Environmental Economics

1. ENVIRONMENTAL LIABILITY
Definition
Obligation based on the principle that a polluting party should pay for any and all damage caused
to the environment by its activities. In some countries, this is a strict liability if the damage can
be attributed to a specific party.
The laws of environmental liability and environmental harm
Environmental liability is an instrument of environmental protection for the prevention of and
compensation for environmental harm. It promotes the personal responsibility of the (economic)
players. Properly constituted environmental liability law creates economic incentives to prevent
the occurrence of harm, paving the way for the payment by the polluter of compensation for any
harm that occurs.
The legislature can create environmental liability legislation under both public and civil law. In
terms of civil law this is a matter of compensation for harm to life, limb, health or property of
individuals who fall victim to such harm mediated by environmental media as a result of the
conduct of other individuals. This kind of harm is covered in particular by the Environmental
Liability Act (Umwelthaftungsgesetz) of 19.12.1990. This is accompanied by standards that
oblige the polluter to repair the harm to environmental goods by itself, even if the latter are not
the property of a person. These standards allow the authorities to proceed against the polluter, if
necessary with coercion, and to order it to repair any harm. Such regulations are contained in
the Environmental Damage Act (Umweltschadensgesetz), which entered into force on
14.11.2007.
The development of environmental liability law at EU level and a compact presentation of the
conditions and legal consequences of the practical application of the Environmental Damage Act
can be found in the presentation “Umweltschutz durch Umwelthaftung – Das
Umweltschadensgesetz” (“Environmental protection through environmental liability - the
Environmental Damage Act”).
The German Environment Agency has for many years been engaged in the further development
of environmental liability at national, European and international levels.
Environmental liability in international law
Cross-border environmental harm is increasing internationally. For many areas - for instance, for
the protection of the marine environment - there are instruments which govern liability for
environmental harm in specific areas and which contain different conditions for establishing
liability. This opens up the unwelcome possibility of regulatory differences in individual areas
which cannot be objectively justified or, with even graver implications, of gaps in the
regulations.
The study prepared on behalf of UBA entitled “Environmental Liability in International Law:
Towards a Coherent Conception” and authored by Prof. Rüdiger Wolfrum, Prof. Christine
Langenfeld and Dr. Petra Minnerop extensively describes and evaluates many such cases giving
rise to liability which are found mainly in multilateral environmental agreements but also in

2. international case law. The authors analyse national environmental liability regimes in Germany
and the United States, and show how international civil and procedural law can best protect the
environment. It is the contention of the authors that the relatively most stringent domestic
environmental liability law should always be applied. One chapter is devoted to comparing and
contrasting the essential elements of the various international, European and national liability
systems. According to the authors, there is an ever increasing interdependence between the
international and European levels of standard-setting and the improvement of compliance with
environmental law in international environmental law. The authors therefore attempt to use the
subsidiary and complementary state responsibility in the event of the non-implementation, for
instance, of EU directives, which is enshrined in European law, as a basis for new international
liability regimes. They contend that an international liability regime needs to be developed not
just in the sphere of civil law but also for states. The study was published in English by the Erich
Schmidt Verlag as volume 2/05 of the UBA BERICHTE (reports) series.
The study builds on the existing work entitled “Environmental Protection by Means of
International Liability Law” by Prof. Rüdiger Wolfrum and Prof. Christine Langenfeld, which
was also published in English by the Erich Schmidt Verlag as volume 6/99 of the UBA
BERICHTE (reports) series.
Liability for environmental harm
Liability for harm to the environment as a common good - for instance to biodiversity, water and
soil - can strengthen the hand of preventive environmental protection and ensure the enforcement
of compensation for environmental harm in accordance with the polluter-pays principle. Prof.
Juliane Kokott from the University of St. Gallen has joined forces with an interdisciplinary
research team to develop cornerstones for liability for environmental harm. Particular attention
was paid to the legal requirements and methods for determining the nature and scope of
compensation of harm. The authors analyse existing national and international liability regimes
as well as the EC regulations which were still being discussed at that time and make specific
proposals for the further development of liability for ecological harm. The study “Ökologische
Schäden und ihre Bewertung in internationalen, europäischen und nationalen Haftungssystemen
– eine juristische und ökonomische Analyse” (“Ecological harm and its evaluation under
international, European and national liability regimes - a legal and economic analysis”) was
published by Erich Schmidt Verlag, Berlin as volume 3/03 of the UBA BERICHTE (reports)
series.
Common Law Environmental Remedies
Underlying the development of legal theory in the United States is a body of rules and principles
relating to the government and security of persons and property that had its origin, development
and formulation in England.

3. Brought to the American colonies by peoples of Anglo-Saxon stock, these basic rules were
formally adopted in the states in which they were in force after the American Revolution. Known
as the "common law," these principles are derived from the application of natural reason, an
innate sense of justice and the dictates of conscience. The common law is not the result of
legislative enactment. Rather, its authority is derived solely from usages and customs that have
been recognized, affirmed and enforced by the courts through judicial decisions.
It is important to realize that "common law" is not a fixed or absolute set of written rules in the
same sense as statutory or legislatively enacted law. The unwritten principles of common law are
flexible and adaptable to the changes that occur in a growing society. New institutions and public
policies; modifications of usage and practice; changes in mores, trade, and commerce;
inventions; and increasing knowledge--all generate new factual situations which require
application and reinterpretation of the fundamental principles of common law by the courts.
As the courts examine each new set of facts in the light of past precedent, an orderly
development of common laws occurs through a slow and natural process. Thus, the basic
principles underlying American jurisprudence remain fundamentally constant, evolving slowly
and progressively.
The common law, so far as it has not been expressly abrogated, is recognized as an organic part
of the jurisprudence of most of the states. However, since the state court systems have functioned
independently of each other, subject only to federal review in cases of national importance, the
common law varies slightly from state to state.
The common law actions are civil suits in which the plaintiff (the party bringing the lawsuit)
seeks to remedy a violation of a right. Civil actions are distinguished from criminal proceedings.
Criminal actions are those in which the state seeks to redress a breach of public or collective
rights that are established in codified penal law.
The three types of common law actions most commonly encountered in the environmental field
are: (1) nuisance, (2) trespass and (3) negligence.

4. Which action fits where? Plaintiffs will use negligence to seek damages for personal injury from
environmental pollution. For invasions of property interest, plaintiffs rely on trespass and
nuisance actions to address environmental harm.
In every common law action, the plaintiff must bring the case within the statute of limitations
and establish the causation between the harm and the defendant’s conduct. Let’s take a closer
look at each of these common law actions.
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B. Nuisance
Nuisance is the most frequently pled common law action in environmental litigation. Nuisance
law traditionally protected the right of a landowner to use and enjoy property.
Nuisance is defined as “that activity which arises from the unreasonable, unwarrantable or
unlawful use by a person of his own property, working an obstruction or injury to the right of
another or to the public, and producing such material annoyance, inconvenience, and discomfort
that the law will presume resulting damage.”
The general rule is that a person may use his land or personal property in any manner he sees fit.
However, this rule is subject to limitation. The owner must use his property in a reasonable
manner. A nuisance arises whenever a person uses his property to cause material injury or
annoyance to a reasonable neighbor. Odors, dust, smoke, other airborne pollutants, water
pollutants and hazardous substances have all been held to be nuisances. Nuisance actions come
in two forms: public and private
Under both private and public nuisance law, the plaintiff must prove that the defendant’s activity
unreasonably interfered with the use or enjoyment of a protected interest and caused the plaintiff
substantial harm.
The trier of fact determines whether an activity is unreasonable by balancing the social utility of
the activities against the harm they create.
Plaintiffs have used private nuisance actions to gain compensation and force polluters to
discontinue interference with their physical private property as well as with their comfort and
enjoyment of their property. In Boomer et al. v. Atlantic Cement Company, 257 N.E.2d 870
(N.Y. 1970), the plaintiffs claimed that the dirt, smoke, and vibrations coming from the

5. defendant's cement plant caused injury to their property. The property owners sought damages
and an injunction to close the plant. The plant already employed the best pollution control
technology. The Boomer court addressed the economic consequence of the injunction and the
effect of the nuisance. The court weighed the economic effect of closing the plant against the
harm to the individual plaintiff's land, and concluded that the cement company could pay
permanent damages in lieu of an injunction or closing. This case illustrates the limitations of
private nuisance law to remedy pollution. Courts typically balance the equities and hardships.
Private nuisances do not always outweigh the economic contribution of the polluting entity.
Public nuisance law protects from interference a "right common to the general public." Plaintiffs
may bring a public nuisance action if there are damages, interference, or inconvenience to the
public. A state may assert a public nuisance action as an exercise of its police powers--the typical
situation. A private citizen may bring a public nuisance action only if he or she can show that he
or she has suffered from a harm that can be distinguished from that suffered by the members of
the general public.
Village of Wilsonville v. SCA Services, Inc., 426 N.E.2d 824 (Ill. 1981), is a case in which the
plaintiffs, a village and other governmental bodies, alleged that the defendant's hazardous
chemical landfill was a public nuisance. The plaintiffs sought to enjoin the operations of the
landfill and require removal of toxic waste and contaminated soil. The court found that there was
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a substantial danger of groundwater contamination and explosions from chemical reactions.
Although the damages were prospective, the nuisance already was present. Therefore, the court
granted an injunction and ordered a site clean-up.
“Coming to a nuisance” is the phrase used to describe a defense that the complainant or plaintiff
affected by the nuisance moved into the area where the complained about activity” had already
been in existence.
An example of “coming to a nuisance” occurs when someone moves onto property near an
airport or industrial complex and then complains of the nuisance that existed prior to his moving
there. Generally, the fact that an individual purchases property with the knowledge of the
existence of a nuisance or that he came to the nuisance will not defeat his right to the abatement
of the nuisance or recovery of damages.

6. C. Trespass
Trespass is distinguished from nuisance in that trespass is interference with the possession of
property whereas nuisance is interference with the use and enjoyment of property.
Trespass to land is an unlawful, forcible entry on another’s realty. An injury to the realty of
another or an interference with possession, above or below ground, is a trespass, regardless of the
condition of the land and regardless of negligence.
Trespass to land is the type of trespass action that is generally used in pollution control cases. In
an action for trespass to land, entry upon another’s land need not be in person. It may be made by
causing or permitting a thing to cross the boundary of the premises. The trespass may be
committed by casting material upon another’s land, by discharging water, soot or carbon, by
allowing gas or oil to flow underground into someone else’s land, but not by mere vibrations or
light which are generally classed as nuisances.
In the case of Martin v. Reynolds Metal Co the deposit on Martin’s property of microscopic
fluoride compounds, which were emitted in vapor form from the Reynolds’ plant, was held to be
an invasion of this property—and so a trespass.
The line between trespass and nuisance is sometimes difficult to determine. The distinction
which is now accepted is that trespass is an invasion of the plaintiffs interest in the exclusive
possession of his land, while nuisance is an interference with his use and enjoyment of it.
D. Negligence
“Negligence” is “the omission to do something which a reasonable man, guided by those
ordinary considerations which ordinarily regulate human affairs, would do, or the doing of
something which a reasonable and prudent man would not do. Negligence is that part of the law
of torts which deals with acts not intended to inflict injury.

7. The standard of care required by law is that degree which would be exercised by a person of
ordinary prudence under the same circumstances. This is often defined as the “reasonable man”
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rule, what a reasonable person would do under all the circumstances.
In order to render the defendant liable, his act must be the proximate cause of injury. Proximate
cause is that which in the natural and continuous sequence, if unbroken by an efficient
intervening act, produces injury and without which the result would not have happened.
Nissan Motor Corp. v. Maryland Shipbuilding and Drydock Company exemplifies a negligence
action in an environmental case. The shipbuilding company’s employees failed to follow
company regulations when painting ships, allowing spray paint to be carried by the wind onto
Nissan’s cars. The shipbuilders had knowledge of the likely danger of spray painting, yet failed
to exercise due care in conducting the painting operations in question. This failure to exercise
due care amounted to negligence.
Persons harmed as a result of careless and improper disposal or handling of hazardous waste can
recover for their losses under a negligence cause of action. Indeed, state and federal courts have
long recognized this common law theory of recovery against defendants who engage in the
negligent disposal of pollutants such as hazardous waste. Where negligence can be established,
it is no defense that the negligent action was in full compliance with all government regulations
and permit conditions. On the other hand, noncompliance with regulations or a permit may be
prima facie evidence (proof without any more evidence) of liability in some states.