Environmental liability funds

Abstract

Environmental liability funds have the potential to solve a number of the problems associated with individual liability. Their purpose can be to provide funding for the remediation and compensation of damage that has already occurred, or to pool funds with which to compensate for future damage. In the first case the financing function is dominant, as exemplified by the CERCLA/Superfund for remediating contaminated sites in the USA (Hohloch, 1994; Karl, 1994). If a fund has the second purpose, the financing function is joined by a preventive function if future damage or payments can be reduced by means of precautionary measures. Funds attempt to compensate for damage resulting from environmental pollution caused by products, waste disposal and emissions to air, soil and water in cases where there is a lack of access to individual polluters, and to create specific incentives for potential polluters to take precautionary action.