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Faure (2016). In the Aftermath of the Disaster: Liability and Compensation Mechanisms as Tools to Reduce Disaster Risks

Bibliographic details:

Faure, M. G. (2016). In the aftermath of the disaster: liability and compensation mechanisms as tools to reduce disaster risks. Stan. J. Int'l L.52, 95.


A variety of instruments can be used to compensate victims in the aftermath of a disaster. This article argues that it is important to structure ex post compensation mechanisms in such a way that they also provide incentives for disaster risk reduction. To that end, the article analyzes the ability of a variety of instruments to provide incentives for disaster risk reduction. Further, it argues that where an operator who contributed to the disaster risk can be identified, liability rules can be employed to provide incentives to reduce the risk of disaster. In the case of natural disasters, firstparty insurance may be an appropriate tool to provide potential victims with incentives to reduce disaster risk.

In addition to analyzing the theoretical potential of various instruments to contribute to disaster risk reduction, this article provides many examples that show which instruments are used in practice. It also provides a critical analysis of international environmental agreements, arguing that the liability rules used in those agreements show particular features that may reduce their ability to contribute to disaster risk reduction. It therefore argues that there is substantial scope for policy change, more particularly in international environmental agreements. By making a smarter use of liability rules and having risk-dependent contributions to compensation mechanisms, the liability and compensation schemes in international environmental agreements could better contribute to disaster risk reduction than is currently the case.