The Financial Cost of Oil Spills - a review of international cost data and the factors affecting the costs of oil spills from ships

Tim Wadsworth and Jamie Stovin-Bradford

Paper presented at International Oil Spill Conference (IOSC), Ernest N. Morial Convention Center, New Orleans, Louisiana New Orleans 13-16 May 2024 

Oil spills pose significant ecological, social, and economic consequences. The response to a spill and the effects of pollution damage can give rise potentially to high costs. The financial risk of an oil spill is consequently of immense interest to policy makers and the organisations involved in funding and providing compensation and in determining risk and liability.

This paper examines the various factors affecting the cost of ship-source oil spills, considering the aspects contributing to the overall cost of an incident. The paper will provide a brief overview of the nature of oil spills from a financial point of view and the importance of understanding their costs. A review of publicly available data on the costs of past oil spills will be analysed, adjusting for a common currency and historical inflation. This will delve into the complexities of calculating the financial consequences of oil spills, drawing on case studies to illustrate the varying costs associated with different incidents.

The diverse factors influencing the cost of oil spills will be considered, including spill size and location, response and containment measures, environmental and ecological damage, socio-economic implications, legal and regulatory consequences, and considering the point of view of the enquirer. Finally, the conclusion will summarise the main findings of the paper, highlighting the need for a comprehensive understanding of the factors contributing to the cost of oil spills in relation to the International Conventions and national law, highlighting the difficulties in predicting figures and anticipating financial risk.

Categories: Economic effects, Papers