Abstract

This paper investigates the economic and environmental effects of supplying Abu Dhabi with desalinated ballast water brought in by exporting oil tankers and liquefied natural gas (LNG) vessels on their return route from oil and natural gas trade. Traditionally, ballast water is discharged into the ocean which leads to a negative impact on marine environments. The International Maritime Organization (IMO) has developed regulations that prohibit the discharge of untreated ballast water in order to prevent these negative environmental effects. An efficient way of meeting IMO requirements would be to desalinate the ballast water and supply it domestically to local residents for consumption. In this paper, we illustrate two models. The first is a cost benefit analysis model that examines the economics of desalinating ballast water using oil tanker/LNG carrier engine waste heat under different domestic water demand scenarios. In addition to environmental benefits, results show that ballast water trading can generate cost savings of between $771.5 million and $602.0 million from 2012 to 2030, depending on realized domestic water demand. The second model presents a computable general equilibrium (CGE) analysis, performed to identify GDP (Gross Domestic Product) and inter-sector production changes. An environmental analysis is built into this model to understand the impact on climate change. Flexible price and fixed price policy scenarios are considered. Results show that GDP and CO₂ emissions increase under both flexible price and fixed price policy scenarios, and that implementation of a flexible price policy has more of an impact on the growth of GDP and CO₂ emissions than implementation of a fixed price policy.