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Effect of Exxon Valdez Oil Spill on the Economy

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Effect of Exxon Valdez Oil Spill on the Economy

Oiled bird being rehabilitated (Credit: Justin Sullivan / Getty Images)

What Was the Exxon Valdez Oil Spill?:

In 1989, the Exxon Valdez crashed onto the shore of Prince William Sound in Alaska, contaminating 1,300 miles of coastline with 250,000 barrels (11 million gallons) of oil. Direct contact with the oil slick killed at least 140 bald eagles, 302 harbor seals, 2800 sea otters and 250,00 seabirds within a few days. Four people died as part of the clean-up efforts. Even though it was only the 34th worst oil spill in history, its impact on the Alaskan shoreline made it the nation's biggest environmental disaster since Three Mile Island. (Source: Exxon Valdez Oil Spill Trustee Council; Fry, D. Michael,How Exxon's "Video for Students" Deals in Distortions)

Economic Impact of Wildlife Loss:

Wildlife value is measured by the cost to obtain or rehabilitate them. For example, zoos pay as much as $50,000 dollars to capture an otter. The cost of losing 2,800 of these endangered species is $140 million. Exxon paid between $40,000-$90,000 to rehabilitate them, confirming the otter's value. Harbor seals go for $20,000, so losing 302 costs $604,000. Most sea birds cost $300 each, so losing 250,000 costs $75 million. Eagles cost $22,000 to rehabilitate, so 140 are worth $3 million. Total cost for just these four species in the first week was $218.6 million. (Source: Replacement Costs of Birds and Mammals)

Economic Impact of Exxon Oil Spill:

Fisheries for salmon, herring, crab, shrimp, rockfish and sablefish were closed, with some Shrimp and salmon commercial fisheries remaining closed through 1990. Herring and salmon species never fully recovered, which means the commercial fishing industry that depends on them haven't either. Over 2,000 Alaskan Native Americans and 13,000 other subsistence permit holders lost the source of their food. This continues today, as many are afraid of being poisoned by contaminated fish.

The tourism industry immediately lost over 26,000 jobs and more than $2.4 billion in sales. By 2003, it had recovered somewhat. Passive use cost the state $2.8 billion, and it too has never fully recovered since vacationers still think of the area as contaminated. (Source:NOAA)

Now, 20 years after the spill, about 20 acres of Prince William Sound shoreline are still contaminated with oil. Two species have never come back, ten species haven't quite come back, and five are unknown. Until all species recover, the economy that depends upon them cannot fully recover, either.

Economic Impact to Exxon:

Exxon spent over $3.8 billion to clean up the site, compensate the 11,000 residents and pay fines. However, it could have been $4.5 billion more. The Alaskan court ordered Exxon to pay $5 billion in punitive damages in 1994. After 14 years of lawsuits and appeals, the U.S. Supreme Court ruled that Exxon only owed $507.5 million - about 12 hours of revenue for the giant oil company. (Source: Larry West, About.com Guide to the Environment)
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