Page 136 - Challenges in Corrosion Costs Causes Consequences and Control(2015)

114 CORROSION COSTS

An important aspect of corrosion is public safety, which may be at stake. In such
cases, governments do intervene in market forces under certain circumstances. In the
absence of corrosion mitigation technology, public expenses will be large. Here the
concept of “internalized and externalized” liabilities may be important. For instance,
governments regulate by prescribing maintenance schedules for aircraft and rigor-
ously control standard safety. Unchecked, corrosion can cause an aircraft crash. Thus
maintenance standards are put in place to avoid crashes.
If corrosion is the cause of an aircraft crash into the sea, the costs are effectively,
partly internalized as the airlines obtain their money for anticorrosion measures from
fare-paying passengers. However, if the aircraft crashes on a city suburb, third parties
are involved, and the costs are externalized. Internalized costs represent an argument
for industry support for corrosion information and dissemination and research facil-
ities. Externalized costs refer to government support.

2.2.6 Kuwait (1995)
In 1992, Kuwait conducted an economic assessment of the total cost of corrosion to its
economy using a modified version of the Battelle-NBS IO model. The resulting report
containing the assessment can be found in “Economic Effects of Metallic Corrosion
in the State of Kuwait” authored by F. Al-Kharafi, A. Al-Hashem, and F. Martrouk,
Final Report no. 4761, KSIR Publications, December 1995.
The total cost of corrosion was estimated at about $1 billion 1987 dollars repre-
senting 5.2% of Kuwait’s 1987 gross domestic product (GDP). Avoidable corrosion
costs were estimated at $180 million or 18% of the total cost.
The method to estimate corrosion costs was patterned after Battelle-NBS IO
method. Data gathered and information required for the model’s adjustments came
from three sources: (i) data compiled from a survey specifically designed for
industries in Kuwait; (ii) judgment of experts in corrosion in Kuwait; (iii) experience
of other countries and previous studies.
The questionnaire or survey was the choice for data compilation. The elements
considered were: replacement of equipment and buildings, excess capacity and redun-
dant equipment, loss of product, maintenance, and repair and corrosion control.
The costs of corrosion for two years, 1987 and 1992, were analyzed and the costs
for 1992 were less than those in 1987 because of the following factors:

1. The economy in 1992 was smaller than in 1987.
2. The 1992 model assumed a more efficient economy with respect to cost of
corrosion for each output in the IO model.
3. The study assumed that the economy in 1992 was operating below capacity.
4. The study assumed that only more efficient equipment was used in the produc-
tion process.

On the sector level, the estimates for total cost of corrosion in the oil sectors (crude
petroleum and petroleum refining) were $65 million in 1987. The avoidable cost was