Liability for oil spill damages: Issues, methods, and examples

Abstract

Liability is an important incentive‐based instrument for preventing oil spills and provides a sustainable approach for restoring coastal resources injured by spills. However, the use of liability for environmental damages raises many challenges, including quantification of money measures of damages. In this article, case studies are used to illustrate the issues, methods, and challenges associated with assessing a range of damages, from those that can be measured relatively easily using market information to more “esoteric,”; and much more difficult, cases involving non‐market‐valued losses. Also discussed are issues raised by the new national and international regulatory focus on restoration and by the simplified, compensatory formula used by some states.