Epsilon Open Archive

Abstract

The European Union (EU) recently implemented the Environmental Liability Directive (ELD), requiring that environmental damage be restored so that the affected environment returns to (or toward) its baseline condition and the public is compensated for the initial damage and the losses during the time it takes for the environment to recover (interim losses). Equivalency Analysis (EA) represents a method for scaling environmental compensation to offset interim losses. Ensuring appropriate compensation for resource loss requires a merging of ecological measurement with the theories of welfare economics. This thesis explores some of the issues in scaling resource-based compensation in three papers. Paper I is a quantitative application of the EA method to compensate for sea eagle mortality from wind turbine collisions. It is co-authored with a biologist and proposes a new and innovative compensatory measure based on electrocution prevention on power lines. Paper II is written for an ecological readership and communicates fundamental economic assumptions in a way that might be helpful for cross-discipline collaboration. The main contribution is to clarify that the underlying goal of environmental compensation should be "no net loss of welfare." Paper III scrutinizes the conventional EA method from a social efficiency perspective, suggesting that the focus on equity for the victim may preclude a socially optimal compensatory outcome. The overarching conclusion is that EA fails to inform policy makers of the inescapable environmental trade-offs that arise in compensating environmental losses.