Towards a reform of environmental liability in China: an economic analysis

In December 2009, the People's Republic of China ('the PRC') introduced a new Tort Liability Law ('the TLL'), in which important provisions also deal with environmental liability. This article analyses environmental liability in the PRC using economic insights. First, basic requirements for an efficient environmental liability system are outlined, then circumstances for environmental liability prior to the 2009 changes are highlighted. In the past, many issues relating to the applicable liability rules were highly debated. The TLL clarifies many issues and introduces strict liability for environmental harm. A critical economic analysis of both the old and the new regime are provided, whereby it is concluded that the changes may enable effective use of environmental liability as an instrument to remedy environmental pollution in China.