AP Environmental Science

## Learning Outcomes

- Explain why oil spills are described as **negative externalities**
- Identify the main economic sectors harmed by oil spills, including fisheries, tourism, and transport
- Distinguish between cleanup costs, restoration costs, and compensation for lost environmental services
- Understand how damaged natural systemss create economic losses for people and communities
- Use **Deepwater Horizon (2010)** as a case study for large-scale oil spill impacts
- Apply these ideas in AP Environmental Science free-response answers

## AP Environmental Science Syllabus

For the AP Environmental Science, you are expected to understand oil spill economic effects, with a focus on the following syllabus points:

- Know that oil spills are a form of water pollution that harms both natural environmentss and human systems
- Identify oil spills as **negative externalities**, where costs are shifted to third parties
- Explain how oil spills affect commercial and recreational fisheries through contamination and closures
- Understand how tourism and recreation decline because of beach contamination and fear of contamination
- Distinguish direct response costs from longer-term restoration and compensation costs
- Know that environmental service losses include lost fishing, boating, swimming, wildlife viewing, and shoreline protection
- Understand the purpose of **Natural Resource Damage Assessment (NRDA)**
- Use **Deepwater Horizon in 2010** as a major example of large economic and ecological impacts

## Test Your Knowledge

_Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, look more closely at that area during your revision._

1. Why is an oil spill considered a negative externality?
2. How can an oil spill reduce income for people who do not work directly in oil extraction?
3. What is the difference between cleanup costs and restoration costs?
4. Why can tourism losses happen even after visible oil has been removed?
5. What was significant about the **Deepwater Horizon** spill in **2010**?

## Introduction

## Introduction

Oil spills are often taught as an example of water pollution that harms wildlife, but AP Environmental Science also expects you to think about human systems. A spill does not only kill seabirds, coat marsh plants, or reduce light penetration in water. It also interrupts fishing, damages tourism, disrupts transport, lowers business income, and creates major cleanup and restoration bills.

This matters for the exam because APES links environmental damage to economics through **natural system services**. If a coastal habitat provides seafood, recreation, storm protection, and jobs, then damaging that habitat creates financial loss as well as ecological loss. Oil spills show this link very clearly.

> **Key Term: negative externality**
> A cost of an economic activity that is experienced by people or communities who did not choose that activity and are not paid for the harm.

### Why oil spills create economic harm

An oil company may profit from extraction or transport, but when a spill happens, many costs fall on others. Fishers may lose income, hotels may lose bookings, restaurants may lose customers, and local governments may lose tax revenue. This is why oil spills are a textbook example of a negative externality.

The causal chain is worth learning carefully:

- oil spill occurs
- water, shorelines, wetlands, or fisheries become contaminated, or are believed to be contaminated
- authorities close fishing grounds, beaches, or waterways
- seafood sales, tourism, and recreation fall
- cleanup and legal costs rise
- recovery may take years, so losses continue after the initial event

Students often stop at “cleanup is expensive.” That is true, but it is incomplete. The largest social cost may be the long period during which people cannot use the environment normally.

> **Key Term: natural systems services**
> Benefits people obtain from natures, including food, water purification, recreation, shoreline protection, and support for fisheries.

Oil spills damage several kinds of environmental services at once:

- **Provisioning services**: seafood harvests decline
- **Regulating services**: wetlands and mangroves may become less effective at filtration and shoreline protection
- **Cultural services**: beaches, boating, wildlife watching, and tourism become less attractive or unavailable

This is why a spill can harm many industries at the same time.

> **Test Tip:** In FRQs, do not just say “oil spills hurt the economy.” Name the mechanism: fishery closures, beach closures, cleanup expenses, lower tourism demand, or loss of ecological services.

### Fisheries, seafood businesses, and coastal jobs

Commercial and recreational fisheries are often among the first sectors hit. This is partly because oil can directly contaminate water and organisms, and partly because regulators may close fishing areas to protect public health.

These closures matter beyond the fishers themselves. A fishery is an economic chain:

- fishers catch seafood
- processors prepare it
- distributors transport it
- restaurants sell it
- local tourism benefits from seafood demand

If the first step stops, every later step is affected.

After **Deepwater Horizon** in **2010**, fishing closures in the Gulf of Mexico covered more than **80,000 square miles** at one stage. That scale matters because it shows how an environmental event can remove access to a very large resource area, not just pollute a small beach.

Why are closures so economically damaging?

1. Fishers lose immediate income.
2. Processors have less product to handle.
3. Restaurants may lose customers if local seafood is unavailable.
4. Charter fishing businesses lose bookings.
5. Communities built around seasonal harvests lose money during the most important part of the year.

Even if seafood is later shown to be safe, the economic loss may continue because consumers remain uncertain. Public perception matters. A customer who believes seafood might be contaminated may avoid it, even when testing says otherwise.

This is an exam distinction many students miss: **economic harm can result from actual contamination and from perceived contamination**.

Some summaries of Deepwater Horizon estimated first-months losses to commercial fishing harvesters in the range of millions to over one hundred million dollars, depending on method and assumptions. You do not need exact figures memorized, but you should know the pattern: large closures caused immediate fishing losses, and the wider seafood industry lost sales, income, and jobs.

> **Key Term: fisheries closures**
> Temporary bans or limits on commercial or recreational fishing put in place to protect seafood safety, marine lifes, or both after contamination.

### Tourism, recreation, and the importance of public confidence

Tourism losses are another major category. Coastal economies often depend on beaches, boating, hotels, restaurants, wildlife viewing, and recreational fishing. An oil spill threatens all of these.

The key point is that tourism can fall even when oil does not physically reach every business. A hotel can lose bookings because visitors avoid the entire region. A beach café can lose customers because fewer people travel to the coast. A dolphin-watching company can lose income because tourists assume the experience will be unpleasant or unsafe.

This gives another clear cause-and-effect chain:

- oil spill damages beaches, marshes, water quality, or wildlife
- media coverage spreads images of contamination
- tourists cancel trips or choose another destination
- local businesses lose revenue
- local governments may lose tourism-related tax income

This happened after **Deepwater Horizon**. Recreational use losses were huge. Estimates for lost boating, fishing, and beachgoing user-days exceeded **16 million**, and recreational-use damages were valued in the hundreds of millions of dollars through **November 2011**.

Notice what is being measured here. Economists are not only counting hotel bookings. They are also counting **lost use** of natural spaces by the public.

> **Key Term: lost use value**
> The value of human activities that cannot happen while a natural resource is damaged, such as fishing, boating, swimming, or beachgoing.

A student-friendly example:

- Before a spill, a family visits a beach every weekend.
- After a spill, the beach is closed for three months.
- The family cannot use the beach, even if they did not plan to spend much money there.
- That lost benefit is still real and can be counted in environmental damage assessment.

This is why oil spill economics is wider than business accounting. It includes the value of public use of nature.

> **Test Tip:** If an FRQ asks about human impacts, mention both market losses like hotel revenue and non-market losses like lost recreation or public access. That shows stronger APES reasoning.

### Cleanup, response, restoration, and NRDA

Cleanup is the most visible cost, but it is only one category. Students should separate four related ideas:

- **response costs**: emergency action to contain and remove oil
- **cleanup costs**: labor, equipment, booms, skimmers, disposal, shoreline treatment
- **restoration costs**: projects to repair injured habitats and services
- **compensation costs**: payments for economic damage, lost use, or legal liability

These are connected, but not identical.

For example, removing floating oil with skimmers is a response cost. Replanting marsh vegetation years later is a restoration cost. Paying fishers or states for economic damage is compensation.

After large spills, the public also needs a way to assess environmental injury. In the United States, that process is called **NRDA**.

> **Key Term: Natural Resource Damage Assessment (NRDA)**
> The process used to determine how natural resources and the services they provide were injured and what restoration is needed to compensate the public.

NRDA is important because it expands the definition of damage. It asks not only, “How much did cleanup cost?” but also:

- What happened to fisheries?
- What happened to wetlands, birds, and habitats?
- What public uses were lost?
- What restoration is needed to make up for that loss?

This connects directly to natural-resource services. If a marsh no longer provides nursery habitat for fish or storm buffering for coasts, then the public loses a service, even if no one owns that marsh privately.

Another idea that can appear in more advanced discussion is **nonuse value**.

> **Key Term: nonuse value**
> The value people place on a natural resource even if they never directly use it, such as valuing the existence of a healthy coastline or wanting it preserved for future generations.

This matters because people may care that dolphins, marshes, or beaches recover even if they never visit that location. That value is harder to measure than hotel revenue, but it is still part of environmental economics.

### Deepwater Horizon as the major APES case study

For AP Environmental Science, **Deepwater Horizon** is the strongest example to know. In **2010**, an explosion on the drilling rig led to the largest marine oil spill in U.S. oil industry history. The spill lasted **87 days** and released about **3.19 million barrels**, or nearly **134 million gallons**, into the Gulf of Mexico.

Why is this case so useful for the exam?

Because it combines all the main ideas in one event:

- direct pollution of marine and coastal habitatss
- fishery closures
- tourism and recreation losses
- expensive cleanup
- long-term restoration
- damage to ecological services
- clear negative externalities

Economic figures vary by report and date, but several headline numbers are worth understanding carefully:

- BP spent more than **$14 billion** on cleanup operations at one reporting stage
- Additional payments exceeded **$15 billion** at that stage
- Total costs are often described as exceeding **$60 billion** once cleanup, settlements, restoration, fines, and compensation are included
- NOAA highlights a **$20.8 billion** settlement as the largest environmental damage settlement in U.S. history
- NOAA also notes **up to $8.8 billion** for natural resource restoration under the BP settlement

Do not treat these numbers as universal for all spills. Deepwater Horizon was unusually large. Smaller spills can still be economically serious, but on a lower scale.

A strong APES explanation would say something like this:

Deepwater Horizon harmed coastal economies because large fishing areas were closed, beaches and recreation were disrupted, tourism declined, and response plus restoration costs reached many billions of dollars. The spill also damaged ecological services, so losses continued after the visible oil was reduced.

That sentence links environmental damage to human systems, which is what the exam wants.

### How to write about oil spill economic effects in FRQs

In APES free-response questions, students often lose marks by staying too vague. Good answers use mechanism, not just labels.

Weak answer:

- “Oil spills are bad for the economy.”

Stronger answer:

- “Oil spills create negative externalities because coastal businesses that did not cause the spill lose income when fisheries close, beaches are contaminated, and tourists cancel trips.”

If asked to analyze an environmental problem, structure it as:

1. **Source**
   - drilling platform failure, tanker accident, pipeline rupture, or transport spill

2. **Environmental effect**
   - oil coats organisms, reduces light penetration, damages wetlands, harms marine food webs

3. **Economic pathway**
   - fisheries close, seafood demand drops, tourism declines, navigation is disrupted

4. **Long-term effect**
   - restoration costs, slower habitat recovery, continuing reputation damage

5. **Solution or response**
   - cleanup, restoration, compensation, stronger prevention measures

You can also show systems thinking by naming sectors beyond fishing:

- seafood processors
- charter boat operators
- marinas
- hotels
- restaurants
- beach businesses
- local governments
- shipping and port users

That breadth often separates stronger answers from basic ones.

## Key Point Checklist

_This article has covered the following key knowledge points:_

- Oil spills are major **negative externalities** because costs are shifted to fishers, tourism businesses, communities, and governments
- Economic damage includes more than cleanup; it also includes lost fisheries, tourism decline, transport disruption, and restoration
- Oil spills reduce **environmental services**, including seafood provision, recreation, and shoreline protection
- Fisheries can be harmed by contamination and by precautionary closures even when all seafood is not directly polluted
- Tourism losses can result from actual contamination and from public fear or loss of confidence
- **Lost use value** refers to the value of human activities that cannot happen during environmental damage
- **Nonuse value** refers to the value people place on natural resources even without directly using them
- **NRDA** is used to assess injury to natural resources and determine restoration needed to compensate the public
- **Deepwater Horizon (2010)** is the key U.S. case study for oil spill economic effects
- After Deepwater Horizon, Gulf fisheries were closed over a very large area and recreation, tourism, and seafood businesses suffered losses
- Cleanup, compensation, fines, and restoration for Deepwater Horizon reached tens of billions of dollars
- In APES answers, the strongest explanations use clear cause-and-effect chains linking environmental systems damage to economic loss

## Key Terms and Concepts

- negative externality
- natural systems services
- fisheries closures
- lost use value
- Natural Resource Damage Assessment (NRDA)
- nonuse value


Human Impacts on Ecosystems - Oil spill economic effects