Environmental issues in ports; how could port prices help to mitigate these problems?

Seaports are main economic hubs that generate a vast amount of production, jobs and revenues for a country. Along with all these benefits, ports and its users cause many negative impacts on the environment too. Large vessels with inefficient engines, toxic chemicals and dirty fuel emissions may do harm to local sea life and human health in nearby communities. Especially in Europe, where ports are often located near densely populated cities, the effects of smog and water contamination can have enormous impacts. Over the last decades, there has been a large increase in international trade. Shipping is responsible for the transportation of 95% of this trade (Michaelowa and Krause, 2000). The total amount of transport (measured in gross tonnage, GT) has risen from 22 million GT to 558 million GT during the last century (Endresen et al., 2008). Together with this growth in international shipping, ports have expended and intensified their activities too. Within the boundaries of the European Union, the ports altogether process more than 90% of the trade with the rest of the world (Abbes, 2007). This has led to an increase in the total negative effects of ports on the environment. These negative impacts are often not paid for by the polluter, in this case the ship-owner. The pollution caused remains an ‘external’ effect, one that is not taken into account in the port dues paid to the port authority. However, there are ways to incorporate these external effects but it remains both difficult and arbitrary. In recent academic literature, much has been written on the notion of these external effects and how to deal with them. The focus of this paper will mainly lie on the practical application of solutions to these externalities within the port environment. In particular, we will take a closer look at the role price incentives can play in causing an economic stimulus to act environmentally friendly. For example, this can be done by providing discounts in the port dues for cleaner vessels. This paper will therefore address the observed problems by examining whether ports should differentiate their port fees in order to stimulate a cleaner environment. We will start by looking at the nature of the negative impacts caused by ships and what economic theory states as possible solutions. The use of price incentives is one of the main solutions that will be covered in this study. With respect to the port environment, we will investigate which problems are nowadays mostly encountered in ports and how we could mitigate them. Finally, in a case study we look at five European ports (Amsterdam, Antwerp, Bremen, Hamburg and Rotterdam) in order to see if what we found in academic literature has also been applied in practice. We do this by analysing the commercial sea transport port dues for each of the five ports, as found on each of their websites. In the end, some future policy recommendations will be made.