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Costs and values: The legacy of the Exxon Valdez disaster

The views expressed are those of the author and are not necessarily those of Scientific American.

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Nature,Wohlforth,oil,ExxonEditor’s note: The following is an excerpt from The Fate of Nature by Charles Wohlforth, published on June 8 by St. Martins Press. The Fate of Nature considers the burgeoning science of human nature and behavior, using Alaska as a starting point to explore our capacity to save the planet from environmental decline. As we meet a cast of characters from hippie activists to blind evolutionary scientists, from environmentalists to oil companies, we come to better understand the history of mankind’s relationship with nature and the challenges for our future life on the planet.

Few moments of outrage in the modern era have been as potent as the public sentiment after the Exxon Valdez oil spill, and probably none concerning the environment has ever been so strong. Nationally, all but 6 percent of Americans were aware of the spill; by comparison, 26 percent didn’t know the name of the vice president (Dan Quayle). Briefly, the truth lay exposed, undeniable, along a thousand-mile coast, as if a sewer had backed up with the sick, dark stuff we prefer to keep hidden. Killing the ocean slowly is much less visible, much more comfortable. Americans were ready to act, potentially to change the basic rules of this relationship. Such changes can happen; that year, 1989, the Berlin Wall fell. But, at this time for facing difficult truth, kindhearted television viewers were instead dealt the happy ending of seeing treated animals released, as if cured, rather than images of terminally disabled otters being euthanized. By denying them that truth, the U.S. Fish and Wildlife Service compounded the harm of the oil spill.

The power of the moment received precise scientific measurement in a study by leading academic researchers commissioned by the Alaska attorney general. The study rested on an interesting idea about how to value environmental injuries in lawsuits. By traditional legal measures, an otter might be worth only the resale value of its pelt, about $200. Prince William Sound obviously was worth much more, but since its intrinsic value could not be bought or sold, the market could not put a price on the damage. The concept of contingent valuation came into federal law as a way around this problem. Economists believed they could find the value of environmental goods by asking ordinary people how much they would pay to avoid losing them, with surveys that concocted plausible scenarios to make the respondents believe their answers would amount to a real vote for a tax or other authentic cost they would have to pay. The contingent-valuation study team sent interviewers to 1,599 doors, in every state, with information explaining the damage of the spill and a supposed foolproof plan to prevent another spill, without which, respondents were told, the disaster would inevitably be repeated within 10 years. The interviewers drastically understated the damage of the oil spill, both to make the study defensible and because some of the harm wasn’t yet known. In their statistical analysis, as well, the economists minimized the results at every opportunity. Thus, the study’s outcome represented the absolute least Americans were personally willing pay to prevent another Prince William Sound oil spill, a figure a half to a fifth of what it might reasonably have been—yet that price, $2.8 billion, was so high the lead state and federal attorneys discarded it as incredible and unlikely to succeed in court.

They turned out to be right. Although the government settled its cases for much less (as we’ll see later), private plaintiffs fought on. In 1994 a federal jury valued the case similarly to the survey respondents, although entirely independently, penalizing Exxon $5 billion. But Exxon fought that verdict through a series of appeals that concluded 19 years after the spill with the U.S. Supreme Court arbitrarily reducing the amount to $507 million—nothing to Exxon, the most profitable company in history, which had paid its CEO, Lee Raymond, $683 million over the 14 years the case was on appeal. As James Madison intended when he created the constitutional system, the justices acted as supreme sovereigns to protect the private property of the wealthy against the democratic will of the majority, in this case making new law on their own authority to do so.

Exxon’s victory was complete, but I am left to wonder how it could have been different without a fundamental change in society. The contingent-valuation concept doesn’t really make sense. By finding that each American house hold would pay $31 to prevent another spill, and multiplying that number by all the house holds in the United States, the economists had come up with a value of $2.8 billion for the damage to Prince William Sound. But why should only Americans have been asked—why not all the people in the world? Surely we all own the ecological integrity of the earth itself. Or, if the economists intended to measure only value for the legal owners of the land, what of the fact that the beaches and territorial waters belonged to the State of Alaska? Surveying only Alaskans would have yielded a much lower value, because they are far fewer in number. But the economic value of an object isn’t supposed to depend on who owns it.

As I consider what I would have paid to have prevented the oil spill, I realize the problem is much deeper, down in the roots of what value means. If the survey takers had asked me, I would have said I would pay everything I have, but that wouldn’t be honest—I wouldn’t give away my children’s education or my ability to manage my other obligations. Just as there is no amount of money I would accept to allow the harm, I’ll never have enough money to pay what I would offer to prevent it. The law puts dollar values on a severed arm or a dead daughter, losses that no one would accept in a willing exchange. These values have meaning only to corporations: they can use them to determine the cost of killing or dismembering people with their products, measuring the downside, for example, of selling defective merchandise.

Punishing a corporation through the legal system is like striking a chair against which you have stumbled. Exxon absorbed the hatred of a generation of coastal Alaskans without flinching, impassive, because it is not a person—it is a thing, ultimately just a set of symbols, an interchangeable subsystem in an economic machine that functions without regard to individuals’ wishes. A higher cost in dollars, even one high enough to bankrupt the company, would hardly change the system of relationships that governs our lives, and through which we are inexorably killing the oceans. Financial penalties would create stronger incentives for care, but only so long as government agencies meting out punishment remained uncorrupted by the corporations they regulate—which they never do for long.

Patrick Norman, the Chugach chief of Port Graham, said protecting the environment requires no more than that each corporate board member possess a conscience and a sense of responsibility, putting their duty to shareholders below their duty to humanity and nature. The oil companies that continue to dump petroleum waste legally in Cook Inlet north of his village use the law as it was intended to be used, as did Exxon. Justice, instead, would require them to decide not to pollute the ocean with their toxins, because it is wrong. "Even in Western culture there is a set of values people live by," Patrick said. "Maybe the Western culture needs to remember them, or re-create them."

Monetary penalties couldn’t give Exxon’s board a conscience. That kind of learning is more personal. Communities sharing the commons rely on shame and exclusion to punish those who abuse shared resources, such as those Native Mexicans who ban outsiders when scallops are scarce, and deter overfishing within their group using embarrassing sexual jokes. We would need similar tools to change the behavior of Exxon’s leaders, including the smug chairman in 1989, Lawrence Rawl, or the well-compensated Raymond, whom the company promoted to Rawl’s job after he led the U.S. subsidiary through the spill and cleanup, or the other executives who made the sloppy decisions that brought so much harm and grief. We would need to punish them as one would punish a child who needs to learn the difference between right and wrong. Then, instead of paying other people’s money to clean beaches and animals, they themselves would futilely wipe the rocks with rags. They personally would put down the oiled animals, ending the pointless suffering of each otter with quick, merciful death, as any decent person would do.

But they were not members of the Prince William Sound community and they were immune to its shaming. A real sanction for the oil spill would require a return of power to local people as they haven’t had for centuries. Give the community a tool with human meaning. Let it exclude Exxon from the sound, forever.

From The Fate of Nature by Charles Wohlforth. Copyright © 2010 by the authors and reprinted by permission of Thomas Dunne Books, an imprint of St. Martin’s Press, LLC.

Image courtesy of St. Martin’s Press, LLC


Comments 8 Comments

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  1. 1. the Gaul 4:18 pm 07/30/2010

    Without doubt, a corporation is an entity without a conscience. Let’s consider what Exxon would do if your proposal loomed in reality.
    Within days, Exxon [or some anonymous subsidiary] would relocate an office to the Sound, and ‘stack’ the voting in its favor with enough hard-pressed individuals to overwhelm the true local majority. The citizenry has long since lost to the corporate elite, backed by the judiciary who find the means to justify their bidding.

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  2. 2. scientific earthling 8:52 pm 07/30/2010

    Is this not the American way. If an American company does something nasty, protect the company, when a foreign company employs an American company to do something and the American company stuffs up destroy the foreign company.

    Hopefully American citizens will realise American companies are selfish immoral organisations, controlled by psychopaths and don’t give a damn for America or its people.

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  3. 3. outsidethebox 3:58 pm 07/31/2010

    I am always brought back to reality when someone like the author writes an impassioned plea against capitalism and then the preceeding poster puts in a totally off topic ad hawking shoes or whatever. The ad has more reality in it then did the article – we’ve all got to eat and get by somehow.

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  4. 4. tichead 1:54 pm 08/1/2010

    Sure, we all do have to eat. But we don’t have to continually crap in our collective dinner plates. Corporations have to make a profit, that is their reason for existance. But quarterly profit created from decades long and often permanent environmental pillage and plunder is not a sustainable business model.

    Would these corporate exectutives and boardmembers go home this evening and put dangerous and deadly toxins in their children’s dinner if someone offered them enough money to do so? Directly, most likely, no. But indirectly that is exactly what they are doing.

    I like the idea of corporate leadership having to personally do the dull, dirty, and dangerous work of cleaning up the messes they make for a few dimes worth of higher stock price. After they get done cleaning up, then they can go spend a day with each family affected by the mess.

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  5. 5. Steve D 1:44 pm 08/2/2010

    In all the years since Exxon Valdez, not one person, to my knowledge, has asked "What was an alcoholic doing as captain of a tanker?" The shocking answer is that it is ILLEGAL to fire someone for being an alcoholic. Surely some of the blame lies with our idiotic laws?

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  6. 6. JohnM 3:19 am 08/4/2010

    While I can agree with a lot of what this article refers to on an emotional level, I have to question the motives of the author.

    When you look at the state of our current civilization, we are where we are because of the oil industry, whether you like it or not. Just about everything that we use or consume is to a greater or lesser degree dependent on the oil indutry. Whether it’s the computer you are using right now or the food you just ate, or the car you drive, petroleum products contributed to your life.

    If you can give up using the things that oil touches and find alternatives then maybe you can be holier than the the rest of us. But in the meantime, give a thought to the real people who have <a href="">oil rig jobs</a> or oil tanker jobs that support families and depend on the income they provide. They unfortunately don’t have the luxury of an extremely liberal view of the petroleum industry.

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  7. 7. Largo 7:16 am 08/5/2010

    Admit that you really dont care about anything other than yourself. Admit you chose to be a mindless consumer of the oligopolies products. Admit that your entire existence is nothing but a sham of good intentions and little actions.

    Then change and see what you must do.

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  8. 8. 123andy 6:54 pm 08/8/2010

    I really question the ethics of Wohlforth and SA in publishing this commentary. I have worked on cleaning up the Valdez Sound after the accident. My Exxon colleagues put our best efforts and heart into it. Rawls and Raymond supported the effort without hesitation or reservation. It was an accident, and as all accidents we learn afterward how to try to avoid it. Exxon under Rawl and Raymond actually did that and created the Operation Integrity Management System which has become the model not only for the oil industry, but all manufacturing. Exxon paid all legitimate claims, and only fought a punishment decision that was excessive. And won the case after incredibly long litigation. I consider the plaintive attorneys responsible for misleading their clients in hope of higher share of the income. Was everything done right by Exxon? No, they made many mistakes, but these were not driven by greed, as it is popular to claim, but by mistakes. Some of the crew that spread fertilizer for biremediation have suffered health damage. They ate their lunch, which they laid out into the fertilizer laden deck and probably were contaminated by it. This was careless by them, and by Exxon and the EPA that approved the use of EAP-22. But I know that the responsible Exxon folks a) did not know the health hazard, and b) could not conceive that someone would put food into the wet material and then eat it. Other mistakes were made as well. The cleaning of the rocks with paper adsorbing towels was never intended as a clean up process, it was aimed at providing paid jobs for the fishermen who were kept from going out to fish and needed income and needed to be kept busy. It was not recognized that the media photos would become the symbol of the clean up effort. No good deed goes unpunished.

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