What Is the Ecological and Socio-Economic the Damages?
The BP oil spill is considered as the major marine oil spill in US history. The reason behind the oil spill was an explosion on the Deepwater Horizon offshore oil platform. It was manifested that Macondo well spilled about five million barrels of oil and the Gulf of Mexico was poured with about 4.2 million barrels. Because of this incident, the ecological balance of this area has been immensely disturbed, and it has a great impact on the environment. Besides this, the incident has significant financial implication, and due to this event, the BP oil company has faced a substantial amount of monetary losses (Briggs, 2011). Hence, it is witnessed that this event has a considerable amount of ecological and socio-economic damage. Moreover, it raises the questions about the social accountability or environmental reporting of the business organization. Beside this, it also raises the question on the role of regulators who are basically the politicians about this particular matter. Moreover, the undertaken article throws light on the motivational factors which influence the regulators to bring the policy and law to protect the environment (Bard, 2015).
Points of discussion
In the year 2011, income statement was released by BP for the fourth quarter for the year 2010. The statement depicted the tax charge of amount US$40.9 billion of the Deepwater Horizon oil spill. It included US$17.7 billion costs incurred effectively for the year 2010. The charges related to the incident was treated as the non-operating items and deducted from the taxable incomes (Barron, 2011). An escrow account of amount US$20 billion was included, and it was established by the sale of the United States assets over the next three and half year. In order to satisfy the legitimate claims, escrow account was made available by the Gulf Coast Claims Facility, local response costs, final judgements in the litigation settlements, cost related to damages of natural sources and local responses costs. BP decided to fund up for the ten-year research program for an amount of $500 million after studying the impact of the Mexico Gulf oil spill and associated response on the shoreline and marine ecosystems. An amount of $360 million was also decided to be funded by the group which is the cost related to the Louisiana barrier island project. However, the charge does not depict any amount related to the penalties and fines, except for the cost arising from the strict liability comes under the Clean Water Act. BP argued that it was not possible to show a number of additional amounts (Tretkoff, 2011).
Role of regulators and motivations of politicians as regulators
The major responsibilities which are illustrated by the government are depicted to be involved in the form of managing and regulating the direction of the overall behavior of the institutions and the individuals. The formation of the business institution and also the involvement of the internal standard setting are depicted by the involvement of the key activities which comprises of the self-regulatory policies (Jones and Plourde, 2011). Therefore, it is evident that the critical and the string policing characteristics are formed in the structure of the self-regulatory controls and also the measurement of the responsibilities cannot be appropriately abdicated in the case of the health and the public safety measures. Therefore, the roles of the regulator and the motivation of the politicians in the form of the regulators are provided in the following points: -
- Logic regarding the self-policing: The regulations and the rules are constructed for the purpose of providing the appropriate management of the conduct in an appropriate way. The support for the key standard settings is a part responsible for the self-policing, and also it is considered in the form of the revenues.
- The restrictions regarding the unregulated self-policing: The firm’s self-policing are not considered in the form of the replacements for the regulators and also it helps in providing the key services as it is considered to be the most important for the risk examinations (Henkel, Sigel and Taylor, 2014).
Ecological and socio-economic damages
The spilling of oil which is undertaken by the BP is creating a significant impact on the environment, and also the economic breakdown is depicted to be undertaken. This incident is depicted to be affecting the various categories of the ecosystem services, and also the protection of the environment rules and the values are not appropriately maintained for which the incident took place. The damages made were reflecting the impacts that were on the firm in the form of the economic breakdown (Geneletti, 2013). Apart from this, the reflection is also made regarding the restoration of the values, and also the conduct is simply undertaken in the form of the damage areas. The prevention is becoming most essential for the purpose of creating balance in the ecosystem, and also the physical damages must be recovered for the purpose of establishing the true social values. After all, the extreme classical of the social damages were demonstrated in the form of charging BP for not demonstrating the damages in an appropriate way. In this situation, the accounting advantages must be gained by the firm in the form of deducting the assessable income and also the BP Limited must demonstrate the situation to the partners for the implications which will be made in this situation (Hatch, 2005).
Environmental reporting and accounting
The oil spill in the Deep Water Horizon depicted that strict rules, regulations, and policies need to be implemented in the oil and gas industry in the United States. The incident adversely affected the people and environment of the surrounding. The government should focus on the rules and regulations in order to ensure the safety of the people and environment. The policies should be related to the environment protection and health safety and protection. BP was responsible for the incident that affected the area (Kiefer, Kauffman and Long, 2011). The annual report should disclose significant information related to the environment and financial information. The ecosystems trends and up to date status should be there in reports in order to ensure than the stakeholders have a reliable ecological environment, safe from any accident and other information such as collaborating with public institutions, research bodies, etc. The ecological and social reporting with respect to the impacts and dependencies on the ecosystem services. All information related to the environmental revenues, liabilities, and charges, calculation methods and potential gas between estimated and latter externalities ("NOAA Deepwater Horizon/BP Oil Spill Response," 2011).
As per the analysis is represented, the environmental clauses must be stringent enough to face the challenges of the assessing the ecological and the socio-economic damages. The significant replacement approaches must be conducted for the purpose of determining the values and also the explanation regarding the climate and also the coastal marshes, and also the hurricane protection can be easily cultural and recreational cost approaches must be made (Kurtz, 2013). Apart from this, disclosures must be appropriately conducted for reducing the environmental impact and also the information must be appropriately disclosed to the stakeholders. The article shows that the negligence of the business organizations in implementing adequate prevention measures for avoiding environmental disaster may badly impact on the environment and can damage ecological balance. As the concerned company BP oil did not apply required safety measures and the company did not have sufficient management skill to handle the adverse situation the incident took place. In this matter inadequate government control is also accountable, because due to scanty of legislation, the organizations are encouraged to operate business without proper safety measures. Hence, the government should introduce laws that enable to protect the environment from the risks growing from business operations.
Deepwater Horizon oil spill has a significant impact on the economy of the country as due to this incident large amount of natural resource of the country had been drained into the sea. The concerned company BP has to face substantial financial loss. Besides this, it has a substantial environmental impact. It raises the question about the social accountability of the organization as well as the role of the regulators who are responsible for implementing appropriate laws, rules and regulations to control and measure the business organizations preventive initiations to avoid this types of hazardous incidents (McCay, 2011).
The government should develop more effective laws with useful rules and regulations and implement on the business organizations to avoid this type of situation in future that damages the ecological balance of the region as well cause of excessive financial loss. The concerned organizations which are in risk prone zone have to apply adequate preventive measures to evade this types of the incident in future. Besides this, the organizations must have the system that improves the alertness for this types of situation in future so that the remedies can be availed on time. The government has to implement more stringent laws to protect the environment from the business activities of the organization.
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