Compensation for Environmental Damage in China: Theory and Practice

This article is organized as follows: following the introduction in Part I, Part II focuses on the role of liability rules in compensation for environmental harm, then Part III focuses on insurance, and Part IV discusses the specific case of marine oil pollution. For each topic, we will first describe theoretical possibilities for providing compensation, and then examine the role these mechanisms play in practice. Part V offers a few concluding remarks, and provides an economic analysis and policy recommendations

The polluter-pays principle in climate change law: An economic appraisal

There is a lively debate among scholars and policymakers on whether either consumers or producers should be seen as responsible for pollution caused in the production and consumption of traded goods. In this article, we argue that, in conformity with intuitive conceptions of causation, the economic incidence of a Pigouvian tax can be seen as a measure of the relative contribution to pollution of consumers and producers. Taking this perspective on the polluter-pays principle can help increase ambition in climate change action because it reduces the relevance of the question “Who is the polluter?” in climate change negotiations and enables a focus instead on the issue of “What can be done?” to reduce carbon emissions

The Law and Economics of Environmental Federalism: Europe and the United States Compared

This article describes the evolution and key features of the centralized environmental regulatory systems that emerged in the United States and Europe during the latter half of the twentieth century. It applies insights from the positive economic analysis of regulatory centralization in an attempt to explain a striking paradox found in both the European and American centralized environmental regulatory regimes: the fact that in both systems, centralized environmental regulation has been adopted not as a solution for transboundary pollution (interjursidictional externalities), but rather for pollution that is primarily local. The paper develops a positive account that explains the tendency of centralized environmental regulation to focus so paradoxically on localized pollution as due to inherent pressures for regional protectionism and redistribution within a (federalized) political system. Normatively, we provide an up-to-date survey of the theoretical and empirical work on the race-to-the-bottom story, and then apply normative economics to develop insight into the relative normative desirability of environmental regulatory centralization in the U.S. versus Europe. We believe that the relatively less centralized European system may have economic justification. On the other hand, the enlargement and increased economic integration of Europe raise some interesting questions, both normative questions regarding the desirability of centralized European environmental regulation, and positive questions regarding the future of European environmental law

The Multiplication Effect of Legal Insurance

Because legal insurance policies cover the expenses of plaintiffs in bringing legal claims, such policies increase the risk of negligent or careless acts by tortfeasors. For this reason, potential tortfeasors would prefer to avoid injuring holders of legal insurance policies. Since insurance coverage (or lack thereof) is not observable to a tortfeasor prior to an accident, tortfeasors can never exercise this preference ex ante. As a result, insured tort victims provide deterrence benefits to those that are uninsured by increasing the over- all expected costs of engaging in negligent, harmful behavior. In magnifying a tort offender’s overall risk of facing legal action, this multiplication effect of insurance policies enhances deterrence, inducing increased overall safety levels. Unfortunately, however, the multiplication effect of legal insurance reduces the demand for legal expense insurance policies. Because policyhold- ers do not capture the full benefits o