Compensation for Natural Resource Injury: An Emerging Federal Framework

This paper provides an overview of the emerging "Superfund" natural resource damage assessment and compensation framework and a review of several economic and legal issues that are likely to affect the ability of the framework to achieve its objectives. The Superfund Act as amended establishes a federal regulatory structure that provides a legal "legitimization" for the use of economic-based nonmarket valuation techniques in judicial proceedings involving natural resource injuries resulting from oil and hazardous waste spills and releases. While the regulations have the potential to foster more appropriate compensation as well as prospective incentives to limit damages to natural resources, several controversial elements, definitions, and assumptions built into the damage assessment regulations appear to have the potential to undermine the efficiency and equity of damage assessments. These issues reflect the difficulty of integrating economic concepts of natural resource value and their estimation into the legal environment.Environmental Economics and Policy, Political Economy, Public Economics, Resource /Energy Economics and Policy,