Shell Nigeria

Environmental disasters are one of the most hazardous adversities that our environment face, perhaps the most devastating among them is the oil spills. This is because oil spills not only affects the environment at the time of contact, but it is also long-lasting. In addition, oil spills have lots of potential victims such as the plants, animals, and even humans. These oil spills may be accidental or intentional, but the end result is the same – water contamination, soil degradation, sewer systems pollution, and even contamination of underground water sources (“Oil Spill,”).

In terms of oil spill disasters, Nigeria would be one of the countries of interest. This is because the country has huge deposits of oil. In fact, 20% of oil in the United States came from Nigeria. Through this, 85% of the nation’s revenue came from supplying oil to other countries, particularly the United States and other European countries. However, oil production led to certain negative externalities in the country. For instance, Nigeria’s environment is already ruined. Furthermore, some Nigerian corrupt politicians make money by keeping the revenues from oil to themselves. As a result, instead of making programs for the replenishment of the environment, these are rather postponed which leads to further pollution in the environment and health hazards. (Bisina, 2004)

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Forty percent of the oil produced in Nigeria came from the Shell Petroleum Development Company of Nigeria Limited (SPDC) or simply Shell Nigeria, which is operated by Royal Dutch Shell. With this, most of the oil spill in Nigeria is caused by the said company and in order to address this continuing problem, Shell Nigeria should logically be the focus of the study.

This study aims to fully comprehend the value of the natural habitat and the human health in the affected area. Specifically, it seeks to evaluate the current situation within the area and its people, and to postulate certain possibilities of alleviating their current situation through further studies. To obtain the needed information, benefit transfer analysis would be done as well as other economic tools.

Policy Site

The Ogoni Land is located at the Tai Local Government Area of Rivers State of Nigeria. This location is perfect for farming because there is a readily available irrigation system. Also, fishing is very much sought after in the area. Being part of the Niger Delta, the people in the Ogoni Land only experienced negative externalities from the oil mining and production. With these, plants, animals, as well as their own lives are in grave danger because of the hazards brought about by oil spills. ((ERA), 2002)

Though Shell already stopped its operation on Ogoni Land for almost a decade, the people in the community still feels its effects up to this date. For instance, the oil pipelines still cause pollution and even fire. ((ERA), 2002)

To be informed regarding the effects of such oil spills in Nigeria, valuation should be done. Valuation is the process of evaluating the worth of something (“Valuation,”). The procedures used in order to know the value of damages done by the oil spill are replacement cost analysis, and contingent valuation among others.

The Situation

Within the fifty-year oil production in the Ogoni Land, countless number of oil spills had occurred. Due to this, it was said that the environmental damages in the area are about four times as much as than that of the Exxon Valdez oil spill in Alaska last 1989. Specifically, these damages are the poisoning of the land, ground and surface water, and the air by the combined discharge of hydrocarbon into the soil and water bodies, and the discharge of sulfur and carbon dioxide into the atmosphere through non-stop gas flaring. The people of Ogoni have consequently lost their primary means of livelihood from farming and fishing, while the health of the indigenes have been hampered by the presence of the polluting substances. Aside from the people, the flora and fauna are also very much affected by these emissions.

Valuing the Damage

The need has arisen to estimate the value of the Ogoni natural habitat and human health that has been so damaged by oil production activities.  But the problem confronting such an exercise is that there is no baseline study or information data bank from which to estimate the level of damage that has been visited on Ogoni land vis-à-vis its pre-oil days. Shell appears not to have carried out any form of environmental impact assessment prior to commencing operations in Ogoni land.


Due to the unavailability of information of the condition in the Ogoni Land prior to the oil spills, the benefit transfer method would be used to further estimate the damages. The extensive (passive) values of the Ogoni people are that they do not want any damage, and they are willing to pay considerable amounts of money to prevent environmental degradation. As for the replacement costs for the habitat that the oil production endangered, still, the Ogoni people are willing to pay certain sums of money to prevent this from happening. This nature of the Ogoni people is not surprising because as stated earlier, the area to which they inhibit is an agricultural land, and the people there are making a living through farming and fishing. But, it must also be taken into account that Nigeria is a developing country. With this, paying for other goods and services other than food is the very least of their concerns.

Final Result

The study is focused on the Ogoni people with concerns to the effects of the oil spills in the community. The effects that the study focused on are the health effects, as well as its effects to their immediate environment. The changes in the environment are brought about by the numerous oil spills and other hazardous effects caused by the mishandling of the petroleum and/or the faulty procedures in producing oil. It is important to study this aspect in economics because this will serve as a reference on how to address the problems in environmental degradation. Also, this study provides information on what would happen if the environment is taken for granted that in turn would lead to further considerations to the environment in general.

Ogoni land is situated in a pristine tropical rain forest that once thrived with the abundance of plants and animals. The environment had provided food and great wealth for the people and endowed them with the herbs for their health. But with advent of oil production activities, Ogoni land has been very much polluted.

In terms of education, the Ogoni people are already qualified in their primary education if they were able to attend six (6) years of education. With this, it is quite obvious that the vast majority of the people are not educated enough. With this limited amount of knowledge that an individual can possibly attain, the jobs available for these group of people is also very limited. More often than not, jobs relating to agriculture are the ones they land into. Usually fishing and farming, the Ogoni people managed to make through their days. Aside from this majority, there also exist quite a few professionals that are well educated.

This paper is attempting to estimate the economic value of the destruction visited on the habitat of Ogoniland and the health of its people by the oil spills on their land and water ways. Considering that there are no studies that have been carried out in the environment from which to draw conclusions in estimating the economic cost of the damage to Ogoni people, the report on the restitution and claims settlement for another oil spill disaster has been used.

To save the Ogoni Land, its people and its habitat, Ken Saro-Wiwa together with the rest of the Movement for the Survival of Ogoni People, MOSOP, fought against the recklessness of the corporations found in the area, particularly Shell Nigeria. (Bisina, 2004)


(ERA), E. R. A. E. (2002). Shell’s Oil Spill in Baraale, Ogoniland, of Nigeria’s River State [Electronic Version]. ERA Field Report. Retrieved April 26, 2007 from

Bisina, J. (2004). Oil and Corporate Recklessness in Nigeria’s Niger Delta Region [Electronic Version]. Retrieved April 26, 2007 from

Oil Spill [Electronic Version]. Retrieved April 26, 2007 from

Valuation [Electronic Version]. Retrieved April 27, 2007 from




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