Question

Do you believe “In environmental liability cases, courts have some discretion regarding the magnitude of compensation polluters should be forced to pay for the environmental incidents they cause. In general, however, the larger the required payments the better.” Why or why not?

Answer 1

Yes, It is true that in cases of environmental liability courts have some discretion regarding the magnitude of compensation polluters should be forced to pay. The reason that courts have this discretion is that the magnitude of environmental damage cannot be determined in an extremely accurate manner. There are two prime reasons why the magnitude cannot be determined completely accurate:

• Environmental goods do not have a market. Since, these are non-market goods there is no corresponding price for these goods as well. Hence, the monetary valuation by courts of the damage caused to environment might be understated or overstated. To address this problem, the courts might use some discretion to decide the amount of environmental damage which should be paid.
• Environmental damage is characterized by externalities. Those people who might not be actively involved in damaging the environment might also get adversely affected. Hence, the damage might not be correctly determined.

Therefore; for both above mentioned reasons, courts have and often use their discretion to decide the amount the polluters should be used to pay.

In general, the larger the required payments the better. It is so because environmental damage is a growing concern across the world. Larger the payments polluters are required to pay, lesser will be the damage to environment because the opportunity cost of performing environment damaging activities will rise for polluters. Also, since there are externalities associated with environmental goods the magnitude of environmental damage in monetary terms is often underestimated. Hence, the payments by polluters in lieu of environmental damage should be large so that the damages due to the externalities created by environmental damage can also be accounted.