Environmental liability: A missing use for ecosystem services valuation

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The PNAS 100th Anniversary Special Feature on natural capital and ecosystem services highlights a range of opportunities and challenges to operationalize these concepts to strengthen environmental governance (1). However, the issue’s focus is largely on the role these concepts play in ex ante decision-making, and overlooks their role in informing courtroom liability suits for ex post environmental damages.
Liability provisions are based on the “polluter pays” principle, and hold responsible parties financially liable for environmental damages. This enables recoveries to restore or replace injured ecosystem services and to compensate for environmental harms. These costs rarely appear in company balance sheets (hence, neither in macroeconomic accounts), unless they are claimed through court cases or unless state regulations mandate the internalization of environmental damages. We believe this omission reflects an important gap in mainstream thinking about ecosystem services and natural capital accounting.

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