Combating eutrophication in coastal areas at risk for oil spills

Kari Hyytiäinen and Anni Huhtala

MPRA Paper from University Library of Munich, Germany

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.

Keywords: nutrient abatement measures; probability; Monte Carlo simulation; recreation; valuation (search for similar items in EconPapers)
JEL-codes: C15 C61 D61 Q52 Q53 (search for similar items in EconPapers)
Date: 2011-04-06
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Journal Article: Combating eutrophication in coastal areas at risk for oil spills (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:38087

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