Environmental compensation using Habitat and Resource Equivalency Analysis

This article deals with environmental damage valuation in France. In coming years, current practices should be influenced by the Environmental Liability Directive which sets out requirements that member states must enact to prevent and remedy environmental damage, specifically damage to habitats and species. Directive 2004/35/CE reinforces the "polluter pays" principle and introduces new useful methodologies to assess and compensate environmental damage: the equivalency methods. These methods, developed by the National Oceanographic and Atmospheric Administration (NOAA), are used to scale remediation needed to compensate for past, current and future damages related to an incident. Two approaches to resource compensation can be distinguished: the service-service approach (or resource-resource approach) and the valuation scaling approaches (value-to-value and value-to-cost approaches). After introducing both of them, we identify some theoretical and practical pitfalls related to their use.