Estimation of Environmental Damages from Mining Pollution:The Marinduque Island Mining Accident

http://www.slideshare.net/no2mininginpalawan/estimation-of-environmental-damages-from-mining-pollution-the-marinduque-island-mining-accident

[Villagers from the once mining province of Marinduque still remember - and suffer - from the worst environmental disaster to hit the Philippines exactly 15 years ago.

On March 24, 1996, Marcopper Mining Corp. accidentally spilled deadly mine tailings into the Boac River, flooding it at the rate of 5 to 10 cubic meters (one truckload) per second. Total volume of discharge was pegged at 1.5 million to 3 million cu. m., Inquirer, Thursday, March 24, 2011, p.A.16]

Estimation of Environmental Damages from Mining Pollution:

The Marinduque Island Mining Accident [1]

Ma. Eugenia Bennagen

9.0 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

The study estimated the foregone income of the residents of the Municipality of Boac whose economic livelihood activities were affected by the Marinduque Island mining accident. This estimate was used as a measure of the environmental damage from the accident-induced mining pollution inflicted on the livelihood of the local residents affected by the pollution. It also provided a minimum value of the lost market use values of the affected natural resources (i.e., river and coastal waters). The study demonstrated the application of some economic valuation methods to estimate environmental damages from pollution. The principal method used was the change-in-productivity approach to estimate foregone income from economic activities affected by mining pollution.

The present value of the estimated total damages over a 10-year period in terms of direct use values of the river and coastal waters affected by the tailings spill amounted to P180 million under the “with short-term rehabilitation” scenario and P162 million under the “with long-term rehabilitation” scenario. The estimated foregone income in 1996 of P50.1 million was slightly more than 50 percent of the total provincial income of P95.0 million and was more than twice the total municipal income of Boac of P21 million in 1996.

The study also generated economic values of the nonmarket use of the river for recreation (i.e., lost recreational values). The health impacts of the pollution as perceived by the affected local residents were also examined but were not translated into monetary values. While the estimated lost economic values from river-based recreation, primarily swimming, were not significant compared with the foregone direct use values of the river, the study revealed that rural households experienced such nonmarket losses brought about by pollution. The study suggests increased use of economic valuation methods rather than the opportunity cost method to estimate lost recreational values in similar pollution-induced incidents as part of natural resource damage assessment.

The positive opportunity cost of fetching drinking water from alternative sources brought about by the affected households’ perception that their pre-spill sources of drinking water were contaminated by the pollution, though the technical studies indicated otherwise, highlighted the need for a more effective public information to avoid incurring economic losses. This is also true with the losses incurred by the affected households who adopted mitigation measures to avoid exposure to the polluted waters.

The study examined the current policy environment in the mining sector with respect to liability-cum-compensation and the compensation process related to the implementation of the Marcopper Environmental Guarantee Fund during the two-year period following the mining accident. The survey-based estimates of economic compensation resulted in higher compensation schedules for the four major affected livelihood activities covered by the study compared with actual compensation payments. The estimated total income loss from the accident-induced pollution of P50.1 million in 1996 was twice the actual compensation paid out to the damage claimants for the same period.

Finally, the study examined some analytical issues on the efficiency effects of alternative liability rules. It observed that while current liability policies of the government are vague in terms of the nature and extent of the liability of polluters for damages arising from injury to natural resource systems, policies on damage compensation are clear and imply that a strict liability rule is enforced on polluters. The discussion also suggested that a liability-cum- compensation policy regime may be a second-best option to address the externalities problem given the difficulties of implementing Pigovian taxes or subsidies.

The study makes the following prescriptions:

1. Guidelines for the conduct of a systematic natural resource damage assessment (NRDA) for events resulting in release of hazardous substances to the environment should be formulated. These should include the three stages in damage assessment, which are injury determination, quantification of effects, and damage determination. In the first two stages, the Philippine EIS System, which is fully institutionalized, should provide the physical, technical, and even economic data required. In the damage determination stage, the guidelines should prescribe the range of valuation methods for valuing foregone natural resource services applicable in different pollution cases.

2. Government policy on the nature and extent of liability of polluters for injury on natural resource systems should be clearly defined. Moreover, the efficiency implications of alternative liability rules should be considered in the formulation of liability-cum-compensation policies.

Ala. Eugenia Bennagen