3.2. OVERALL APPROACHES

The calculation of the amount of financial provision by formula or by reference to default amounts can be set out by regulators through law or guidance. It is typically done for simple operations where liability is relative to a small number of factors such as the area of the operation, quantity of waste held or quantity of pollutants held.

The difficulties associated with calculating unforeseen liabilities might also be overcome by specifying default amounts through benchmarking using simple formulas or for unforeseen liabilities by reference to claims history.

Site-specific calculation is typically for more complex operations such as mines and landfills. It is typically done by reference to specifications in law or guidance. The calculation may be made by an operator or a third-party expert and can be subject to verification by a regulator or third-party expert.

Site-specific calculations are attractive in terms of robustness, but they can be resource-demanding for operators and regulators.

Provision of guidance and templates for documenting the risk assessment and risk management measures improves the quality and timeliness of calculations and streamlines verification by regulators or third parties. Templates published by the Irish EPA are available at the following link http://www.epa.ie/pubs/advice/licensee/fp/.

It is also worth noting that financial provision by way of a mutual fund/pool may avoid altogether the need to attribute amounts to individual operations, as the concern relates to the amount of liability arising from the relevant sector as a whole over time.

Whichever approach is used, there is a need to undertake regular monitoring to ensure that the amount is accurate, given the large number of variables over time. Please refer to the monitoring section.