Oil Spill Revisited

If you had to guess how many birds were killed by the oil spill, what would you guess? A hundred thousand? A million?

According to this government report: 2,188.

BP is apparently charged $50,000 per endangered animal killed by the spill. Which means that BP owes $109 million.

But is that the cost of all the lost birds? Is the value of a pelican really $50,000?

Planet Money has an interesting podcast on this subject. They find estimates that range from $30 to $45,000 per day. Basically, the whole valuation process of goods that have no market is difficult. The result (spoiler alert) is that a pelican is worth a pelican. Which means, that the value of a pelican is the cost of raising a replacement pelican.

So what does it cost to raise a pelican?

I found some info on a Florida bird sanctuary called Pelican Man's Bird Sanctuary. According to this article, the sanctuary was forced to close due to lack of budget and facing a $200,000 deficit. The sanctuary saved somewhere between 4,000 to 7,000 animals yearly. So if it's operating budget was $200,000 per year* and saves around 5,000 birds per year then the cost of saving a bird is $40 per bird.

According to that estimate, then BP truly owes around $87,500, not the aforementioned $109 million. Even if the government report above represents only a small faction of the true numbers of birds killed. BP could open a wildlife preserve for relatively little and replace the animals lost. You could even charge BP an interest rate on the lost animals and say BP has to replace all the dead animals and an additional 5%.

Forcing BP to pay for what it did is a good idea, wejust have to make sure it's the right amount.


*There were no reports I could find that told the cost of the sanctuary above what it made in revenues from visitors. Which means that $200,000 per year could be a wild overestimate. Just the way I like.