Part of the problem with ecosystem collapse is that the markets related to different components of the ecosystem collapse as well. The Gulf Mexico has experienced diminishing fish stocks for decades, and a similarly depressed economy. The economy was further harmed by Katrina, and now will be retarded even further by the decimating effect BP’s oil spill will have on the region’s remaining fish stocks. Fishermen in the region have been rapidly trying to retrain as crisis management workers to assist BP in cleaning up the very spill that will likely put the fisherman out of business in the area for decades. What’sBP’s responsibility when their negligence eliminates the only regional economic activity there is?
According to the Exxon Valdez precedent, the region will take decades to even partially recover. The Prince Edward Sound has never been the same since the Exxon Valdez ran aground. The salmon stocks have never rebounded and fishermen went bankrupt. The tourism industry, which relied greatly on the pristine environment, was dashed. One report put preliminary damage at $580 million dollars in 1992 dollars; Exxon ultimately paid out only $570 million in punitive damages.
When a company takes on high risk activity such as producing and transporting oil, social responsibility has not, thus far, not been be much of a consideration. As far as corporate social responsibility has come, tree planting and donations to charity don’t mitigate the big disasters. Few businesses in high risk businesses have successfully implemented CSR initiatives either. BP is a great example; they offer vast greenwashing, but little has positively changed about their oil production business.
In cases where CSR fails to alter firm behavior, laws must step in. Currently, the U.S. does not have laws strong enough to send the financial signal that would motivate fundamental change in firm business practices. This was made especially true when the Supreme Court reduced the punitive damages in Exxon Valdez from $4.5 billion, which would have sent that message, to a paltry $570 million, which did not. BP is surely relying on this precedent to protect them from the legal fall out of the current spill.
Where firms cannot find a way to motivate themselves to be preemptively socially responsible, they must be forced to take full responsibility for the entire scope of economic disruption their business operation incurs. Firms whose business practices manage to destroy an entire economy should be obligated to make those economies whole to the best of their ability, even if it compromises the financial integrity of the firm. Each of the gulf fisherman affected by this disaster should be able to relatively easily claim lost wages for at least five years from BP, not be forced to beg for a job from them now that BP has destroyed the economy.
Don’t get me wrong; I love CSR. But like other things I love, I also see its limitations. CSR isn’t enough for the big problems; for the GoldmanSachs; for BPs; for the Toyotas. For that, you need laws that unflinchingly harsh consumer protection consequences that force companies to fully cover the harm they cause, and to actually discourage this behavior in the future.