish in water contaminated with oil. Boaters don't launch their boats in areas affected by oil spills. Marine shipping is diverted around such disaster areas.
• Damaged resources must be repaired to restore their economic and ecological function or, at least, to offset what has been lost. Restoration is time-consuming and costly.
• And those who break environmental laws must pay fines intended to deter others from actions that might result in similar environmental damage.
The U.S. political system held BP accountable for the damage caused by the Deepwater Horizon disaster, and BP stepped up and paid the costs. In effect, these are transactions that reveal the value placed by our society on the environment — something that is often obscured in less dramatic circumstances.
The Deepwater Horizon spill, however, affected only a portion of the Gulf of Mexico within the United States. The spill was ultimately contained and, at least in part, cleaned up after a year or so. Just think about the costs in human and ecological terms of the entire gulf losing permanently its current character and use. While destroying a resource of this size is highly unlikely, we damage pieces of that whole every day. And, of course, the Gulf of Mexico is only a small part of our nation's and Earth's environment, the very real monetary value of which is incalculable — all our lives depend upon it.
In the absence of disasters like the Deepwater Horizon spill, we take the economic values of our country's precious environmental resources for granted. The cost of the BP spill is just one measure of the real value to society of those resources and is proof of the wisdom of public and private investments in environmental protection and restoration to avoid such losses and their very real consequences for the health, welfare and prosperity of our society.
Robert Bendick is director of the Gulf of Mexico Program for the Nature Conservancy and Temperince Morgan is executive director of the Nature Conservancy in Florida.