Environmental Liability

Abstract

In this chapter, the law and economics literature with respect to environmental liability is reviewed. The goals of environmental liability from an economic perspective are discussed and the importance of the Coase Theorem is stressed. The classic digotomy between negligence and strict liability is applied to environmental pollution and the question of the consequences of the fact that many polluters are subject to regulation is addressed. Problems of environmental damage are discussed as well as limits and extensions of liability to others than the polluter. The importance of latency and the evolution over time of environmental liability is addressed as well. The chapter equally discusses environmental insurance as well as alternative compensation mechanisms. Also, the literature concerning the application of environmental federalism to environmental liability is reviewed. Attention is also paid to two specific areas of environmental liability, namely, nuclear liability and oil pollution.

Keywords: environmental liability, Coase Theorem, strict liability negligence, environmental damage, latency, retro-active liability, environmental insurance, oil pollution, nuclear liability

JEL Classification: K32, K13, Q01, Q28