Environmental Liability in a Federal System: A Law and Economics Analysis

Abstract

Kristel De Smedt defended her PhD research on the harmonisation of environmental liability rules in a federal system at the Law Faculty of Maastricht University on 19 December 2007. The promotor of this research was Prof. dr. Michael Faure (Maastricht University). The article below summarises the main results of this research. The PhD research examines the harmonisation of environmental liability rules in a federal system from a law and economics perspective. Public interest and private interest theories are used to examine at which level environmental liability rules best can be decided in a federal system. Throughout the book, soil pollution is used as a case-study. The research was induced by the controversial harmonisation of environmental liability rules in the European Union by means of Directive 2004/35/CE on Environmental Liability with Regard to the Prevention and Remedying of Environmental Damage (ELD). The research tries to unravel the decision–making process behind the ELD, and the reasons and consequences of harmonisation. Kristel De Smedt examines whether the harmonisation of environmental liability rules in the European Union corresponds with the economic theory on federalism and, if not, how harmonisation of environmental liability rules in the European Union can be explained. She concludes that the shift of environmental liability rules to the European level was inefficient and does not correspond with the economic criteria for centralisation. Moreover, the content of the Directive itself shows inefficiencies. At the same time, the analysis makes clear that the existence and the content of the Environmental Liability Directive largely can be explained by private interest distortions.