The use of habitat equivalency analysis in natural resource damage assessments

Federal and state government agencies and Indian tribes, acting on behalf of the public as trustees, can recover damages to natural resources from companies responsible for oil spills or hazardous-substance releases. Habitat equivalency analysis (HEA) is a method for estimating the appropriate amount of compensation for interim losses resulting from such spills or releases. HEA has several restrictive assumptions that are not met in many situations and its input parameters often are not known with certainty, which can lead to substantial differences between HEA results and the true amount of compensation for losses resulting from oil spills or hazardous-substance releases. Critical assumptions of HEA include a preference for compensation with the same services as were injured, a fixed proportion of habitat services to habitat value, and a constant real value of services over time. HEA also requires that complex ecological services are expressed as a single metric and that the incremental effect of spills/releases are estimated reliably over time. Notwithstanding these important assumptions and limitations, HEA is frequently used to settle natural resource damage (NRD) claims and two HEA applications to NRD claims have been upheld by the courts. When properly structured and applied, HEA can produce relatively reliable results for most oil spills and simple cases involving hazardous-substance releases. Even when unmet assumptions and/or differences in professional judgment with respect to input parameters produce differences in HEA results, the method can be useful in achieving an NRD settlement in a variety of situations. However, HEA should only be viewed as a framework to provide a general approximation of any required restoration, and not as a substitute for a formal NRD assessment in cases involving complex hazardous-substance releases. (C) 2003 Elsevier B.V. All rights reserved.