Financial Provisions

This report summarizes the evaluation of three pre-existing calculation tools for determining financial provision for unforeseen environmental liabilities. The tools, developed in Spain, the Netherlands, and Ireland, were assessed for wider application in different jurisdictions. The report concludes that all three tools have potential for use in other regions, with some considerations for their specific purposes and contexts.

This document provides a practical guide for regulators on using financial provisions for environmental liabilities. Building on a previous report on financial provisions, this guide explains terminology, gives an overview of financial systems, and offers advice on calculating the amount of financial provision needed. It also explores different types of financial provisions and their advantages and disadvantages.

This report presents the findings of a year-long project on financial provisions for environmental liabilities in Europe. The project examined various financial tools and their suitability to cover foreseen and unforeseen environmental liabilities, with the aim of protecting the environment and the public purse. The report also presents case studies where financial provisions have succeeded and failed, and includes recommendations for a second year of research.

This practical guide is intended as a reference document for regulators. It does not prescribe what a regulator should do. Instead, it aims to provide information to assist regulators in making better decisions about financial provision for environmental obligations and liabilities. In this way, it should contribute to improved protection of the environment and the public purse, promote compliance with the polluter pays principle and encourage operator investment in pollution prevention. The guide identifies issues to consider in the decision-making process when assessing financial provision, and assists regulators and other users in finding successful solutions. It also highlights the importance of ongoing maintenance and monitoring of financial provision to ensure successful delivery of that financial provision when required and provides examples of usage and guidance internationally.