Oil spills in the Gulf of Mexico have been known to cause extensive damage to both public
Question:
Oil spills in the Gulf of Mexico have been known to cause extensive damage to both public and private oyster grounds along the Louisiana and Mississippi shores. One way to protect shellfish along the shoreline is to release large volumes of freshwater from the Mississippi River to flush oil out to sea. This procedure inevitably results in death to some of the saltwater shellfish while preventing more widespread destruction to public reefs. Oil containment booms and other temporary structures can also be used to intercept floating oil before it damages sensitive fishing grounds. If the Fish and Wildlife Service spent $110 million in year 0 and $50 million in years 1 and 2 to minimize environmental damage from one particular oil spill, what is the benefit-to-cost ratio provided the efforts resulted in saving 3000 jobs valued at a total of $175 million per year? Assume disbenefits associated with oyster deaths amounted to $30 million in year 0. Use a 5-year study period and an interest rate of 8% per year.
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