Environmental Legislations and Firms’ Risk-Reduction Activities

L'incidence des régimes de responsabilité environnementale sur les comportements de prévention et d'assurance des firmes

Sandrine Spaeter
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Sandrine Spaeter: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique

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Abstract: Firms are often protected by limited liability, which holds them financially liable for an environmental damage only upon their net value. Limited liability may explain the under-investment in prevention by firms and the small demand for pollution insurance. To counterbalance this tendency, the American Congress adopted a harsh environmental legislation in 1980 which extends the (financial) liability to any operator of the pollutant firm, and especially to banks. In the Directive on environmental liability proposed by the European Parliament and the Council of the European Union, financial guarantees rather than extended liability are the important point. In this article, we study both liability systems in the light of the results of the economic theory on the impact of extended liability on the behaviors of firms, banks and insurers.

Keywords: Limited liability; Banks; Insurers; Responsabilité limitée; Assurance pollution; Parlement européen (search for similar items in EconPapers)
Date: 2004
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Published in Revue Economique, 2004, 55 (2), pp.227-245. ⟨10.3917/reco.552.0227⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00279339

DOI: 10.3917/reco.552.0227

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