Thursday, January 29, 2004

Finally: Exxon Valdez

Exxon Mobil Corp. has to pay severe punitive damages due to its 11 million gallons oil spill on Prince William Sound Alaska, 15 years ago. The federal judge imposed a total of $6.7 billion. This is historical decision by Judge Russel Holland of Anchorage. Exxon-Valdez case has been a classic example for explaining the rationale of contingent valuation in classrooms. Looking aback, today's decision is a culmination of economists long time debate on how to value this non-market damage (see the documented debates in Hausman, 1993: Contingent Valuation - A Critical Assessment. The editor, Jerry Hausman was one of the economists hired by Exxon. See also Richard Carson's new book. Carson led the contingent valuation study team at that time. The team proposed a severe punishment on Exxon).

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