Financial liability for environmental damage: insurance market in Italy, focus on Veneto region experience

Abstract

Making good environmental damage caused by industrial accidents and restoring impaired ecosystems may be associated with high costs. The European Environmental Liability Directive requires that environmental damage is prevented or remediated and confers financial liability on operators responsible for the activities that caused the damage. The directive encourages adoption of financial risk instruments for environmental liability, ensuring that operators stand up for their responsibilities. We analyse the risk financing instruments for environmental liability in Italy, with emphasis on waste treatment and disposal plant management in Venice Metropolitan City, where financial guarantees and environmental insurance are mandatory. The regional legislation obliges operators of waste treatment plants to seek financial protection through financial guarantees and environmental insurance. We have conducted online survey and in-depth interviews with both suppliers and users of financial protection instruments. On national level, the relatively high environmental consciousness is countered by a low perception of risk and subsequently very low penetration of financial security instruments. Among the identified barriers, we have singled out a limited knowledge of cumulative and long-lasting impacts of industrial activities on environment and ecosystems. Financial and insurance are well developed, but a deep support for specific risk identification and coverage lacks. A closer cooperation between public and private sector can be an opportunity to foster the adoption of these instruments and to improve the coverage of public costs for environmental restoration, due to unattended liability.