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Environmental economics reframe pipeline debate

10/10/12

A 750-​​mile pipeline across Canada cuts through First Nation lands and pris­tine envi­ron­ments to bring oil-​​rich tar sands to a new ter­minal on the Pacific Ocean. The com­pany behind the project, the Cal­gary, Alberta-​​based Enbridge Inc., argues that the pipeline will create thou­sands of jobs and an influx of cash from the Asian com­pa­nies that will buy and process the tar sands.

But the eco­nomic analysis pre­sented to the Cana­dian gov­ern­ment does not account for the pipeline’s envi­ron­mental impact, including the poten­tial for a spill, said Matthias Ruth, a North­eastern pro­fessor with dual appoint­ments in the Col­lege of Engi­neering and the School of Public Policy and Urban Affairs.

Ruth is at the fore­front of the emerging field of envi­ron­mental eco­nomics, which focuses on devel­oping methods to account for unquan­tifi­able envi­ron­mental con­tri­bu­tions to the economy.

He and his doc­toral stu­dent, Rebecca Gasper, a researcher at World Resources Insti­tute, tes­ti­fied before the Joint Review Panel of Canada’s National Energy Board in Sep­tember. They argued against Enbridge’s eco­nomic analysis, explaining that the oil com­pany over­stated the eco­nomic impact of its project by as many 200 times.

“There are a lot of things for which there is no market, like ecosystem goods and ser­vices — from water reten­tion and purifi­ca­tion to carbon uptake,” Ruth said. “There are a lot of costs that come from dis­turbing these envi­ron­ments that never made it into the eco­nomic analysis.”

Ruth noted that the amount of money First Nation tribes are being paid by pipeline devel­opers does not even begin to mea­sure the project’s impact on the land’s del­i­cate and long undis­turbed eco­log­ical balance.

“We’re only now begin­ning to under­stand what projects like these can do to an envi­ron­ment and the costs that come with that,” Ruth said. “But now that we can mea­sure it, we can include it in eco­nomic analyses.”

The project is sim­ilar to the stalled Key­stone Pipeline, which would deliver crude oil from Canada to loca­tions in the United States for refine­ment and export. Ruth said a sim­ilar envi­ron­mental analysis could be applied to that project, to explore whether the envi­ron­mental dam­ages from a pipeline may out­weigh its eco­nomic ben­e­fits — even when applying top engi­neering standards.

Though Ruth’s tes­ti­mony may not sway the Cana­dian panel, it has already sparked a con­ver­sa­tion with the gen­eral public and in the media, which has started cov­ering the pipeline project from an envi­ron­mental angle.

“It’s a total game-​​changer,” Ruth said. “It’s becoming clear that by pointing out these typ­i­cally non­market goals, they become part of the national energy dialogue.”

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