Environmental Liability Law Research Articles

A Comparative Study on the Application of Group Liability in the Field of Environmental Torts between China and the United States

As the biggest developing country, China is relatively lagging in the development of laws on environmental protection. With the increasing impact on the environment bring by the enterprises, the application of group liability in the field of environmental torts has become an urgent legal issue to be solved. This paper uses case the study method, the comparative method, and literature study method, taking Comprehensive Environmental Response Compensation and Liability Act in the United States as an example, to compare the cases, legislation, and judicial practice of China and the United States in this problem. It is concluded that the current Chinese legislation on group liability and corporate environmental responsibility is insufficient, which affects the application of group liability in environmental tort cases. Based on these shortcomings, this paper draws on the experience of CERCLA and proposes suggestions for improving China’s legislation on this issue. A relatively detailed two-step plan is arranged, including improving and perfecting the existing system of piercing the corporate veil and introducing the Environmental Liability Law.

Poacher pays? Judges' liability decisions in a mock trial about environmental harm caused by illegal wildlife trade

Conservation litigation applies environmental liability law to biodiversity conservation contexts—holding parties who harm biodiversity responsible for providing remedies such as restoration, compensation, apologies and investments into education and cultural activities. Many countries have enabling legislation, but these types of lawsuits are rare in most countries and have been infrequently used to protect biodiversity from drivers such as illegal wildlife trade. Yet, these types of cases could be strategically used to provide remedies for cases of egregious harm and help catalyze social change through the power of judicial decisions. The viability of future cases, however, relies heavily on the judges and juries who adjudicate cases. Rather than wait potentially decades for test cases to emerge to help evaluate the success of this strategy, we conducted mock trials and post-trial interviews with Indonesian judges (N = 32), a population that is rarely explored in conservation science. We presented them with a hypothetical civil lawsuit in a case of illegal tiger trade, which sought to hold the defendant liable for providing 11 different remedies to address the harm purportedly caused by their actions. The results show that judges were very amenable to providing remedies in this type of civil lawsuit; for eight of the 11 claims, over 60% of the respondents indicated each claim would be likely to be accepted. The results also highlighted six key themes important in judicial decision-making, which provide insights for practitioners developing future lawsuits. The results suggest a favorable setting for testing real-world application of liability laws to remedy biodiversity harm, which may become an important part of future environmental governance.

Should environment be a concern for competition policy when firms face environmental liability?

In the recent period, more and more voices have called for unconventional competition policies as a way to achieve higher environmental investments from firms. This paper shows that this objective may come into conflict with those of environmental liability laws. We introduce a basic oligopoly model where firms produce a joint and indivisible environmental harm as a by-product of their output. We first analyze the effects on the equilibrium of alternative designs in environmental liability law, secondly, we discuss the rationale for “non-conventional” competition policies, i.e. more concerned with public interest such as the preservation of environment (as well as human health and so on). We study firms decisions of care and output under various liability regimes (strict liability vs negligence) associated with alternative damages apportionment rules (per capita vs market share rule), and in some cases with damages multipliers. We find that basing an environmental liability law on the combination of strict liability, the per capita rule, and an “optimal” damages multiplier, is consistent with a conservative competition policy, focused on consumers surplus, since, weakening firms’ market power also increases aggregate expenditures in environment preservation and social welfare. In contrast, a shift to the market share rule, or to a negligence regime, may be consistent with a restriction of competition, since firms’ entry may instead lead to a decrease in aggregate environmental expenditures and losses of social welfare. Nevertheless the fine tuning of the policy requires specific information from a Competition Authority, which we discuss as well.

Liability for environmental damage and insurance coverage under German law

“Protection of the environment“ and “sustainability“ are more significant than ever. The legal system contributes an important share to the protection of the environment. However, an overview of the German private environmental liability law shows that conventional tort law is not a suitable basis for civil liability for the environmental consequences of officially approved emissions of greenhouse gases. In general, one of the main problems of private environmental liability law lies in proving the individual causality of the conduct of an emitter, as the lawsuit of a Peruvian homeowner against a German energy company pending before the Higher Regional Court of Hamm illustratively demonstrates. The outcome of this lawsuit, which may have an outstanding significance for the status and development of private environmental liability law in Germany, is awaited with great anticipation. The article also briefly examines recent developments in private environmental liability law outside Germany and the question to what extent insurance can be an instrument to protect the environment.

Pollution insurance—methods, coverage and beneficiaries under german policies

German environmental liability law is characterised by a whole range of different liability provisions. These rules do not only establish a liability for the violation of individual rights due to environmental impacts, but also, since 2007, a liability under public law for damage to the environment. The new Environmental Damage Act (Umweltschadensgesetz, “USchadG”) not only gives rise to considerable and unpredictable liability risks for businesses, but also creates an additional need for adequate liability insurance coverage. This is because the conventional environmental liability insurance (Umwelthaftpflichtversicherung, “UHV”) did not provide cover for claims against companies for damage to flora, fauna, water and soil. For this reason, the so-called environmental damage insurance (Umweltschadensversicherung, “USV”)was launched on the market in 2007, which can at least partially cover liability under the USchadG. Nevertheless, environmental damage insurance policies only offer incomplete protection against official claims based on the USchadG (e.g. by excluding damage caused by normal operations), not least due to the difficulty of calculating environmental damage. The following article provides a brief overview of the main questions on German environmental liability law and corresponding insurance models.

Seguros para riscos ambientais e o problema da delimitação da infortunística ambiental em um cenário de riscos difusos e complexos: aspectos jurídicos no Brasil

Partindo-se de noção de crise ambiental e da constatação de que o Estado, a sociedade e as empresas vêm criando mecanismos para propiciar o desenvolvimento sustentável, pondera-se que no âmbito jurídico aparecem como importante solução os instrumentos econômicos de proteção ambiental, dentre os quais sobressai-se o Seguro Ambiental. Demonstra-se que, embora de forma ainda tênue, o seguro ambiental vem progredindo no Brasil, fruto não de uma obrigatoriedade legal, mas isto sim de uma evolução gradual e adequada às exigências do mercado. Diante deste contexto, preocupando-se com a inserção e consolidação do seguro ambiental de forma apropriada, rentável e duradoura, ressalta-se que o seguro ambiental deve estar devidamente ajustado às modernas construções legais, jurisprudenciais e doutrinárias sobre responsabilidade civil ambiental. Discorre-se sobre as peculiaridades relacionadas aos riscos e danos ambientais, analisando destacadamente a forma como a jurisprudencia do Superior Tribunal de Justiça vem enfrentando as questões de litigiosidade em matéria ambiental. Conclui-se que o Direito Ambiental que vem sendo implementado pelos Tribunais vem empregando significativas inovações em matéria de responsabilidade civil ambiental, tanto do direito material quanto processual, o que é um cenário de incertezas, fator que dificulta a implementação das técnicas securitárias. São apresentados os principais elementos relacionados à técnica securitária, ressaltando-se a necessidade de os seguros atuarem em cenários jurídicos estáveis e previsíveis. Tais pressupostos, se demonstra, não estão presentes no Direito brasileiro. O modelo legal europeu de asseguração de riscos ambientais é analisado, destacando-se a previsibilidade e segurança possíveis, a partir de marcos legais claros sobre responsabilidades ambientais. Por fim demonstram-se as potencialidades e os benefícios da inserção do seguro ambiental no sistema de tutela do meio ambiente, notadamente como instrumento com vantagens preventivas e reparatórias.

환경책임법 제정의 핵심쟁점에 관한 고찰

환경책임법 제정의 핵심쟁점에 관한 고찰

Environmental liability law and R&D subsidies: results on the screening of firms and the use of uniform policy

This paper analyzes both R&D in pollution control technology and pollution abatement by firms that are subject to environmental liability law (either strict liability or negligence) and are granted R&D subsidies. Firms differ in their R&D costs (private information) and experience technology spillovers. Policy makers may induce first-best abatement and R&D levels despite asymmetric information by graduating policy instruments to screen firms. The chances of implementing first-best activity levels by such means differ under strict liability and negligence, and examples suggest that negligence performs better. The paper also studies the case in which uniform policy levels are imposed on heterogeneous firms, showing that strict liability tends to outperform negligence from a social welfare perspective in this scenario.

“It’s All in the Mix!”- Internalizing externalities with R&D subsidies and environmental liability

Extending previous “tales of two market failures”, we consider a setting in which firms generate environmental externalities and may invest in environmentally friendly technological advancement generating R&D spillovers. We analyze the joint use of environmental liability law and R&D subsidies to internalize the double externality. Two alternative liability rules are considered: strict liability and negligence. In a complete information scenario, the social optimum in terms of emission levels and technical progress may be induced by combining either liability rule with an appropriate R&D subsidy. However, when the policy maker has incomplete information with respect to a firm’s productivity of R&D investments and non-discriminatorily sets a uniform liability rule and a uniform subsidy, only the so-called “double negligence” rule that imposes both an emission and a technology standard can induce the social optimum (if any one). The double negligence rule dominates strict liability with respect to the goal of minimizing social costs under modest conditions, also in cases in which none of the liability rules is capable of inducing first-best behavior among firms. Somewhat counterintuitively, a non-discriminatory double negligence rule can even dominate a (simple as well as double) negligence rule with type-specific norms and compliance-contingent type-specific subsidies.

Led on the Wrong Track? A Note on the Direction of Technical Change under Environmental Liability Law

AbstractThis note shows that polluters might opt for technical change which is inferior to other innovations from a social standpoint under environmental liability law. Polluters choose what is socially optimal under strict liability. However, we show that it is possible to have not only too little or too much technical change of a given kind but, importantly, also the wrong kind of technical change under negligence.

Generalized Progress of Abatement Technology: Incentives Under Environmental Liability Law

This paper considers the incentives environmental liability creates to improve pollution abatement technology. Our analysis considers technical progress in end-of-pipe abatement and in the production technology used, thereby generalizing the approach taken by Endres et al. (Environ Resour Econ 36:341–366, 2007). We establish that this generalization has drastic repercussions on incentives under negligence liability, while the performance of strict liability is not compromised. Furthermore, it is demonstrated that the social desirability of investment in abatement or production technology (or both) decisively determines how ex-ante and ex-post regulation fare with respect to welfare maximization in the case of negligence liability.

The monopolistic polluter under environmental liability law: incentives for abatement and R&D

This article analyzes the output, abatement, and investment decisions made by a monopolistic polluter under environmental liability law. The model applied considers both integrated and end-of-pipe abatement technologies. We find that in the case of fixed technology, in many instances negligence produces more favorable results than strict liability in terms of social welfare. The reason is that output under strict liability is always less than first-best output, whereas output under negligence is not similarly limited. However, this ranking of liability rules may be reversed when technology is endogenous. Under such conditions investment in both integrated and end-of-pipe abatement technologies under negligence is guided by motives foreign to the social planner, whereas the polluter’s calculus under strict liability is similar to that of the social planner.

Market Power in the Eco-industry: Polluters' Incentives under Environmental Liability Law

This paper analyzes the output and abatement choices of perfectly competitive downstream polluters who are subject to environmental liability law and procure abatement from an imperfectly competitive eco-industry. Under strict liability, polluting firms choose suboptimal abatement, but socially optimal output given abatement. Under negligence with firm-specific abatement standards, polluting firms choose suboptimal output but socially optimal abatement given output. Under negligence with industry-wide abatement standards, the output and abatement choices of most firms are socially suboptimal. Second-best considerations are offered for each case. Under strict liability (negligence), these apply to the level of liability (the behavioral standard). <i>(JEL H23, Q58)</i>

Incentives to diffuse advanced abatement technology under environmental liability law

Polluting firms with advanced abatement technology at their disposal have incentives or disincentives to share this technology with other polluting firms. The ‘direction’ and extent of those incentives depends on the liability rule applicable and the way technical change impacts marginal abatement costs. We establish that incentives for diffusion are socially optimal under strict liability and socially suboptimal under negligence if technical change lowers marginal abatement costs for all levels of abatement. Negligence may, however, induce better diffusion incentives than strict liability if technical change decreases (increases) marginal abatement costs for low (high) levels of abatement.

The Monopolistic Polluter Under Environmental Liability Law: Incentives for Abatement and R&amp;D

This paper analyzes the output, abatement, and investment decisions made by a monopolistic polluter under environmental liability law. The model applied considers both integrated and end-of-pipe abatement technologies. We find that in the case of fixed technology, in many instances negligence produces more favorable results than strict liability in terms of social welfare. The reason is that output under strict liability is always less than first-best output, whereas output under negligence is not similarly limited. However, this ranking of liability rules may be reversed when technology is endogenous. Under such conditions investment in both integrated and end-of-pipe abatement technologies under negligence is guided by motives foreign to the social planner, whereas the polluter's calculus under strict liability is similar to that of the social planner.

R&D and abatement under environmental liability law: Comparing incentives under strict liability and negligence if compensation differs from harm

This paper analyzes equilibrium R&D in pollution control and equilibrium pollution abatement by polluters who are subject to environmental liability law when the level of compensation differs from the level of environmental harm. We contrast the performance of strict liability with that of the negligence rule. Privately optimal levels necessarily deviate from socially optimal ones under strict liability, whereas private decisions are first-best under negligence unless compensation is much smaller than harm. It is established that the way in which privately optimal R&D deviates from the first-best level depends on the kind of technical change in pollution abatement. Counterintuitively polluters might overinvest into R&D in pollution control if compensation falls short of harm, and may underinvest if compensation exceeds harm.

Erratum: The Winding Road to Industrial Safety: Evidence on the Effects of Environmental Liability on Accident Prevention in Germany

The German Environmental Liability Law (ELL) of 1991 has introduced far-reaching civil liability for environmental damages with the aim of increasing firms’ efforts to prevent accidents. Previous studies find poor evidence that this goal has actually been achieved. One and a half decades after the introduction of that law, we undertake a new attempt to investigate the impact of the ELL on accident prevention. Our analysis is based on annual data on the number of environmental accidents per year, reported to the monitoring agency ZEMA, and the risk premium imposed by a large German insurer on environmental liability insurance (ELI). Examining the relationship between the ELI premium and accident prevention, we are able to model the dynamics of the adjustment process induced by the ELL. According to our results, the average number of environmental accidents per year has decreased from 35 before to 22 after the reform.

The Winding Road to Industrial Safety: Evidence on the Effects of Environmental Liability on Accident Prevention in Germany

The German Environmental Liability Law (ELL) of 1991 has introduced far-reaching civil liability for environmental damages with the aim of increasing firms’ efforts to prevent accidents. Previous studies find poor evidence that this goal has actually been achieved. One and a half decades after the introduction of that law, we undertake a new attempt to investigate the impact of the ELL on accident prevention. Our analysis is based on annual data on the number of environmental accidents per year, reported to the monitoring agency ZEMA, and the risk premium imposed by a large German insurer on environmental liability insurance (ELI). Examining the relationship between the ELI premium and accident prevention, we are able to model the dynamics of the adjustment process induced by the ELL. According to our results, the average number of environmental accidents per year has decreased from 35 before to 22 after the reform.

Environmental Liability Law and Induced Technical Change: The Role of Spillovers

We investigate the incentives of environmental liability law to improve pollution control technology. It is shown that equilibrium choice of abatement technology and of the level of pollution reduction is socially optimal under very restrictive conditions. However, technological spillovers distort the incentives to innovate. The negligence rule turns out to be less sensitive to this problem than strict liability if the due-care standard is set sufficiently close to the second-best level of care.

Environmental Liability Law and Induced Technical Change – The Role of Discounting

We analyse the incentives of environmental liability law for inducing progress to emission abatement technology. We consider three liability rules: strict liability, a negligence rule with an emission norm as the due care standard, and a double negligence rule which combines the emission standard with an abatement technology norm. In the case of distortive discounting, i.e. where the private discount rate deviates from the social one, we show, how the level of distortion influences the ranking of liability rules, according to the criterion of generated social cost.