Hindsight is a wonderful thing, but shouldn’t governments have a little more foresight when it comes to predictable disasters?
With operations underway to cap the leaking Deepwater Horizon oil well in the Gulf of Mexico, economists are already totting up the bill. So far we have somewhere around $3.5 billion of insured losses, $15 billion losses at BP (although the damage to the share price may be only temporary unless BP gets hit with additional fines under the US Clean Water act), $700 million a year for the local economy and probably a lot more won’t see the bill for until much later. Putting all of this together we are looking at a bill of up to $20 billion dollars.
The real tragedy of this disaster is not the size of the bill, the economic or ecological damage, but the fact that it could, and should have been manageable. After all, we can be reasonably sure that given the amount of oil being produced and transported around the world every day a major spillage is inevitable, and history shows us that major oils spill occur every twenty years with smaller ones happening on a far more regular basis.
While it is as difficult to prevent these type of accidents occurring as it is to prevent new strains of infection diseases emerging, i.e. impossible we are forewarned but oddly not forearmed, even though the economic cost of preparedness far outweighs the cost of disaster mitigation. Politicians seem to ‘get it’ as far as climate change is concerned, and are taking action now to avoid much bigger clean up bills in the future, but why don’t we do this in other areas?
As I prepare for another round of discussions about risk management and mitigation with the World Economic Forum in Doha this weekend, I have to wonder whether we are making the best use of our five thousand years of accumulated scientific and technological knowledge. While it is possible to hedge against corporate losses through insurance – in fact without insurance companies wouldn’t be able to take any risks at all – there is still no way we can insure the rest of the population against the outcomes of major disasters.
Or perhaps there is, and that is why we do science. If we were to instigate a global program tomorrow to tackle a major potential disaster, what would it cost? With assets of some $35 billion the Bill and Melinda Gates Foundation is tackling global health, poverty and education, and making some great strides forward as a result of its focussed initiatives. But this is a huge project tackling a wide range of issues across a very broad front, mitigating an oil spill or a global pandemic should be much cheaper.
I have looked at a number rapid screening technologies for pandemic control recently, costing between two and twenty million dollars to get to market. That’s small change compared with the estimated $70-166 billion dollar cost to the United States of an influenza pandemic.
Similarly the cost of developing technologies to mitigate oils spills is negligible in comparison to doing nothing, and much of this cost can be offset by piggy backing on existing academic research, and could be well funded by diverting only a tiny proportion of oil profits.
So when it comes to global catastophes, it can be argued that science is our only real and tangible insurance policy.