Risk Assessment Oil and Gas

Economic Assessment Phase

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3.4.5. Economic Assessment Phase
The economic assessment phase is concerned with the costs associated with the ecological degradation of the environment. Economic assessment is a newer area of study than the purely ecological component. Some economic costs are easy to quantify while others, such as the
“quality of life,” are less amenable to economic analysis. GIS can help with cost analysis of activities that are quantifiable, such as the cost for transportation of contaminated soil in a remediation effort. That is, the volume of soil and the distance it must be transported are calculable because the GIS is spatially based. The GIS can also reduce the remediation costs by optimizing transportation routes. Another economic cost is for emergency response. In the Komi spill, containment ponds were built for short-term storage. In the Alaskan spill, there were costs associated with immediate and long-term cleanup. In response to the costs of emergency response and remediation the concept of risk reduction was born. Risk reduction methods include enforcement and education. However, risk reduction has its own cost. The benefit of risk reduction is a balance between the cost for each dollar spent on risk reduction and the benefit of less environmental risk.
Returning to the issue of less quantifiable economic costs, we find that the Amoco environmental impact assessment (Yuganskneftegaz and Amoco, 1995) is an example of a method to address economic, social, and cultural issues associated with the proposed Priobskoye development plan. That is, in addition to the economic costs of environmental degradation caused by the oil field development, there are also economic, social, and cultural impacts to the

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resident population. In the Amoco study of the Priobskoye region the following plan for economic assessment and remediation was used:
1. Identification of economic, social, and cultural issues;
2. Preparation of a baseline profile (existing conditions of the environment);
3. Evaluation of probable changes to the social, cultural, and economic conditions; and
4. The development of mitigative measures to minimize the potential negative impacts.
Based on the experience of the EWG Oil and Gas risk assessment study, the inclusion of better data in the GIS format can improve the quality and reduce the cost of economic impact studies.

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