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Environmental Liability

Study on Valuation and Restoration of Biodiversity Damage for the Purpose of Environmental Liability

Various options for developing a liability regime for damage to biodiversity or natural resources were explored in the Commission White Paper on Environmental Liability. This study was commissioned to provide further information on how such a liability scheme could work by answering three inter-related questions:

  • How to define 'significant' damage to natural resources and decide on the 'minimum level of restoration';
  • How, and to what extent, monetary valuation techniques can be used to estimate the economic value of damage to natural resources; and

  • How, and to what extent, cost-benefit analysis can be used to choose between restoration options.

Although initially the scope of the study was limited to damage to Natura 2000 sites, the methodology presented in the study is applicable to other sites of nature conservation value. The terms 'biodiversity' and 'natural resources' refer to notions which are of interest in the context of a potential Directive on environmental liability. The term 'biodiversity' refers to "the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part" (Convention of Biological Diversity, Article 2). On the other hand, the term 'natural resources' refer to "land, fish, wildlife, biota, air, water, groundwater, and drinking water supplies" (Oil Pollution Act of the USA). The wider-concept of natural resources is used in this study provided that it does not refer to privately owned resources, which are covered in the current liability regime.

The study reviews the relevant literature in Europe and the USA and the relevant aspects of the litigation experience in the USA, namely the Natural Resource Damage Assessment (NRDA) guidance. It also provides three case studies (based on the Sea Empress oil spill off the coast of Wales in 1996, the Aznalcóllar mine toxic spillage affecting the Doñana National Park in 1998 and the Exxon Valdez oil spill in Alaska in 1989) to illustrate the framework recommended in the study and the issues raised. A fourth case study is used throughout Chapters 3 to 5 focusing on the Blackbird Mine pollution incident in Idaho, USA.

The framework used in this study for assessing the damage to natural resources and choosing between different restoration options will be familiar to those carrying out environmental impact assessments and/or cost benefit analysis. It is also based on the guidance for NRDA in the USA (NOAA, 1997). This framework consists of three main steps:

  • Damage assessment and significance;
  • Primary restoration options, and
  • Compensatory restoration options.

The study discusses the different points of importance in each step and the role of economic valuation and cost-benefit analysis within the overall framework.

The following documents are available:

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