LSI 2010 NRD Santa Fe final conference binder 072110.pdf

William H. Desvousges of W. H. Desvousges & Associates Speaker 27: 2
INTRODUCTION
In this case study of a natural resource damage assessment (NRDA), the
Plaintiff sued the owner of a former chemical facility for natural resource damages
resulting from groundwater contamination at the site. The Plaintiff’s expert used
Resource Equivalency Analysis (REA) to estimate losses at the site based on the size
of the injured plume over time and the amount of land that would have to be obtained to
provide the equivalent amount of water over time. This approach focuses exclusively
on the quantity of affected water, rather than on the service losses that may have
resulted from the injury. Both standard economic valuation principles and the principles
incorporated into the Department of Interior 43 CFR Part 11 regulations recognize that
the services a resource would have provided between the time of the injury and return
to baseline are the appropriate metric on which to base any potential compensation.
This compensation can be made either through the dollar valuation of the lost services
or through a restoration project that provides services of the same type and quality as
those that were lost. In this case, the Plaintiff’s expert ignores service losses and
calculates the cost of completely replacing the resource. In a case with no evidence of
any service losses, the Plaintiff’s expert produces an assessment of several million
dollars damages with no basis in regulations or economic theory. This paper provides
an overview of that case study and the economic issues associated with it.
SITE DESCRIPTION
This case involves the site of a former chemical facility that covers
approximately 11.2 acres and is located in a light industrial/commercial park in New
Jersey. From approximately 1976 to 1984, the facility operated as an adhesives
backed product preparation facility. Soil studies have found detectable concentrations
of chlorinated solvents at the site. In addition, groundwater samples show that the
groundwater on the site of the former facility, and areas downgradient of the site, has
been contaminated with chlorinated and non-chlorinated organic compounds.
Significant remedial work has already been accomplished at the site and further work is
planned as part of fulfilling the site remediation requirements.
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Law Seminars International | Natural Resource Damages | 07/16/10 in Santa Fe, NM