Over the past several years, decommissioned U.S. warships have been turned into artificial reefs in the ocean by towing them out to sea and sinking them. The thinking was that sinking the ship would conveniently dispose of it while providing an artificial reef environment for aquatic life. In reality, some of the sunken ships have released toxins into the ocean and have been costly to decontaminate. Now the U.S. government is taking bids to instead dismantle and recycle ships that have recently been decommissioned (but have not been sunk yet). Assume that a recently decommissioned aircraft carrier, the USS Searay, is estimated to contain approximately 40 tons of recyclable materials able to be sold for approximately $42.5 million. The low bid for dismantling and transporting the ship materials to appropriate facilities is $43.6 million. Recycling and dismantling the ship would create about 500 jobs for about a year in the Rust Belt. This geographic area has been experiencing record high unemployment rates in recent years.
Requirements
1. Is it more financially advantageous to sink the ship (assume that it costs approximately $0.2 million to tow a ship out to sea and sink it) or to dismantle and recycle it? Show your calculations.
2. From a sustainability standpoint, what should be done with the decommissioned aircraft carrier? List some of the qualitative factors that should enter into this analysis.
3. As a taxpayer, which action would you prefer (sink or recycle)? Defend your answer.