Environmental Valuation and Compensation

• Author: Jamie Benidickson
• Pages: 219-234

219

CH AP TER 10

ENVIRONMENTAL

VALUATION A ND

COMPENSATION

A. THE SCOPE AND NATURE OF

EN VIRONMENT AL DAM AGE

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.

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, 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.