Are there any legal obstacles that countries have faced while implementing NRDA?

Are there any legal obstacles that countries have faced while implementing a natural resource damage assessment framework?

There are pitfalls and legal obstacles at every stage in a damage assessment framework. At each step in the process, potential problems in data collection, analysis, and interpretation could result in an unsubstantiated or inaccurate damage assessment that fails the evidentiary standards for clarity and transparency demanded by a court of law. In a court of law, these deficiencies could be cited as reasons for reducing reparation claims or, worse, inspire the court to reject the entire claim outright. Furthermore, a poorly planned damage assessment could weaken or delay the recovery efforts, create inaccurate loss reporting, establish inappropriate restoration priorities, create negative environmental impacts, and delay or result in the denial of recovery funds from donor organizations.

One especially cogent obstacle concerns monetization methods for ecological effects that are not closely tied to well-being. Ecological and human use services (e.g., enjoyment and existence values) are very difficult to monetize accurately, and US courts (and others) impose a high standard when using contingent valuation methods to measure and monetize such effects. Instead, a restoration cost approach has seen wider use because it reflects and embodies these values. For example, suppose an oil spill kills “K” birds. One could attempt to value those birds using survey methods. Imagine the birds are valued at “X” monetary units. First, note that spending “X” on bird restoration is incorrect. If the benefit-cost ratio of restoration actions is “B”, the correct amount to spend to compensate for bird losses is “X/B”. Second, if the value for each bird is “p”, the number of birds needing to be restored, “R”, is such that “pK = pR” (where “K” and “R” are defined in discounted present-value units over time). The value term “p” cancels out. Hence, damages equal the cost of restoring “R” birds, and valuation is not necessarily needed.

References:

• Legal obstacles for contingent valuation methods in environmental litigation

What’s Next?

Our team will be exploring NRDA questions more deeply in this five-question blog series. Our goal is to help provide you with a better understanding of Natural Resource Damage Assessments and how the framework applies to the war in Ukraine. As always, we are here to answer any questions you may have. We look forward to helping you and your company achieve your NRDA goals and hope you tune in for our additional workshops and webinars.