ASSESSMENT OF COMPENSATION VALUATION METHODS FOR OIL POLLUTED WETLANDS IN NIGER DELTA REGION, NIGERIA

Abstract

The menace of oil spills arising from exploration, extraction, processing and transportation of crude oil necessitates determination of compensation to victims of oil pollution in Niger Delta Region of Nigeria. This study evaluates the adequacy of the compensation valuation for oil polluted wetlands in Niger Delta Region with a view to developing a model for determining equitable compensation value for impaired interests. The target population for the study comprised Estate Surveying and Valuation firms and residents of oil producing communities selected from five out of nine states constituting Niger Delta Region. Data were collected using two sets of questionnaires (type A and type B). Type A was administered on a total of 190 Estate Surveying and Valuation firms in the selected states; while, 123 (64.74%) were retrieved. Type B questionnaire were randomly administered on 386 residents of Abereke oil producing community of Ondo State, 389 residents at Oben in Edo State, 390 at Uzere in Delta State, 383 at Kaani Babbe in Rivers State, and 392 at Awiama in Bayelsa State following multistage sampling. Data analyses were conducted using Relative Importance Index (RII), Kruskal Wallis (H) Test, paired T-test, and Multiple Regression. The findings showed that various heads of claim recognised for compensation assessment in the current practice fall short of the expectation of the oil spill victims as well as the Estate Surveyors and Valuers with the exclusion of the following sub-head: Non Extractive use, Indirect Use, Non-use and Bequest /Future use values. The Kruskal Wallis (H) test on each of the heads of claim included in valuation assessment shows that at 0.05 level of significance, χ2(4), N = 83), the methods employed by valuers in determining compensation for oil spill impacted private interests was found significant for valuation for loss/desecration of shrine and sacred sites, diminution in property/equipment values, valuation of grave yard/ tomb, fish harvesting, source of drinking water, timber production, grazing and game hunt. Results of Kruskal-Wallis test on adequacy of compensation paid to claimants for oil spill damage showed that there was general dissatisfaction with compensation across the selected communities (χ2= 33.221, p = 0.000). A multiple linear regression model developed for determining compensation indicated that the independent variables considered in the model explain 95.8% of the variation in the dependent variable (R2 = 0.957). It was recommended among others that there is urgent need to redefine various heads of claim recognized for compensation purpose to reflect the religious and cultural make-up of the people. Also, Nigeria should have an Oil Spill Damage Compensation Code; based on this, the Nigerian Institution of Estate Surveyors and Valuers (NIESV) will develop the practice code which will spell out the process, the bases, and appropriate method to be applied in the valuation of different heads of claims.