Safety Measures for Deepwater Drilling
The federal civil trial on the 2010 BP Deepwater Horizon spill commenced last week, with experts raising concerns about BP’s culture of prioritizing cost cutting and increasing production over ensuring adequate safety measures.
In a report prepared by RFF experts at the request of the National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, authors Mark Cohen, Madeline Gottlieb, Joshua Linn, and Nathan Richardson examine the importance of a “safety culture” in avoiding accidents in high-risk industries. They identify several policy changes to incentivize a stronger safety culture, such as raising the liability cap and requiring risk-based fees. Other key recommendations related to the oil spill can be found here.
Paying for Natural Disasters
The New Madrid Floodway diverts Mississippi River floodwater from reaching Cairo, Illinois, but local residents have taken to farming the floodway land when not in use. Now, residents are calling on the Army Corps of Engineers to fund the $165 million remodel of the floodway to better accommodate crop cultivation.
Lynn Scarlett, RFF Visiting Scholar and Co-Director of the Center for the Management of Ecological Wealth, writes that the level of risk, relative costs of doing nothing or relocating, and alternative mitigation strategies must be considered before projects are funded with taxpayer dollars. Similarly, RFF’s Sheila Olmstead and Carolyn Kousky raise concerns about “development in risky locations,” and find that “Federal polices can alter the incentives individuals face to locate in hazardous areas…or invest in risk-reducing measures.”
Carbon Tax Debates
Last week, a study by the National Association of Manufacturers found that a carbon tax could lead to reduced consumption, job loss, real wage reductions, and other negative impacts. On that same day, The Brookings Institution released a policy proposal in favor of a carbon tax, asserting that it could replace costly subsidies and encourage economic activity.
On February 27, experts from RFF, the American Enterprise Institute, and Harvard, Stanford, and Duke Universities discussed the potential costs and benefits of a carbon tax at a seminar co-sponsored by RFF and the International Monetary Fund’s Fiscal Affairs Department: “Comprehensive Tax Reform and Climate Policy.” Full video of the discussion is available here.
