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Risk-sharing agreements to cover environmental damage: theory and practice

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Risk-sharing agreements to cover environmental damage: theory and practice. / Liu, Jing; Faure, Michael.

In: International Environmental Agreements-Politics Law and Economics, Vol. 18, No. 2, 04.2018, p. 255-273.

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@article{7b2147474f0d4bbebeace36e1dadd766,
title = "Risk-sharing agreements to cover environmental damage: theory and practice",
abstract = "Mordernization has witnessed increasingly new industrial sectors which havethe potential to create environmental disasters. The insolvency of risk creators in case of such disasters may lead to insufficient compensation as well as to a dilution of preventive incentives. Insurance is a traditional instrument to address these problems, but is subject to limitations such as the lack of information by the insurers on the risk and limited insurance capacity. The risk-sharing agreement is an alternative which is widely used in high-risk sectors but it received relative little attention in academic literature. This paper analysesthe potential of risk-sharing agreements in minimizing total social costs of environmental harmful activities, in comparison with insurance. The comparison shows the advantage of risk-sharing agreements in terms of less demanding information requirements, allowing for mutual monitoring and the potential to reduce administrative costs. However, the analysis also shows that a few conditions need to be met for such advantages to be materialized.This paper then discusses a typology of various risk-sharing agreements and illustrates the different categories with examples from the maritime and nuclear sectors. Based on these experiences, this paper explores the possibilities to expand risk-sharing agreements to other policy areas where environmental risks may emerge.",
keywords = "Risk-sharing agreements, Insurance, Oil pollution, Nuclear damage, STORAGE, TORT LAW, SAFETY, Insurance, LIABILITY, SOCIETY, INSURANCE CLUBS",
author = "Jing Liu and Michael Faure",
year = "2018",
month = "4",
doi = "10.1007/s10784-018-9386-0",
language = "English",
volume = "18",
pages = "255--273",
journal = "International Environmental Agreements-Politics Law and Economics",
issn = "1567-9764",
publisher = "Springer",
number = "2",

}

RIS

TY - JOUR

T1 - Risk-sharing agreements to cover environmental damage: theory and practice

AU - Liu, Jing

AU - Faure, Michael

PY - 2018/4

Y1 - 2018/4

N2 - Mordernization has witnessed increasingly new industrial sectors which havethe potential to create environmental disasters. The insolvency of risk creators in case of such disasters may lead to insufficient compensation as well as to a dilution of preventive incentives. Insurance is a traditional instrument to address these problems, but is subject to limitations such as the lack of information by the insurers on the risk and limited insurance capacity. The risk-sharing agreement is an alternative which is widely used in high-risk sectors but it received relative little attention in academic literature. This paper analysesthe potential of risk-sharing agreements in minimizing total social costs of environmental harmful activities, in comparison with insurance. The comparison shows the advantage of risk-sharing agreements in terms of less demanding information requirements, allowing for mutual monitoring and the potential to reduce administrative costs. However, the analysis also shows that a few conditions need to be met for such advantages to be materialized.This paper then discusses a typology of various risk-sharing agreements and illustrates the different categories with examples from the maritime and nuclear sectors. Based on these experiences, this paper explores the possibilities to expand risk-sharing agreements to other policy areas where environmental risks may emerge.

AB - Mordernization has witnessed increasingly new industrial sectors which havethe potential to create environmental disasters. The insolvency of risk creators in case of such disasters may lead to insufficient compensation as well as to a dilution of preventive incentives. Insurance is a traditional instrument to address these problems, but is subject to limitations such as the lack of information by the insurers on the risk and limited insurance capacity. The risk-sharing agreement is an alternative which is widely used in high-risk sectors but it received relative little attention in academic literature. This paper analysesthe potential of risk-sharing agreements in minimizing total social costs of environmental harmful activities, in comparison with insurance. The comparison shows the advantage of risk-sharing agreements in terms of less demanding information requirements, allowing for mutual monitoring and the potential to reduce administrative costs. However, the analysis also shows that a few conditions need to be met for such advantages to be materialized.This paper then discusses a typology of various risk-sharing agreements and illustrates the different categories with examples from the maritime and nuclear sectors. Based on these experiences, this paper explores the possibilities to expand risk-sharing agreements to other policy areas where environmental risks may emerge.

KW - Risk-sharing agreements

KW - Insurance

KW - Oil pollution

KW - Nuclear damage

KW - STORAGE

KW - TORT LAW

KW - SAFETY

KW - Insurance

KW - LIABILITY

KW - SOCIETY

KW - INSURANCE CLUBS

U2 - 10.1007/s10784-018-9386-0

DO - 10.1007/s10784-018-9386-0

M3 - Article

VL - 18

SP - 255

EP - 273

JO - International Environmental Agreements-Politics Law and Economics

T2 - International Environmental Agreements-Politics Law and Economics

JF - International Environmental Agreements-Politics Law and Economics

SN - 1567-9764

IS - 2

ER -