Environmental Valuation and Compensation

• Author: Jamie Benidickson
• Profession: Faculty of Law University of Ottawa
• Pages: 211-227

211

CHA PTER 10

ENVIRONMENTAL

VALUATION AND

COMPENSATION

A. THE NATUR E OF ENVIRONMENTAL

DA M AGE

Environmental dam age 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 t ake many form s. 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 situ ations it is also possible to imagine that contamina-

tion will have permanently 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 appreciate

as ecological functions or ser vices such as water supply, climate stabil-

ization, nutrient cycling or pollin ation. Insofar as human populations

are concerned, individuals may suffer adverse health effect s, physical

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

occasion it is possible to spe ak of entire communities a s the victim s of

environmental harm, arising, for e xample, from the contam ination of

food and water supplies. Financia l compensation m ight then focus on

payments to t hose — including the public — who have suffered losses

or incurred expenses associated with remedying environmental dam-

age or taking measure s to prevent the spread of such damage.1

1 For discuss ion of restoration see the following ch apter.

ENVIRONMENTA L LAW212

Many aspects of environmental damage as just discussed fall out-

side the scope of compensat ion as generally understood in the context

of tort claims. For purpose s of comparison it is worthwhile to review

that approach prior to examining alternative approaches to environ-

mental losses:

Traditionally, the courts con sidered the only me asure of compensa-

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

the tortfeasor’s wrong, that is, the difference b etween the propert y

value before and after the occur rence of damage. The cost of restoring

or repairing the proper ty, if considered at all, wa s simply regarded as

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

cases, the disti nction i s irrelevant. Where the cost of restoration is

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

always recoverable, even if the plaint iff does not actua lly incur t he

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

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

additional sum to compen sate for the residual def‌iciency. However,

where the co st of restor ing the property is gre ater than the diminu-

tion of value the cases are divided as to which measure of dam ages

should be applied. Most cases follow the tr aditional approach so th at

the plaint iff is only entitle d to da mages suf f‌icient to compen sate for

a diminution of proper ty value. However, damages will be me asured

according to the cost of repair if restoration a lone w ill make good

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

the plaint iff actually inte nds to effect repai rs and if the cost of such

repairs is re asonable.2

As environmental losses are more fully appreciated in a context

that encompasse s recognition of such principles a s 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 Ltd.3 (discussed later in this

chapter), the willing ness of courts to explore new issues around t he

valuation of env ironmental losses introduces methodological and evi-

dentiary cha llenges.

2 L.N. Klar et al., Re medies in Tort, vol. 4, looseleaf (Toronto: Carswell, 1999–) at

27.

3 British Columbia v. Canadia n Forest Product s Ltd., 2004 SCC 38 [Canfor].