Environmental Valuation and Compensation

AuthorJamie Benidickson
Harm or damage suf fered as a result of ongoing pollution, accidents or
spills, general degradat ion, or the over-exploitation and mismanage-
ment of resources may take ma ny 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 contamin ation will have perma-
nently or irreversibly undermined t he regenerative capacity or resilience
of the affected ecosystem. Losses here may also entai l the reduction or
elimination of what we are coming to appreciate a s 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 t he victims of environmenta l harm, arising, for
example, from the contaminat ion of food and water supplies. Finan-
cial compensation might then focus on pay ments to those — including
the public who have suffered losses or incur red expenses associated
with remedying env ironmental damage or tak ing measures to prevent
the spread of such damage.1
1 For discuss ion of restoration, see Chapter 11.
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, i mposes costs in three broad categories on
households, businesses, and govern ments: direct welfare costs, costs for
goods and services, and declines in the value of property and n atural
capital.2 In term s 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 estim ates were, of course,
acknowledged, given a range of uncertainties. Extreme weather linked
to climate change is a prime example of this uncerta in environmental
costing.5 Turning to the third category of pollution costs, the IISD analy-
sis described d ifferent 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 as sess the value of these cost s to Canadians.6
Many aspects of env ironmental damage and associated costs a s just
discussed f all 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 exa mining alternat ive
approaches to env ironmental lo sses:
Traditionally, the courts considere d the only measure of compensation
for damage to property to b e the diminution in value c aused by the
tortfeasor’s wr ong, that is, the differe nce between the property va lue
before and after the occu rrence of damage. The cost of restor ing or
repairing t he property, if considered at all, was s imply regarded as
a means of determ ining the dimi nution 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: w ww.iisd.org/sit es/default /
f‌iles/publ ications/cost s-of-pollution-in- canada.pd f.
3 Ibid at 15 –18.
4 Ibid at 50.
5 Ibid at 18.
6 Ibid at 84.

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