Comments on paper by James Boyd

Publication Date15 August 2002
Pages487-490
DOIhttps://doi.org/10.1016/S0193-5895(02)20022-6
AuthorDonatella Porrini
COMMENTS ON PAPER BY
JAMES BOYD
Donatella Porrini
The paper "Financial Responsibility for Environmental Obligations:
Are
Bonding and Assurance Rules Fulfilling Their Promise?" written by James Boyd
presents a very interesting and complete description of financial responsibility
as an environmental policy instrument. It describes very well and in depth the
topic of financial responsibility: the theoretical characteristics and the practical
applications.
With the expression "financial responsibility" all the instruments are
considered that require polluters to demonstrate
ex ante
financial resources
adequate to correct and compensate for environmental damage that may arise.
In practise, financial responsibility implies that the operations of hazardous
plants and other business are only anthorised if firms show proof that future
liability claims will be covered by insurance companies products or other
financial sources.
The starting point of the paper is the importance of financial responsibility
as an instrument to solve the environmental damages internalisation problem.
In fact a firm strict liable is not stimulated to choose an efficient level of care
if there is the possibility to go into bankruptcy, following the judgement proof
theorem) On an economic point of view, this is a problem of intemalisation
in the sense that it causes the fact that some of the losses of the victims will
go unclaimed under conventional strict liability and in some cases firms facing
considerable liability risks can reduce their capital 2 and use judgement
proofness as a evasion strategy. 3
An Introduction to the Law and Economics of Environmental Policy: Issues in Institutional
Design, Volume 20, pages 487-490.
© 2002 Published by Elsevier Science Ltd.
ISBN: 0-7623-0888-5
487

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