Community Research and Development Information Service - CORDIS

Study on liability and compensation systems for environmental damage

The European Commission has published an invitation to tender for a study to investigate and analyse the economic effects of civil liability and joint compensation systems for remedying environmental damage. The study is intended to provide all necessary material for the Commission to develop its policy in this area.

The study should take into account the Green Paper on Remedying Environmental Damage, a Communication from the Commission to the Council and Parliament (COM(93) 47 final). It should be carried out in connection with a parallel study on the analysis of different civil liability systems in the Member States (responsible unit: XI/1, Legal Affairs), for which a call for tender has already been published (OJ No C 106 of 14.4.1994).

The study has to identify and analyse the following:

A. Methods for the economic evaluation of environmental damage and rules for its cost-effective restoration/compensation;
B. The main economic effects on all levels (micro-, meso- and macro-level) and in all terms (short, medium and long term) of action and non-action of the EU, regarding civil liability for environmental damage, including financial security for this liability, and funds for remedying environmental damage;
C. The possible characteristics of such funds.

The part of the study described in point B consists of a cost-benefit analysis of action and non-action of the EU. This analysis has to be based on the methods and rules found under point A and on different scenarios of liability and fund systems. Applying these scenarios, methods and rules, the following items have to be dealt with:
- Effects of the current legal situation on costs, especially possible distortions of competition;
- Effects of the possible introduction/harmonization of liability, financial security and funds by EU legislation, such as remedial and preventive effects for the environment, internalization of external environmental costs, facilitation of public tasks, e.g. in granting licences;
- Effects on environmental services, financial security markets and employment;
- Costs for (potentially) liable parties (expenditures and losses, less access to finance);
- Costs for Member States, consumers and for the economy as a whole.

Regarding financial security, the availability of insurance cover for environmental liability has to be examined.

The identification and analysis of possible characteristics of funds (point C) should, with a view to adopting appropriate elements for EU legislation, take into account existing or draft funds, including recent developments. It should focus on the functioning in practice of existing funds and should consider possible deficiencies. Items to be considered are:
- Material, personal and geographical scope of funds and their relationship to a civil liability system;
- Possible scope of action by Member States and by the EU;
- Financing and administration of funds;
- Access to funds.

Finally, the costs and benefits of a liability system and/or a fund system have to be compared with the costs and benefits of other economic instruments, such as charges and taxes, public rules aiming at cleaning up, for example, soil and water pollution, voluntary agreements and tradable permits.
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