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INTERNALIZED COSTS

Artificial Reefing Costs

The U.S. Maritime Administration (MARAD) recognizes “the requirements in the BMP

[National

Guidance:

Best

Management

Practices for Preparing Vessels Intended to Create Artificial Reefs] to remove all solid PCBs [polychlorinated biphenyls] above the regulated limits…for purposes of creating an artificial reef could negate potential cost advantages of artificial reefing compared to conventional dismantling.”57 In fact, Maritime Administrator David Matsuda was cited by the Washington Post in 2009 as saying artificial reefing is 3 to 5 times as costly as domestic recycling.58

This appears to be a newly realized viewpoint of MARAD under the Obama Administration. However the Navy has not indicated a comparable view, as evidenced by the June 8, 2010 transfer of the Ex-ARTHUR RADFORD, a 563 foot Navy Destroyer to the states of Delaware, New Jersey and Maryland for the Summer 2011 scuttling as an artificial reef. The Navy’s share of the costs associated with this sinking is 200,000 times the costs to taxpayers for recycling this vessel domestically, as evidenced by a domestic recycler’s unsolicited offer to the Navy to recycle the vessel at a cost of $1. The Navy did not respond to the unsolicited

offer from the approved contractor, Esco Marine.

Navy

recycling

From 2002-2008, MARAD and the Navy disposed of four vessels at sea via artificial reefing. These four sinkings cost a total of $37.5 million dollars, for which MARAD and the Navy contributed $25.35 million, or 68% of the total costs, leaving the remaining 32% to be covered

Report to Congress on the Progress of the Vessel Disposal Program, US Department of Transportation, Maritime Administration, January 2008 57

http://www.washingtonpost.com/wp- dyn/content/article/2009/09/06/AR2009090601989.html 58

INTERNALIZED COSTS

by the state artificial reefing programs. On a disposal cost per ton basis, reefing these vessels costs an average of $554/ton, for which MARAD and the Navy contributed an average of $253/ton. However, the costs to recycle these ships domestically during this same period was an average of $67/ton which would equate to a savings to the U.S. taxpayer of $21.5 million. Recycling would have also created an estimated 1,865 U.S. jobs.59

Disposing of vessels at sea does not bring best value to the Federal government as costly remediation requirements, combined with a lack of returns from commodity metals (see below), negates any perceived cost advantages including financial contributions from state artificial reefing programs or sports fishery

The Ex- ARTHUR RADFORD is now being prepared for sinking as an artificial reef in Summer 2011. The sinking of the RADFORD will discard an estimated $6 million worth of recyclable materials to the depths of the sea, and forfeit approximately 223 jobs, lasting approximately one year, from the economy at large. Image Source: Navy Photo ID 021127-N-3653A-004.jpg

59 Author’s calculation using job forecast methodology at http://www.foeeurope.org/publications/2010/More_Jobs_Less_ Waste_Sep2010.pdf; and Recycling and Economic Development, A Review of Existing Literature on Job Creation, Capital Investment, and Tax Revenue, CASCADIA, 2009

BASEL ACTION NETWORK

25

2011

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