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Combating eutrophication in coastal areas at risk for oil spills

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  • Hyytiäinen, Kari
  • Huhtala, Anni

Abstract

In this study we evaluate the profitability of nutrient abatement measures in eutrophied coastal areas exposed to a risk of frequent oil spills. The case studied is the Gulf of Finland, which forms part of the Baltic Sea.We present a dynamic model that integrates land loads of nitrogen and phosphorus, cost of nutrient abatement measures in agriculture, nutrient dynamics in the sea basins adjoining the Finnish coast, exogenous risk of oil spills, and recreational value of the sea, which faces environmental damage of uncertain magnitude and duration. Monte Carlo simulation is applied to evaluate the profitability of nutrient abatement measures carried out unilaterally by Finland or as a joint effort by Estonia, Finland and Russia.We demonstrate that a high exogenous risk of oil damage may render investments in nutrient abatement economically infeasible. On the other hand, several components of the model entail uncertainties owing to the scarcity of data and our limited understanding of the relationship between the ecological processes involved and the values people place on natural resources. For example, the uncertainties related to the curvature of the value function outweigh the uncertainties connected with the oil spills and their potential consequences.

Suggested Citation

  • Hyytiäinen, Kari & Huhtala, Anni, 2011. "Combating eutrophication in coastal areas at risk for oil spills," MPRA Paper 38087, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:38087
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    References listed on IDEAS

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    1. Marita Laukkanen & Anni Huhtala, 2008. "Optimal management of a eutrophied coastal ecosystem: balancing agricultural and municipal abatement measures," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(2), pages 139-159, February.
    2. Gren, Ing-Marie, 2008. "Adaptation and mitigation strategies for controlling stochastic water pollution: An application to the Baltic Sea," Ecological Economics, Elsevier, vol. 66(2-3), pages 337-347, June.
    3. Hoel, Michael, 1991. "Global environmental problems: The effects of unilateral actions taken by one country," Journal of Environmental Economics and Management, Elsevier, vol. 20(1), pages 55-70, January.
    4. Olof Byström, 2000. "The Replacement Value of Wetlands in Sweden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 16(4), pages 347-362, August.
    5. Maria Loureiro & John Loomis & Maria Vázquez, 2009. "Economic Valuation of Environmental Damages due to the Prestige Oil Spill in Spain," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 44(4), pages 537-553, December.
    6. Brady, Mark, 2003. "The relative cost-efficiency of arable nitrogen management in Sweden," Ecological Economics, Elsevier, vol. 47(1), pages 53-70, November.
    7. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
    8. Hausman, Jerry A. & Leonard, Gregory K. & McFadden, Daniel, 1995. "A utility-consistent, combined discrete choice and count data model Assessing recreational use losses due to natural resource damage," Journal of Public Economics, Elsevier, vol. 56(1), pages 1-30, January.
    9. Keohane, Nathaniel & Van Roy, Benjamin & Zeckhauser, Richard, 2007. "Managing the quality of a resource with stock and flow controls," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 541-569, April.
    10. Montserrat Grau & Theodore Groves, 1997. "The Oil Spill Process: The Effect of Coast Guard Monitoring on Oil Spills," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 10(4), pages 315-339, December.
    11. Koikkalainen, Kauko & Laukkanen, Marita & Helin, Janne, 2006. "Abatement costs for agricultural nitrogen and phosphorus loads: a case study of South-Western Finland," Discussion Papers 11867, MTT Agrifood Research Finland.
    12. Kim, Inho, 2002. "Ten years after the enactment of the Oil Pollution Act of 1990: a success or a failure," Marine Policy, Elsevier, vol. 26(3), pages 197-207, May.
    13. Loureiro, Maria L. & Ribas, Alfonso & Lopez, Edelmiro & Ojea, Elena, 2006. "Estimated costs and admissible claims linked to the Prestige oil spill," Ecological Economics, Elsevier, vol. 59(1), pages 48-63, August.
    14. Ing-Marie Gren, 2001. "International Versus National Actions Against Nitrogen Pollution of the Baltic Sea," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(1), pages 41-59, September.
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    1. repec:eee:enepol:v:113:y:2018:i:c:p:608-620 is not listed on IDEAS
    2. Scharin, Henrik & Ericsdotter, Siv & Elliott, Michael & Turner, R. Kerry & Niiranen, Susa & Blenckner, Thorsten & Hyytiäinen, Kari & Ahlvik, Lassi & Ahtiainen, Heini & Artell, Janne & Hasselström, Lin, 2016. "Processes for the sustainable stewardship of marine environments," Ecological Economics, Elsevier, vol. 128(C), pages 55-67.

    More about this item

    Keywords

    nutrient abatement measures; probability; Monte Carlo simulation; recreation; valuation;

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis

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