Regulatory Takings and Environmental Regulation in Nafta's Chapter 11

34 Pages Posted: 3 Mar 2006

See all articles by Emma Aisbett

Emma Aisbett

ANU - School of Regulation and Global Governance

Larry S. Karp

University of California, Berkeley

Carol McAusland

University of British Columbia (UBC)

Date Written: February 21, 2006

Abstract

NAFTA's investment treaty has led to several expropriation compensation claims from investors hurt by new environmental regulations. Expropriation clauses in international treaties solve post-investment moral hazard problems such as hold-ups. However, these clauses can interact with National Treatment clauses in a manner that hinders investment. A police powers carve-out from the definition of expropriation can be Pareto-improving and can increase the level of foreign investment.

Keywords: foreign direct investment, regulatory takings, expropriation, NAFTA, National Treatment, environment

JEL Classification: K3, Q58, F21

Suggested Citation

Aisbett, Emma and Karp, Larry S. and McAusland, Carol, Regulatory Takings and Environmental Regulation in Nafta's Chapter 11 (February 21, 2006). Available at SSRN: https://ssrn.com/abstract=886168 or http://dx.doi.org/10.2139/ssrn.886168

Emma Aisbett (Contact Author)

ANU - School of Regulation and Global Governance ( email )

Canberra, Australian Capital Territory 2601
Australia

Larry S. Karp

University of California, Berkeley ( email )

Dept. of Agriculture & Resource Economics
313 Giannini Hall
Berkeley, CA 94720
United States
510-643-8911 (Fax)

Carol McAusland

University of British Columbia (UBC) ( email )

2329 West Mall
Vancouver, British Columbia BC V6T 1Z4
Canada

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