Natural resource damage assessment for the Hebei Spirit oil spill: An application of Habitat Equivalency Analysis

Sixteen oil spills occurred in Korea between 1995 and 2010, including the Hebei Spirit oil spill (HSOS) in 2007, the largest (77,857 barrels) in Korean history. Yet compensation for environmental damages has never been claimed under the International Oil Pollution Compensation Fund for any of these accidents, because there is no adequate natural resource damage assessment (NRDA) procedure and there are no internationally-admissible economic quantification methods established in Korea. The objective of this study is to propose a methodology to overcome these shortcomings. We propose the use of Habitat Equivalency Analysis, which has dominated the US NRDA process for oil spills, and apply it to the HSOS as a case study. A Base Case analysis estimates the compensatory costs of fishery habitat damages (34,703.5 ha) with a 10-year recovery rate at $119.4 million. We also conduct sensitivity analyses under several alternative assumptions.