Environmental Valuation and Compensation

• Author: Jamie Benidickson
• Pages: 219-234

219

CHAPTER 10

ENVIRONMENTAL

VALUATION AND

COMPENSATION

A. THE SCOPE AND NATURE OF

ENVIRONMENTAL DAM AGE

Harm or damage suffered as a result of ongoing pollution, accidents or

spills, general degradation, or the over-exploitation and mismanage-

ment 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 situa-

tions it is also possible to imagine that contamination will have perma-

nently or irreversibly undermined t he 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 services

such as water supply, climate stabilization, nutrient cycling, or pollin-

ation. Insofar as human populations are concerned, 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 environmental harm, arising, for

example, from the contamination of food and water supplies. Finan-

cial 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 AW220

In The Costs of Pollution in Canada, the Inter national Institute for Sus-

tainable Development (IISD) suggested a comprehensive approach. Pol-

lution, this report suggests, imposes costs in three broad categories on

households, businesses, and governments: direct welfare costs, costs for

goods and services, and declines in the value of property and natural

capital.2 In terms of direct welfare costs from pollution, for example, the

report mentions health care expenditures, suggesting a 2015 estimate

of $39 billion in that category. Air pollution alone accounted for $36 bil-

lion of estimated health care costs related to pollution. Other sources

of pollution-related health care costs include tap water-borne pathogens,

heavy metals, noise pollution, and extreme weather.3 Pollution also con-

tributes to lost income and increased costs such as lost labour produc-

tivity, increased infrastructure costs, crop losses, and contaminated site

reclamation. Such expendit ures were estimated at around $3.3 billion for

2015.4 The challenges of formulating reliable estimates were, of course,

acknowledged, given a range of uncertainties. Extreme weather linked

to climate change is a prime example of this uncertain environmental

costing.5 Turning to the third category of pollution costs, the IISD analy-

sis described different ways that pollution contributes to the decline in

the value of property and natural capital, including the impact of algae

blooms on waterfront property values and the decli ne in forests and far m-

land from environmental st ressors. However, the study determined that it

is not currently possible to assess the value of these costs to Canadians.6

Many aspects of env ironmental damage and associated costs a s just

discussed fall outside the scope of compensation as generally under-

stood in the context of tort claims. For purposes of comparison it is

worthwhile to review that approach prior to examining alternative

approaches to environmental losses:

Traditionally, the courts considere d the only measure of compensation

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 occurrence of damage. The cost of restoring or

repairing the property, if considered at all, was simply regarded as

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

2 Robert Smith & K ieran McDougal, Costs of Pollution in Canada: Mea suring the

Impacts on Families, Busine sses and Governments (Wi nnipeg: Internation al Insti-

tute for Sustain able Development, 2017) at 8, online: www.iisd.org/sites/default/

f‌iles/publications/costs-of-pollution-in-canada.pdf.

3 Ibid at 15 –18.

4 Ibid at 50.

5 Ibid at 18.

6 Ibid at 84.