Externalities and the Piney Point Disaster

 After our initial discussion about externalities, the recent Piney Point leak in the Tampa Bay area came to mind. Piney Point is an abandoned phosphate mine in Manatee County, FL which was in danger of collapsing earlier this year, unless the government authorized the discharge of over 200 million gallons of nitrogen infused water into Tampa Bay. Many experts believe that this spillage caused a red tide breakout, which led to a major decline in tourism hurting many local businesses. 

I had a question from this event which I will attempt to answer here but would love any feedback from the rest of the class: when determining the externality cost factor associated with a production externality, how do we incorporate the cost of potential future disasters, such as this one? In this case, the mine had been shut down for over twenty years and the ownership company no longer exists. When the mine was operating, if the government were trying to assign a tax in order to push back production to the optimal level, would we have to include in our model the potential that the plant could have a risk of exploding and causing a major environmental disaster, even though this is something that only could happen many years down the road? I would argue that no we should not account for a cost like this when determining the optimal output level for Piney Point at the time of production, as it could not have been reasonably estimated that a disaster like this could have occurred. Additionally, although the actual mining operation did unleash the chemicals which ended up spilling into the bay and causing the red tide, I believe that Piney Point is ultimately not the one to blame for this issue because if government/environmental agencies had been keeping a better watch on the property after its abandonment, the plant may have not ever been at risk of explosion. Because of both the inability to predict the future problems of the mine and the difficulty in assigning blame for this crisis, I do not think the cost of a potential future crisis like this should have been incorporated when enforcing tax on Piney Point to determine its optimal level of output.