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Schmid, A. Allan --- "Environmental law and economics" [1999] ELECD 22; in Backhaus, G. Jürgen (ed), "The Elgar Companion to Law and Economics" (Edward Elgar Publishing, 1999)

Book Title: The Elgar Companion to Law and Economics

Editor(s): Backhaus, G. Jürgen

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781858985169

Section: Chapter 15

Section Title: Environmental law and economics

Author(s): Schmid, A. Allan

Number of pages: 5

Extract:

15 Environmental law and economics
A. Allan Schmid


Law and economics has two contrasting approaches. One aspires to provide
not only a positive theory of economic behaviour but also a guide to legal-
economic policy choices. Efficiency and maximization of net economic product
is claimed to be that guide (Faure, 1995). The second provides only a sub-
stantive description of the impacts of legal alternatives on different parties,
with little attempt to aggregate them. These approaches will be contrasted
with respect to several major legal questions concerning the environment,
including the choice of injunction or liability as relief to injury, externalities
and ownership, use of markets versus governmental regulation, and the tak-
ings issue. These will illustrate some of the theoretical and empirical findings
in the environmental law and economics literature.
What is the appropriate relief when an actor causes environmental injury to
another? The case of Boomer v. Atlantic Cement Co. (Court of Appeals of
New York, 1970, 26 N.Y. 2nd 219, 257 N.E. 2nd 870) is often used to
illustrate the problem (see Goetz, 1984). A large cement plant created smoke,
dirt and vibration which damaged neighbours. The court found that the activ-
ity created a nuisance and awarded damages, but not an injunction. Cooter
and Ulen (1988) argue that law and economics can provide an authoritative
answer to the desirability of damages versus an injunction which legal analy-
sis alone cannot. The landmark literature here is Calabresi and Melamed
(1972) and Polinsky (1980). The authors ...