Page 130 - Challenges in Corrosion Costs Causes Consequences and Control(2015)

108 CORROSION COSTS

1. A measure of the severity of corrosion costs.
2. An indication of where and how the impacts of corrosion are felt.
3. A useful method for the analysis of corrosion costs.
4. Bibliography and database on corrosion economics.
5. Reference point for the impact of corrosion on other factors affecting the
economy.
6. Assessment of the economic effect of proposed means to reduce corrosion costs.
7. Identification of sectors where affordable and unavoidable corrosion costs are
encountered.

2.2.5 The Economics of Corrosion in Australia
Since the 1950s, many countries have attempted to assess their national corrosion
costs. In 1973, R.W. Revie and H.H. Uhlig estimated that the direct losses to the
Australian economy caused by corrosion (7) were “in the order of A$470 million,”
which was equivalent to 1.5% of the GNP for Australia in 1973. However, no element
for indirect losses caused by corrosion was included. Revie and Uhlig believed that
the indirect losses were high, but not easily estimated. Since indirect costs may equal
or exceed the direct costs, total corrosion costs to Australia could have been estimated
to be about 3% of GNP in 1973. Assessments of uncertainties or a separation of costs
into avoidable and unavoidable components were not quantified.
The 1973 estimate of A$470 million was noted to be about double the 1955
estimate of $240 million made by Worner (8) and was further compared with an
estimate of the annual cost of corrosion to Australia of $900 million published
in 1972 by E.C. Potter in 1972. Potter (9) used a published estimate of corrosion
costs to Great Britain (2) equal to 3.5% of GNP and included corrections relevant
to Australia to arrive at A$900 million corrosion costs. Potter’s cost estimate is
higher than that of Revie and Uhlig because some elements for the indirect costs of
corrosion were included in the Potter report.

2.2.5.1 The NBS/B.C.L. Economic Model in Relation to the Australian Economy
The methods of N.B.S./B.C.L. econometric model in relation to the Australian econ-
omy was considered appropriate to determine the costs of corrosion and evaluate
the potential economic savings that might accrue to the Australian community with
the improved application of corrosion mitigation technology. By applying the B.C.L.
methodology to the Australian economy, a figure for the potential economic savings
to the Australian community has been computed. As in the B.C.L. model, it has been
calculated by forming a judgment of the extension of the useful life of capital assets
by the application of an input/output econometric analysis.

2.2.5.2 Concepts and Definitions Relating to Corrosion as Developed
by N.B.S./B.C.L. and as Applied to the Australian Economy Corrosion was
restricted to metals and was defined as the degradation of metals where the environ-
ment – aqueous or gaseous – contributed to the mode of degradation. This included