GAS FLARING AND ITS EFFECT ON THE ENVIRONMENT

ABSTRACT

 The atmosphere is kind. It takes the carbon dioxide (CO2) and other heat-trapping greenhouse gases that humans create and disperses them equally all over the world. But that is also its cruelty. The accumulation of these waste gases over the decades, disproportionately from industrial countries but increasingly from some developing ones, is over-whelming the planet‘s energy balance and heating up its surface and affecting human wellbeing. Gas flaring and thermal plants emissions in the Niger Delta region are example of such pollutions, this accumulation must end, but how that would happen is hard to imagine.

Ecological economics framework is suggested as a more fruitful approach to socio-economic and environmental problems than the now dominant neoclassical paradigm. The background and theories of Neo-classical and ecological economics is given in this paper, as well as the main characteristics of their approach. Differences between neoclassical and ecological economics are elaborated with respect to the concept of sustainability and economics (reductionist versus holistic), the approach to decision making (aggregated versus highly disaggregated), and the view of social and institutional change.

This study is to understand how theories and practice of organization and environmental management in Niger Delta region are functioned; these issues will be analyzed through an Ecological and Neoclassical economics theories on the emission of uncontrolled air pollutants from all the existing and proposed thermal plants/gas flaring in the country. Calculations are performed to study the distribution of carbon monoxide (CO), oxides of nitrogen (NO_X), particulate matters (PM), sulphur dioxide (SO₂), and volatile organic compounds (VOCs). The estimated emissions ranges are 978–24,607, 1635–41,148, 37–924, 19– 472, and 11–286 ton/annum for CO, NO_X, PM, SO₂, and VOCs, respectively. The present locations of these plants across the country are characterized by skewed emission distribution both per capita and across the land. Given the potential environmental and health impacts of these emissions, several measures are suggested to reduce future impacts and assist the country in achieving sustainable development.

Key results of the study are: We identify two primary scientific clusters, one clearly confirming the existence of the ecological-economics school of thought, and the other largely capturing the neoclassical environmental view. Yet, there are some surprising exceptions: Both schools of thought share a conceptual definition of sustainability that is integrative in considering ecological, societal and economic dimensions (‗three pillar concept‘) and is geared at preserving the development potentials of society.

Chapter 1;

1.       Introduction………………..……….…………………………………....1-3

1.1. Background…………………………………………………………………..4-7

1.2. Research question and Problem…………………………..……………………8

1.3. Statement of Problem………………………………………………………..8-12

1.4. Objective of the Study…………………………………………………..….12-13

1.5. The Thesis Structure…………………………………………………………..13

1.6. Gas Flaring and Power plants in Nigeria……………………………..……13-15

Chapter 2; Literature Review………………………………………………...15-18

2.6. Origin of Gas Flaring……………….…………………..………….………23-24

2.7. Culprits in the Niger Delta oil, Flares and Power Plants…………………..24-26

IV

2.7.1. Controversial Business Practice………………………………………….26-27

2.8. Environmental/Health impact from Gas Flaring/Power Plants Emissions...27-29

2.8.1. Gas flaring and Power plants contribution to climate change……………29-31

2.8.2. Impact of Gas flares and Power plants to Host communities……….…...31-32

2.8.3. Employment……………………………………………………………...32-33

2.8.4. Barriers to Gas flaring utilization………………………………………...33-34

2.9. Environmental Management Theories……………………………………..34-36

2.9.1. Sustainable Development Concept……………………………..………..36-37

2.9.2. Sustainability as Ecological Ethics………………………………………37-40

2.9.3. Cluster in Sustainability Economics………………………………………40-

2.9.4. Common Ground of the Identified Clusters……………………………...40-41

2.9.5. Cluster 1; Ecological Economics………………………………...………41-47

2.9.6. Cluster 2; Open Minded Neo-Classical Environmental Economics……..47-50

2.9.7. Key Divides Between Cluster 1 and Custer 2……………………………50-52

Chapter 3; Methodology……………………………………………….………52

3.1. Introduction……………………………………………………….………..52-53

3.2. Research Design…………………………………………………………....53-54

3.3. Method of Data Collection and Analysis………………………………….54-

3.4. Interview…………………………………………………………………..54-55

3.5. Observation.……………………………………………………..…………55-

3.6. Qualitative Methodology………………………………………………….55-57

3.7. Sampling Procedure………………...………………………….………….57-58

3.8. Ethical Consideration……………………………………………………..57-58

3.9. Evaluation of Data…………………………………………………………58

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3.9.1. Introduction …………..………………………………………….……...58

3.9.2. Reliability……………………………………………………………….58-60

3.4.3. Validity………………………………………………………………….60-61

Chapter 4;

4.   Presentation, Discussion and Analysis of the Findings……..……………..61

4.1. Introduction……………………………..…………………………….……61-62

4.2. Oil Companies Activities…………..………………………………………62-64

4.2.1. Dealing with Environment, Health and Safety…………………...……...64-65

4.3. National Institute and Oil Industries…………………….…………………65-68

4.3.1. Triple Bottom Line……………………………………………………….68-71

4.4. Local levels and Oil Companies activities…………………………………..71-

4.4.1. Alternative Source of Livelihood for Local Residents…………………..71-72

4.5. Communities House Hood Basic Statistics………………………………...72-83

4.5.1. Batan Community………………………………………………………….73-

4.5.2. Odidi Community………………………………………………………..73-74

4.5.3. Escravos Community…………………………………………………….74-75

4.5.4. Cultural Dimension-(Health-Social)………………………………………75-

4.5.5. Economic Dimension…………………………………………………….75-76

4.5.6. Nature-(Climat Change) Dimension………………………………………76-

Chapter 5;

5.   Conclusion…………….………………………….…………………………..83-

5.1.   Conclusion………………………………………………………………….83-86

5.2.   Limitations of the Study……………………………………………………..87

5.3. Proposal for Further Research……………………………………………...87

VI

CHAPTER 1

1.0. Introduction

The discovery and extraction of natural resources has brought different consequences to countries that are endowed with such resources. While some of these nations have become economically strong and self sustaining, others have been drawn into serious economic hardships and conflicts. Proponents of the resource curse, project have it that the citizens of these countries rather suffer from abject poverty, environmental damages, pollutions, diseases, illiteracy and score very low on the United Nation‗s Human Development Index (UNDP, 2006).

The Niger Delta region, where Nigeria Current Large Oil and Gas resources are located, to with the Niger Delta as the unifying feature has remained a source of global interest. With openness to the Atlantic Ocean and watercourses with access to the sea and rivers such as the Benue and Niger Rivers, the Niger Delta embodies some of the major coastal upwelling sub-ecosystems of the world and is an important center of marine biodiversity and marine food production ranked among the most productive coastal and offshore waters in the world. However, pollution from domestic and industry sources, over-exploitation of Oil and Gas resources and poorly planned and managed communities and coastal developments and near-shore activities are resulting in a rapid degradation of vulnerable land, coastal and offshore habitats and shared living marine resources of the region putting the economies and health of the populace at risk. The deterioration in water and air quality (chronic and catastrophic) from land and sea-based activities (especially industrial,(flaring/power plants), agricultural, urban and domestic sewage run-off, eutrophication and gas flaring have been identified as a major Tran boundary environmental problem by communities in the region.

Mainstream economics of the neoclassical kind was not developed primarily to deal with environmental problems. When facing a new category of problems, it therefore also seems reasonable to consider alternatives to the neoclassical paradigm. The limited reversibility or irreversibility of many environmental impacts is one reason to question conventional economic reasoning, which generally assumes that everything can be traded against everything else in monetary terms. Secondly, ethical and ideological issues become accentuated in relation to environmental problems. Even if it were accepted that impacts can be traded against each other in one-dimensional, monetary terms, the price at which such trading should occur is always open to debate. The idea of correct prices for purposes of resource allocation suggested by conventional cost-benefit analysis becomes less convincing, if not absurd. Why those prices? What right does one have, as an economist, to define so-called correct prices or correct rules

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for valuing environmental impacts or other impacts in monetary (or other one-dimensional) terms? There are ethical reasons to suggest, for instance, an infinite price for irreversible degradation of the natural resource base available to future generations. And, as already indicated, irreversible impacts are the common case rather than the exception. The burning of coal, oil or natural gas is an irreversible process. Pollution of air, water and soil is often irreversible or difficult to reverse, and the same is true of land exploitation for various purposes, or interference with ecosystems.

Environmental and socio-economic issues become business issues. Thus, what is good for the economy is equal to what is good for the environment (Silverstein, 1993). At a pragmatic level, there are some obvious reasons for environmental management study. The traditional view about regulation ecology and economy sounded like ecology versus economy. Social benefits that demand strict environmental standard confronts industry‘s private costs, cost of prevention, and clean-up faced reducing of competitiveness and price increase. Fortunately, companies make a business in the real world of dynamic competition, not in the static world with many economic theories. Thus, it can be concluded that static view of ecological regulation is incorrect today. Moreover, it is not simply enough for companies to have only resources. Using resources productively is what makes for successful competitiveness today. Companies and states can improve resource productivity by providing existing products more efficiently or by making products more valuable for customers, products customers are willing to pay for (Porter, Der Linde 1995). Some researchers deem that industry‘s pollution today means inefficiency. Really, when scarp, harmful substances, or energy forms are discharged into the environment as pollution, it is sign that resources have been used incompletely, inefficiently, or ineffectively (Porter, Der Linde, 1995). However, it is so naïve to allow that most of companies existed to over look their policy into environmental compliance fast. Unfortunately, traditional ways of business dominates rooted tightly in company‘s top management conscience. Moreover, several years ago, most business hoped that the environment issues would disappear, but till date it has still not; it has only gained more important (Woolstone, 1993). Some scholars believe that technology will solve environmental problems and can replace natural capital by profit maximization in resource utilization (weak sustainability- neoclassical economics paradigm) why other believe that is only to an extent that technology can replace natural capital (strong sustainability- ecological economics paradigm). All these world trends claim from the firms to consider environmental issues in long – term perspective. How should companies be motivated into environmental friendly policy and who should determine ecological standard: government, policy makers or companies themselves? This is real tight challenge toward sustainable development.

Since the controversial book by Meadows et al. (2004 for the update of the 1972 edition), the debate about the physical limits to growth has remained lively. If one considers the controversies between economists, one can schematically distinguish two antagonist positions. According to the first and most optimistic one (the so-called ―weak sustainability‖ position), long run economic growth is possible within a finite world thanks to substitutions between natural resources and man-made inputs and thanks to technical progress. This position is well illustrated by the contributions of Dasgupta and Heal, Solow or Stiglitz to the Review of Economic Studies symposium on the Economics of Exhaustible Resources(1974)butmany other contributions followed.

The second position is much more pessimistic about the long run growth prospects in a finite world. It first relies on a critical appraisal of the representation of the production process in neoclassical growth theory: following Georgescu-Roegen (1971), ecological economists like (Cleveland and Ruth, 1997)and (Daly, 1997)considerthat neoclassical growth models rely on much too optimistic assumptions aboutsubstitution possibilities between natural and man-made inputs and about how they can be affected by technological progress. They outline in particular that neoclassical growth models ignore the physical laws (the conservation laws and the second principle of thermodynamics) that govern the transformation process of matter and energy in all human activities, in particular the production of goods and services.

Therefore, a cluster analysis of both ecological and neo-classical economics paradigms is used in this project to analyze how their approach can positively influence the emission of uncontrolled air pollutants from all the existing and proposed Gas flares/ power plants in the Niger Delta region. In evaluation of our survey results, we discuss to what extent the clusters that we identified do-or not to-represent the two schools of thought of Ecological and neoclassical economics perspective, on the issues of sustainability and economic development in the Niger Delta region; how they group around these issues, how they feel about the current scientific divide, and what they expect to be future environmental and economic development of the region, though the Neoclassical economics approach is commonly practice in the region, but this paper will compare with a replacement by ecological economics approach to address these pollutions problems in the region.

1.1. Background of the Study

Niger Delta is the southernmost region of Nigeria. It is located in the South-South District of the Southern Region of Nigeria and is surrounded by small communities such as Batan, Odidi 1 and Odidi2, Escravos, Ekpan, etc. These communities within Niger Delta area are just a few kilometers apart. The inhabitants of

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these communities are predominantly fishermen. Apart from fishing, farming is another economic activity these villages are engaged in.

Due to the production of the crude oil, the communities around Niger Delta region have limited access to fishing and agricultural activities. Oil spill and carbon particles in their rivers, land and air from CO2 emissions from gas flares\power plants has made it difficult for fishing and farming activities in the area, which also affect their health and lands for other purposes. This means their major source of livelihood has been taken away from them. Meanwhile, it has not well been established as to the kind of package which would be made available for these communities not to become worse off as a result of less access to fishing activities and other socio-economic activities within their community where oil production and drilling takes place. In addition, oil production comes with huge environmental challenges especially at a time where climate change and its negative consequences have captured global attention. Unlike land, defining property rights for the use of the sea is rather difficult (Vatn, 2005, p. 261), however contends that undefined or unclear property rights may yield both large conflicts and losses. The oil production off the coast of Niger Delta has indeed created a rivalry in the use of the sea; there would be some cost if any of the agents is excluded from the use of the water resource. The oil drilling infrastructure in the Niger delta has also come under attacks from local residents who claim they have not been compensated for their loss of land and source of livelihood to the oil production. These local residents sometimes damage oil transporting pipelines and set fire to them. Other times, they have engaged the companies in warfare and on some occasions taken foreign expatriates hostage. Supporters of the local residents quote the African Charter Article #21 to back their actions. Three clauses in the charter read:

·                     All peoples shall freely dispose off their wealth and natural resources. This right shall be exercised in the exclusive interest of the people. In no case shall a people be deprived of it.

·                     In case of spoliation, the dispossessed people shall have the right to the lawful recovery of its property as well as to an adequate compensation.

·                     States parties to the present Charter shall undertake to eliminate all forms of foreign economic exploitation particularly that practiced by international monopolies so as to enable their peoples to fully benefit from the advantages derived from their national resources.

If this Charter is anything to go by, then the local communities along Niger Delta have to be compensated in a way that will not make them worse off since they have to give up their source of livelihood. One way

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could have been an agreement for the oil companies to give employment to the residents but this may not materialize since most of the residents have not had education and training in oil extraction, other ways is implementation of sustainable policies and good practice in oil industries production activities including all stake holders. This research work also examines who is responsible for this situation in a context where multinational oil companies have been operating for decades. It highlights how companies can take advantage of the weak regulatory systems that characterize many developing countries, which frequently results in the poorest people being the most vulnerable to exploitation by corporate actors. The Niger Delta people have been systematically denied access to information about how oil exploration and production will affect them, and are repeatedly denied access to justice. The Niger Delta provides a stark case study of the lack of accountability of a government to his people and of multinational company‘s almost total lack of accountability when it comes to the impact of their operations on human right and environment.

For the last twenty years, contributions to endogenous growth theory have dealt with the question of long term growth in the presence of scarce natural resources and/or pollution. But surprisingly, the vast majority of those papers (even rather recent ones) disregard the laws of physics and the ecological economists' criticisms to the neoclassical representation of the production process. For instance, (Grimaudand Rougé, 2003),(Grimaud and Rougé, 2005) and(Groth and Schou, 2007) buildmodels in which anatural resource is one of the production factors of a Cobb–Douglas technology; (Stockey, 1998)and (Hart, 2004)proposegrowth models with pollution in which no material flow is explicitly modeled. Othercontributions to growth theory aim at taking the ecological economists' criticisms more explicitly into account. Papers like (Bretschger, 2005), (Smulders, 1995a), (Smulders, 1995b), (Smulders, 2003),(Bretschger and Smulders, 2010)and(Pittel et al., 2006) explorethe long term consequences of materialbalance constraints and low substitution possibilities between material and man-made inputs. In spite of the resource scarcity, they all show that under some conditions, long term growth can be sustainable thanks to research and development investments. Similarly, Akao and Managi (2007)adopt a material balance approach and put forward the sustainability conditions for long term growth in an economy with finite (but recyclable) resource, pollution and bounded assimilative capacity.

Differences between the present neoclassical and ecological economists cannot be described in terms of black and white. Rather we have to deal with divergent tendencies. According to the Finnish philosopher Georg Henrik von Wright (1986), there is a tension within science generally between reductionist-mechanistic modes of thinking on the one hand and holistic-evolutionary tendencies on the other.

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Reductionist and mechanistic approaches have dominated physics, chemistry and biology since Newton and have succeeded in some respects. Considering especially the environmental problems now facing mankind, von Wright calls for an increased emphasis on holistic and evolutionary approaches. Similar tensions exist within economics. Neoclassical economics is largely on the reductionist-mechanistic side, why ecological economics is more holistic and evolutionary. Extreme beliefs in specialization and division of labor within science, between policy areas and in society generally, can be given as an example of the reductionist tendency of neoclassical economics. Thus the neoclassical economist tends to believe in very clear boundaries between economics and other disciplines and in the possibility of giving useful advice on the basis of highly specialized knowledge. Environmental economics and environmental policy are largely seen as areas that can meaningfully be detached from other study areas in economics and other policy areas. In this way, environmental economists are expected to take care of environmental problems and suggest a rational environmental policy, while other economists need not bother and can continue to do what they did before in fields such as agricultural and food economics, transportation economics, international economics, business economics, public finance, etc.

Ecological economists on the other hand emphasize a organic/holistic or inclusionist [as opposed to exclusionist - see Pirages (198911 approach to economics and policymaking. Specialization and division of labor is seen not only as a positive possibility, but also as a danger. The relationship between disciplines, for instance social sciences, is one of overlap, rather than one involving clear boundaries. Every scholar should try to attain a balance between specialized knowledge and knowledge at a holistic and more interdisciplinary level. According to the holistic view, scholars in all disciplines should consider how environmental and natural resource concerns impinge on their subjects. Thinking in environmental terms has to permeate all subfields of economics and all policy areas. Environmental policy overlaps with transportation policy, energy policy, food policy, etc., and policy discussion has to include, or even start with, visions of society that comprise all so-called sectors of the economy. Another case of neoclassical reductionism concerns the idea of economics that is advocated for purposes of practical economic analysis. Neoclassical economists, too, may realize that the world is complex, but they feel that far-reaching simplification is necessary. Practical economic analysis is reduced to monetary analysis. Cost-benefit analysis, for instance, can be seen as a case of monetary reductionism. Here the institutional economist suggests a more holistic and disaggregated view of economics. Equilibrium theory has been mentioned as an example of the mechanistic tendencies of neoclassical economics. Economists in turn have a preference for organic and evolutionary thinking. ―Patterns modeling‖ (Wilberand Harrison, 1978) is a characterization of this interest in how the ecosystem, technology, institutions, habits, values and the

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economy at large evolve through time (cf. also Norgaard, 1985). Where neoclassical economists use models that are closed in a mathematical sense, ecological economics prefer models which in the same sense are theories and open-ended or only partially closed (Myrdal, 1978). For instance, knowledge about environmental impacts is often fragmentary rather than complete, but together the different fragments may represent meaningful patterns. Attempts to bring everything together in simple equations or in one-dimensional terms may convey a false feeling of control.

This Thesis findings are based on survey of available information from the representatives of national institutions (Environmental protection agency- EPA), Ministry of lands and natural resources, Ministry of environment, Science and Technology, Ministry of Energy. Other institutions like Nigeria Petroleum Company (NNPC), the Nigerian Extractive Industries Transparency Initiative (NEITI) where also conducted, and extensive internet research among sources, like ecological and neo-classical economics text books, journals and article, the international oil companies Nigerian Branches, Environmental Rights Action (ERA), Amnesty International, World Bank and other internet sources. The desk research is complemented with field studies in and around the Warri/Effurun area of Niger Delta region and work shop at Nielson environmental field school conference in the USA to share ideals of environmental pollution and damages. The first chapter describes the background of the research, and the second chapter links them with the objectives of the paper and the appropriate knowledge in the field. So far it is concluded that survey can be appropriate as a methodology for researchers no matter if they are proponent or positivist, interpretive or phenomenological philosophy. With regards to the unit of study several type of sampling are discussed with their respective advantages and disadvantages. It is also important to note that appropriate size of sample depends on the purpose of the research that is reflected in the overall design of the survey (qualitative- statistical).

The settlement of these points will enable data collection process to be essential. It does not really matter if is interviewed or self administered questionnaire is chosen as data collection method for the project. The consideration of interviews in contrast with self administered questionnaire within the same chapter again helps to when either mode is preferable used. Data analysis is characterized both from a point of quantitative and qualitative method.

1.2. Research Question and Problem

From the view point of cooperate researcher, Gas flaring has been agued to be of particularly importance, since most oil and gas companies operation is surrounded with gas flaring and power plants in Nigeria.

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Thus, in principle, Gas flaring offers a route to growth, because there will be oil production and business opportunities but with high level of pollution risk to the socio-economic and environment of communities in the region that these operation takes place. Therefore, there is need to control the level of gas flares and power plants through adequate approach and policies. For this matters, the main issue to be addressed is; the impact of Gas flaring and power plant emissions to the socio-economic and environment in the Niger Delta region and the adequate approach to address these practices. Thus, this study will find out if the main stakeholders would come up with better answers to the problems connected to oil drilling and production if they use the framework based on ecological economics instead of the neo-classical paradigms that is presently in practice in the region.

1.3. Statement of the Problem

There are major problem of our time, from energy, the environment, climate change, food scarcity, and financial security could not be understood in isolation. They are systematic problems, which mean that they are all interconnected and interdependent. The fundamental interconnectedness of our major problems makes it clear we need to go beyond economics to overcome the global economic crisis. In the Niger Delta, majority of the flaring of natural gas takes place is the home to some 31 million people and the location of massive oil deposits which have been extracted by the Nigeria government and by multinational oil companies for decades and oil has generated an estimated $600 billion since the 1960s. The Niger Delta is Nigeria‗s largest wetland region and is the third largest wetland in the world. It covers over 70,000 square kilometers between latitude 4o15'N and 4o50'N and longitude 5o25'E and 7o37'. It is characterized by extensive interconnectivity of creeks, deltaic tributaries, flood plains, mangrove swamps and other coastal features. The Niger Delta has been declared a key zone for the conservation of the Western Coast of Africa on the basis of its highly rich oil and gas resources and extraordinary biodiversity. It harbors a large reserved of oil and gas, family and species of wildlife, especially important and fascinating variety of fishes and birds.

Despite this, the majority of Niger Delta‘s population lives in poverty, no electricity power supply and highly polluted environment. Many of the planned electric power generators are thermal power plants that will burn fossil fuels to generate electricity. In thermal plants, gaseous emissions are of great concern. Major components of these emissions are air pollutants, which include carbon monoxide (CO), oxides of nitrogen (NO_X), particulate matter (PM), sulphur dioxide (SO₂), and volatile organic compounds (VOCs). This project identifies the quantity and location of pollutant emissions and points out the localized and uneven geographic distribution of electric power plants and gas flaring emissions in Nigeria.

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For decades, since oil and gas production started in Nigeria, the approach was from the mainstream economy (neo-classical economic paradigm). Their focus was that; to be healthy the economy must constantly increase the amount of energy and raw materials that flow through it in order to generate ever greater wealth, and in order to be happy people must have more and more of this wealth so as to have access to consumer goods. They see economic growth as the central driver of economic, social and environment progress though the ―trickle-down‖ effect growth will ensure that wealth created in higher income groups, will spread to the lower income layers of the population. But this is not actually happening in the Niger Delta region, apart from not receiving the spread of the wealth from growth in the higher income groups, they are also facing more difficult problem from the impact of emissions from oil and gas production-growth, to their environment and well being. According to Francis Bacon, (1561-1626), from the historical roots of mainstream economy, stated that, we should endeavor to establish and extend the power and dominion of the human race itself over the universe, Descartes (1596-1650), also described the earth and the whole visible universe in the manner of machine. Mainstream economy (neo-classical economics), is based on a mechanical worldview, consequence of the mechanistic worldview is that the whole universe is completely causal and deterministic. The future of any part of the system could-in principle- be predicted with absolute certainty if its state was known in details, there is no capacity for creativity, spontaneity, self movement, or novelty. In this perspective, the society is nothing more than a mere mechanism based on the interplay between egocentric individual seeking their own need, which is exactly the approach of oil production companies in the Niger delta region, Nigeria.

It is also important in this paper, that we further explain the activities of gas flaring and power plants by mainstream economy in greater detail and problems it entails, to give us clearer understanding of the process of production in the Niger delta region. Crude oil is often found mixed with natural gas, which must be separated from the oil during extraction. While it is technically possible to capture and utilize the separated natural gas, in Nigeria the associated gas is generally combusted and flared in the open air. There are currently approximately 100 continuously burning gas flares in the Niger Delta and just offshore locations, some of which have been burning since the early 1960s. According (Environmental Rights Action/Friends of the Earth Nigeria, 2009), based on satellite data, the US National Geophysical Data Center estimated that Nigeria flared 15.1 billion m³ of natural gas in 2008, second only to Russia. Base on ( GGFR, August 2009), gas flares are a significant source of greenhouse gas emissions and emit particulate matter, sulphur dioxide, nitrogen dioxide, as well as carcinogenic substances such as benz[a]pyrene, dioxin, benzene and toluene, which can have severe health effects for local populations and cause environmental problems. Thus, those residing near the flaring sites may suffer from serious

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health problems including respiratory illness, asthma, blood disorders and cancer. Although a Shell spokesman disputed the health impacts of the gas flares, of no scientific proof (Shell spokesman Wim van de Wiel, 6 August 2009), the UNDP has declared that gas flares destroy natural resources and local livelihoods, alienate people from their land, and ―adversely affect human development conditions (―Niger Delta human development report‖, 2006). In additional to the negative environmental effects, gas flaring is inefficient from an economic point of view. The Nigerian government has estimated that it loses about $2.5 billion in revenues annually due to not selling the gas (Vanguard, ―Nigeria loses $150 bn to gas flare in 36 yrs‖, 15 July 2008), instead of utilizing the gases usefully, they are flaring it away, which does not only waste natural resources, but also pollutes the environment and affect human health. This is the practice within the oil and gas production stakeholders‘ paradigm in Nigeria.

It is clear proof from the evidence of oil and gas production in Nigeria, that Triple Bottom line principle of ecological economics paradigm of the integration of environmental protection, society and nature are not properly included in the framework of neoclassical economics approach in the region. Therefore, it is time for change; the current form of global capitalism is ecologically and socially unsustainable. More stringent environmental regulations, better business practices, and more efficient technologies are all necessary, but are not enough; we need a deeper systemic change to address the situation of global ecosystem crisis and the socio-economic and environmental pollution from gas flare and power plants in the Niger Delta region. A new generation of environmental issues faces more threatening than any has perceived before, some local pollution problems such as intense heat, burning- rivers or smog are becoming regional and even global i.e. ozone depletion and global warming. Faced with these problems, we can not say anymore is not our responsibility to clean; moreover, we are the first generation that can destroy its very existence (Winsemius Guntram, 1992). In this light, we can realize that economic can no more be studied within isolation and internal competition between players, there will be need to implement holistic approach to thinking, business should be seen as an ecological model woven into the environment and society. The strands forming a very complex system (Hopfenbeck, 1993), especially as structures and processes in business today are strong governed by their natural environment and societies. Therefore, we see the need that, if the stakeholders of oil production in the Niger Delta region will come up with better solution to the pollution problem if they use the frame work base on ecological economics.

Ecological economics is a new Tran disciplinary field of study that addresses the relationship between ecosystem and economic system in the broad sense. These relationships are central to many of humanity‘s current problems and to building a sustainable future but are not well covered by any existing scientific

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discipline (Robert Costanca, 1997). This frame work is not known by most stakeholders in Nigeria oil production, therefore it is relevant to be used to address the problems of pollution in the Niger delta region. Some researchers have argued that today‘s situation could lead to ecological crisis, other consider environment issues as multiply manageable ecological problems. However, business leaders all over the world recognize increase societal awareness of environmental problems is strong pressure on all sectors of industry. According to Winsemius and Guntram (1992), this pressures spread from four directions: government which are responsible for ecological regulations that should be rigid and inflexible, customers focus on buying green products, competitors and employees, which are characterized by striving to work at cooperation with advanced environmental records and good reputation. As noted, environmental management could try ecological problems cooperation face. Moreover, it can improve organizational function in light of 3E criteria: effectiveness, which is expressed in improvement of environment; efficiency, which is improving the environment at the minimum cost, and equity, showing fair play between all participants. Thus, the impetus for this study is to analyze by an Ecological and Neoclassical economics cluster approach to policy makers and investors and other stakeholders in the sector of the environmental implications of air pollutants from gas flares and power plants to the socio-economic and environment in Niger delta, how it effect the environment and health of settlers in the region. Though the paradigms of Ecological and neoclassical environmental economics have been described in various articles and books and are also embedded in different professional associations, however, we cannot take for granted that the paradigm debates described in the literature are actually mirrored in exactly the same way in the perceptions and opinions of researchers looking at sustainability from an economic perspective. In relation to the situation in the Niger Delta region, oil production activities is currently from a Neo-classical economics approach and has not really benefited the locals and the environment so far, it presuppose that people seek to maximize utility why the proposed new economic assert in addition that people have morality as a source of evaluation. Neo-classical economics treat the market as a separate self-containing system, new economic asserts that the economy is a subsystem of the society and culture. Neo-classical economic assumes that the market is basically competitive, new economics argues that cooperation between interrelated actors are fundamental, we are members of one another (Baldwin 1902), therefore it seems appropriate to consider the framework base on an ecological economics paradigms to re-address the pollution situation in Niger delta region.

1.4. Objectives of the Study

 The objectives of this study revolve around alternative sources of stakeholder frame work in the Niger delta region, to find adequate perspective to address the livelihood and perceived environmental consequences gas flares and power plants emissions may have on the health of local residents and the ecosystem as a whole. The study therefore has two objectives to investigate:

·                     To study how theories from ecological and neo-classical economics paradigms addresses the situation to the problem of pollution from activities of oil production operation in the Niger Delta area and its impact to the environment and livelihood of the local residents.

·                     To assess the regulatory mechanisms put in place to mitigate any environmental or health hazards local residents as well as the immediate environment may face.

From the objectives stated above the following project questions will guide me to elicit information.

Objective 1:

·         What green house gas emission is all about

·         Gas flaring and power plants in Nigeria

·         Culprits in the game of the Niger Delta oil production and their practices

·         What are the environmental and health impacts of green house gas emissions from flaring\power plants in the Niger Delta area?

·         What are the main sources of livelihood for local residents around Niger Delta?

·         How are the local people involved in discussions on the oil exploration and drilling?

Objective 2:

·         Environmental management theories and practices

·         What are ecological\neo-classical economics perspective of sustainable development

·         Ecological economics and neo-classical economics theories related to the problem in the region

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·         What regulatory mechanisms are there to be followed to curb ecosystem destruction?

·         How would information be managed in such a way that local residents would be well informed on the activities of the oil companies?

·         What other source of alternative energy supply could be used?

1.5. The Thesis Structure

The entire thesis comprise of six chapters which are:

·         Introduction

·         Literature and Theoretical frame work

·         Methodology

·         Empirical Findings and Analysis

·         Conclusion and Limitation

This project is therefore taken in partial fulfilment of the requirement leading to the award of a Master of Science Degree in Business, at Bodo Graduate School of Business, University of Nordland, Norway. First and foremost, the introduction chapter has the goal to present general view of the research assignment and to define the research question. It clarifies my motivation for the chosen research topic. The chapter spells the starting point for choice of the theoretical frame work. Secondly, the literature review throws light on the research area and theoretical frame work throws more light on gas flaring and use of power plants, it defines what gas flaring is all about, and then continues to look at the ecological impact of gas flaring to the socio-economic and environment. It further compares the method of gas flaring and power plants approach from a neo-classical and ecological economics perspective. The methodological chapter takes into consideration the collection of data for analysis. It highlights the research design/strategy, qualitative method and inductive approach. The analysis and discussion chapter emphasis the manner of which the information ascertain from the field work is discussed. The perception of the resource person that was interviewed and questionnaires distributed is dealt with in this chapter. Finally, the conclusion and limitation chapter provides a summary of the main point of research and proposal for further research.

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1.6. Gas Flaring and Power plants in Niger Delta, Nigeria

Flaring has been a long-standing issue in the Niger Delta. It is a very explicit sign of natural resource waste (and hence economic mismanagement), also causing environmental problems. The oil companies have mainly been interested in the oil, because of low local market prices for gas (and up until recently also international price levels not sufficiently high to facilitate large-scale transformation into liquid natural gas (LNG). Also the Nigerian judicial context has been a lack of tax regimes or legislation sufficiently strong to discourage flaring. The air pollution stems firstly from the sheer quantities of hydrocarbons being burnt off, but also because the gas being burnt is not only natural gas (mostly methane), but also heavier gas types and pollutants like hydrogen sulphide (H2S), which give off more air pollution. In addition to nitrogen and sulphur oxides (which cause respiratory problems and acid rain) and un-burnt methane, the flaring also gives off cancer-inducing benzene and other toxic gases (SEJ 2004). In addition you have CO2, which is not a big local problem, but should worry the global community, and indeed Nigeria and Africa, which can be hit pretty hard by global warming. The CO2 emissions from flaring in Nigeria were estimated at 34 million tons for the year 2002 (ERA 2005). The Associated Gas Re-Injection Act of 1979 (amended 1984 and 1985, see Annex: Petroleum legislation in Nigeria) is the judicial framework for flaring regulations. Flaring is currently taxed by a Gas Flaring Penalty that fetched US$ 20 million in government revenue in 2004 (NEITI 2006a). It is however clear that this penalty is incredibly cheap compared to penalties in some other countries. The federal government launched its ―flares out by 2008‖ vision in 1996, saying that all routine flaring must stop by the year 2008. Nigeria‘s largest petroleum operating company Shell Petroleum Development Company (SPDC) soon stated they had adopted the same target. The vision has until now not been put into law, however. SPDC now has stated it will not be able to reach the 2008 target, and has asked for an extension of the government‘s deadline. However, more general laws also apply, which was proved by the Federal High Court on the 14th of November 2005, when it ruled that all flaring, by all oil companies, must stop on grounds it violates constitutional rights to life and dignity. The ruling came after members of Iwerekan community in Delta State forwarded the case (FOEI 2005). SPDC has also appealed the Federal High Court ruling.

Over the last few years, a number of gas gathering projects have been put in place, and the Nigeria Liquefied Natural Gas (NLNG) plant on Bonny Island has been expanded numerous times. Time and time again, web and newspaper articles have promised a decrease in flaring would be the result. Were these predictions truthful? Well, it depends on how you define ―decrease‖. If you are a bit creative, you can define an increase in utilized quantities of gas (which reduce the relative share of gas being flared) as a

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