Michael Faure


This Article follows the economic analysis of law as the methodology for analyzing appropriate liability and compensation mechanisms with respect to damages resulting from CO2 storage sites. There are various reasons for employing this approach. One reason is that many have already discussed the design of a liability and compensation scheme for CCS-related damages. But these earlier studies have not yet approached the issue from the angle of an economic analysis of law. The advantage of thismethodology is that attention is paid to the way in which various liability and compensation schemes affect the incentives for prevention of the various stakeholders involved. After all, an important feature of any liability and compensation scheme should be that itprovides appropriate incentives for prevention in the first place.Moreover, the law and economics methodology allows for both an assessment of liability rules from an efficiency perspective and an analysis of how the shape of particular liability rules can stimulate their insurability.