Setting the Stage

Abstract

When the tanker Exxon Valdez collided with Bligh Reef on March 24, 1989, it released 11 million gallons of oil into the pristine waters of Prince William Sound and subsequently induced a torrent of valuation studies on the economic damages of the spill. The potential magnitude of Exxon’s liability unleashed a conflict between oil companies and resource trustees over measurement of these damages that has had a lasting influence on environmental valuation.¹ The con- flict led to the investment of a vast quantity of resources in valuation methods by both sides. In the struggle to establish the magnitude of economic damages something of greater significance emerged: a universal admission that resource damages represent real losses to people. Although defendants challenged the use of stated choice methods in measuring ‘non-use’ values associated with toxic spills, both plaintiffs and defendants accepted the concept of measuring damages for injury to public resources by the amount of compensation individuals in society would need in order to restore their well-being. This acceptance, characteristic of both the Exxon Valdez oil spill and other important but less spectacular cases, implicitly ratified the economic model of individual choices as the basis for economic value.

Keywords

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