Environmental Valuation and Compensation

• Author: Jamie Benidickson
• Pages: 215-230

215

CHAPTER 10

ENVIRONMENTAL

VALUATION AND

COMPENSATION

A. THE NATURE OF ENVIRONMENTAL

DA M AGE

Environmental damage and other losses suffered as a result of ongoing

pollution, accidents or spills, general degradation, or the over-exploita-

tion and mismanagement of resources may take many forms. Physical

contamination of a short- or long-term nature is an obvious example,

with or without destruction of plant and animal life, or biodiversity

loss. In severe situations it is also possible to imagine that contamina-

tion will have per manently or irreversibly undermined the regenerative

capacity or resilience of the affected ecosystem. Losses here may also

entail the reduction or elimination of what we are coming to appreci-

ate as ecological services such as water supply, climate stabilization,

nutrient cycling, or pollination. Insofar as human populations are con-

cerned, individuals may suffer adverse health effects, physical damage

to property, or economic losses, singly or in combination. On occasion

it is possible to speak of entire communities as the victims of environ-

mental harm, ar ising, for example, from the contamination of food and

water supplies. Financial compensation might then focus on payments

to those — including the public — who have suffered losses or incurred

expenses associated with remedying environmental damage or taking

measures to prevent the spread of such damage.1

1 For discuss ion of restoration, see Chapter 11.

ENVIRONMENTAL L AW

216

Many aspects of environmental damage as just discussed fall out-

side the scope of compensation as generally understood in the context

of tort claims. For purposes of comparison it is worthwhile to review

that approach prior to examining alternative approaches to environ-

mental losses:

Traditionally, the courts considered the only measure of compensa-

tion for damage to property to be the diminution in value caused by

the tortfeasor’s wrong, that is, the difference between the property

value before and after the occ urrence of damage. The cost of restoring

or repairing t he property, if considered at all, was simply regarded as

a means of determining the diminution of value. However, in many

cases, the distinction is irrelevant. Where the cost of restoration is

equal to or less than the diminution of capital value, the repair is

always recoverable, even if the plaintiff does not actually incur the

cost. Moreover, where the repairs fail to restore the property to its

original value, the plaintiff is entitled to the cost of repair and to an

additional sum to compensate for the residual def‌iciency. However,

where the cost of restoring the property is greater than the diminu-

tion of value the cases are divided as to which measure of damages

should be applied. Most case s follow the tradit ional approach so th at

the plaintiff is only entitled to damages suff‌icient to compensate for

a diminution of propert y value. However, damages wi ll be measured

according to the cost of repair if restoration alone will make good

the plaintiff’s loss . . . . The latter approach will only be adopted if

the plaintiff actually intends to effect repairs and if the cost of such

repairs is reasonable.2

As environmental losses are more fully appreciated in a context

that encompasses recognition of such principles as polluter pay, inter-

generational equity, and the values of biodiversity and ecological integ-

rity, attention has shifted from individualized claims to a more broadly

conceived framework for evaluating compensation. As seen in Brit-

ish Columbia v Canadian Forest Products Ltd3 (discussed later in this

chapter), the willingness of courts to explore new issues around the

valuation of environmental losses introduces methodological and evi-

dentiar y challenges.

2 LN Klar et al, R emedies in Tort, vol 4, loose-leaf (Toronto: Carswell, 1999–) at 27.

3 British Columbia v Cana dian Forest Products Ltd, 2004 SCC 38 [Canfor].