Economic Analysis Methodology for the 2017–2022 OCS Oil and Gas Leasing Program
Net Benefits Analysis 1-22 November 2016
1.5.1.3 OECM Ecological Modeling
The OECM treatment of ecosystem service losses covers some but not all possible losses.
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An
appropriate evaluation of ecological and ecosystem service values involves analyzing the change in
ecological and ecosystem service values of the program relative to the No Sale Option. As in the other
categories, OECM applies this conceptual approach in its evaluation of ecological and ecosystem service
values for the program relative to the No Sale Option by accounting for changes in ecological and
ecosystem service values for several categories including ecological losses from oil spills, air quality,
commercial fishing, recreational offshore fishing, beach use, property values and aesthetics, and
subsistence harvest (BOEM 2015b).
Certain ecosystem service losses are quantified in the OECM. For the Program costs, the OECM uses the
probability of oil spills from new oil platforms and pipeline installations to estimate the associated
ecosystem service losses. For the No Sale Option, the OECM uses the increased probability/frequency of
oil spills due to increased oil imports transported by tankers to estimate the likely associated loss of
ecosystem services. In both instances, ecological losses are calculated via HEA within the framework of
a natural resource damage assessment where the cost of restoration that equates ecological losses from the
oil spill to ecological gains from restoration is used as the monetary measure of ecological damages.
The OECM does not quantify other identifiable ecological and ecosystem service losses. For example,
the net benefits analysis does not measure the effects of habitat disturbances from project footprints
associated with new oil platforms, pipeline installations, drilling rigs, and any other new infrastructure
(beyond incremental air emissions) on the OCS nor passive use losses for marine mammals and other
threatened, endangered, and sensitive species adversely affected under the PFP. The OECM also does not
count ecosystem service losses (beyond incremental air emissions) that would occur under the No Sale
Option. Such losses would arise from incremental habitat disturbances for development of additional
onshore oil and gas, renewable energy, and coal resources. Passive use values associated with terrestrial
mammals and other threatened, endangered, and sensitive species would also be adversely affected due to
incremental development of onshore energy substitutes for offshore oil and gas not developed.
The OECM estimates several types of use values associated with ecological and ecosystem services
resulting either from direct or indirect use.
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While the OECM attempts to quantify the primary
categories of ecological and ecosystem service values, it is not designed to represent impacts to unique
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Following the definition given by the Millennium Ecosystem Assessment (2003), ecosystem services can be classified into four
categories: provisioning services (goods produced from ecosystems such as food, timber, fuel, and water [i.e., commodities]);
regulating services (benefits from regulation of ecosystem processes such as flood protection, disease control, and pollination);
cultural services (nonmaterial benefits from ecosystems such as recreational, aesthetic, and cultural benefits); and supporting
services (services necessary for production of other ecosystem services such as nutrient cycling and soil formation).
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Direct use involves human physical involvement with the resources, where direct use can be either consumptive use
(e.g., activities that involve consumption or depletion of resources, such as logging or hunting) or non-consumptive
(e.g., activities that do not involve resource depletion, such as bird watching). Indirect use involves the services that support the
quality of ecosystem services or produced goods used directly by humans (e.g., climate regulation, flood control, animal and fish
refugia, pollination, and waste assimilation from wetlands).