Regulatory Takings and Environmental Regulation in NAFTA's Chapter 11

Emma Kate Aisbett, Larry S. Karp and Carol McAusland ()

No 1014, Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series from Department of Agricultural & Resource Economics, UC Berkeley

Abstract: NAFTA's investment treaty has led to several expropriation compensation claims from investors hurt by new environmental regulations. Expropriation clauses in international treaties solve post-investment moral hazard problems such as hold-ups. However, these clauses can interact with National Treatment clauses in a manner that hinders investment. A police powers carve-out from the definition of expropriation can be Pareto-improving and can increase the level of foreign investment.

Keywords: foreign direct investment; regulatory takings; expropriation; NAFTA; National Treatment; environment (search for similar items in EconPapers)
Date: Written
Note: oai:cdlib1:are_ucb-1108

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