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Environmental economics reframe pipeline debate

A 750-mile pipeline across Canada cuts through First Nation lands and pristine environments to bring oil-rich tar sands to a new terminal on the Pacific Ocean. The company behind the project, the Calgary, Alberta-based Enbridge Inc., argues that the pipeline will create thousands of jobs and an influx of cash from the Asian companies that will buy and process the tar sands.

But the economic analysis presented to the Canadian government does not account for the pipeline’s environmental impact, including the potential for a spill, said Matthias Ruth, a Northeastern professor with dual appointments in the College of Engineering and the School of Public Policy and Urban Affairs.

Ruth is at the forefront of the emerging field of environmental economics, which focuses on developing methods to account for unquantifiable environmental contributions to the economy.

He and his doctoral student, Rebecca Gasper, a researcher at World Resources Institute, testified before the Joint Review Panel of Canada’s National Energy Board in September. They argued against Enbridge’s economic analysis, explaining that the oil company overstated the economic impact of its project by as many 200 times.

“There are a lot of things for which there is no market, like ecosystem goods and services — from water retention and purification to carbon uptake,” Ruth said. “There are a lot of costs that come from disturbing these environments that never made it into the economic analysis.”

Ruth noted that the amount of money First Nation tribes are being paid by pipeline developers does not even begin to measure the project’s impact on the land’s delicate and long undisturbed ecological balance.

“We’re only now beginning to understand what projects like these can do to an environment and the costs that come with that,” Ruth said. “But now that we can measure it, we can include it in economic analyses.”

The project is similar to the stalled Keystone Pipeline, which would deliver crude oil from Canada to locations in the United States for refinement and export. Ruth said a similar environmental analysis could be applied to that project, to explore whether the environmental damages from a pipeline may outweigh its economic benefits — even when applying top engineering standards.

Though Ruth’s testimony may not sway the Canadian panel, it has already sparked a conversation with the general public and in the media, which has started covering the pipeline project from an environmental angle.

“It’s a total game-changer,” Ruth said. “It’s becoming clear that by pointing out these typically nonmarket goals, they become part of the national energy dialogue.”