Oil pollution caused by tanker accidents: liability versus regulation

Abstract

Difficulties under traditional tort law of narrowing the gap between pollution damages and compensation payments (such as identifying the polluter, proving damages, and causal relationship) do not arise in tanker accident cases. Changes in liability law have improved the legal position of the victims, but remain insufficient as an incentive for accident prevention. Optimal pollution control on the basis of liability alone is not possible because of data asymmetries in the insurance industry. And the assumption implicit in taxes and licenses, as well as in the liability law approach, that the polluter is best qualified to make the best choices to minimize accident pollution control costs is disproved by Coast Guard studies. The author concludes that liability can play only a supplementary role in pollution control. This role can be enhanced if future compensation discussions pay more attention to the incentive effects of the financing of compensation. 35 references, 5 tables.