3.3.1. RESOURCES AVAILABLE

In Spain, under the Environmental Liability Law, there is a legal requirement for operators to carry out a risk assessment to identify the operation’s risk scenarios, to score those scenarios based on the probability of occurrence and an environmental damage index, and then to select the scenario that represents 95% of the risk.

The Ministry for the Ecological Transition and the Demographic Challenge  (Spain) has developed  three tools (ARM-IDM-MORA), which help operators prepare environmental risk assessments and calculate the amount of mandatory financial security.

Modelo de Oferta de Responsabilidad Ambiental (MORA), 2014 calculates potential environmental damage remediation costs. The MORA model is a follow-on non-mandatory tool for calculating potential environmental damage remediation costs. It requires information on the place where the damage would occur, the agent causing the damage (e.g. fuel, fire), the extent of natural resources affected (e.g. numbers of species, quantities of soil or water) and the reversibility of damage. The MORA model contains environmental data for Spain, selects the best remediation method (which can be adjusted) and contains unit rate costs for the remediation methods. The receptors considered are water (groundwater, rivers, sea), soil, species and habitats. Its greatest potential is as an ex-ante methodology, although it could be used to assist with evaluations ex-post.

The Environmental Risk Assessments (ARM) tool helps operators prepare environmental risk assessments.

The Environmental Damage Index (IDM) tool allows the operator to estimate the severity of the environmental damage for each risk scenario identified in the environmental risk assessment. This makes it possible to compare the different scenarios, and to select a reference scenario to serve as the basis for calculating the amount of the mandatory financial guarantee.

Many sectors are reported to have developed electronic environmental risk analyses for their industry that connect with the MORA application, automatically retrieving estimated restoration costs for their risk scenarios, which is very useful for risk management purposes.

Further information, in Spanish, is provided at the following link: Modelo de Oferta de Responsabilidad Ambiental (MORA), 2014. 

The English version of the tools is available at

https://servicio.mapama.gob.es/mora/login.action?request_locale=en.

Guidance, in English, on the tools is available at the following link Guidance document for the implementation of the Law. A Brochure is also available.

Ireland has also developed (Guidance on assessing and costing environmental liabilities’ for costing potential liabilities arising from incidents (i.e. unforeseen liabilities).  It is available at the following link http://www.epa.ie/pubs/advice/licensee/fp/. The first step is a standard risk assessment (based on International Standards Organisation standards) to identify, analyse and evaluate plausible risks for treatment. The guidance provides non-exhaustive lists of risks that typically arise under the headings: fuel storage; bulk storage and handling (chemicals, solvents, milk, etc.); production; waste management; air abatement; waste water treatment; drainage; landfill; fire; weather; traffic; and legacy. The risks are ranked in priority based on the product of their likelihood and consequence scores. Mitigations are then proposed, risk owners assigned and implementation timeframes specified.

The second step is the identification, quantification and costing of the plausible worst-case scenario. This is the potential event that poses the maximum environmental liability (i.e. highest consequence score from above). The plausible worst-case scenario is described in detail in terms of the following:

• types of materials lost
• quantity of materials lost
• pathways involved
• nature and extent of impact
• control and remediation measures required

The Dutch model has been developed as a tool for the competent authorities responsible for issuing permits for Seveso companies and IED Annex I-category 4  companies (chemical industry) in the Netherlands to help determine the amount of financial security needed to cover the costs of remediation of environmental damage.   A google translation of the Dutch model is provided in Annex II. 

An English translation of Chapter 4 (which contains the method) is provided in Annex II of IMPEL report 2017/22, updated 2018 which is available at https://www.impel.eu/projects/financial-provision-what-works-when/

The approach is underpinned by the assumption that the company has an up-to-date and valid permit and that the company complies with its environmental obligations.  The rationale behind the model is based on effects rather than risks, and company closure (bankruptcy) as a consequence of an incident is taken as a starting point.  This is because this type of company closure automatically includes the public costs that can follow from a regular business termination.

Assuming that a company complies with its up-to-date permit, in the case of company closure (bankruptcy) due to an environmental incident, environmental costs arise for disposal of stocks and waste and the remediation of soil, surface and groundwater contamination. Non-environmental costs (e.g. economic damage) are not part of the model.

Permit providers can easily fill in the model with information that companies must already provide when applying for the permit. After completing a limited number of steps, the application of the model results in an amount for the financial guarantee with which any non-recoverable environmental costs can be (largely) met in case of company closure.

Three components determine the extent of the financial security:

1. Cost for removal and processing of waste;
2. Soil and groundwater remediation; and
3. Purification and remediation of surface water.

The total size of the financial security is determined by adding up the calculated costs of the three components. 

There is a significant amount of information on claims under international maritime oil spill clean-up funds on the International Oil Spill Funds (international oil pollution compensation fund) website. Research has examined correlations with factors such as hydrocarbon type and amount spilled in particular. There have also been attempts to develop formulas and models using these factors and other factors such as geographic location, shoreline type, environmental and socioeconomic features and clean-up strategy. While these should be considered with caution given the limitations of the datasets and the real life complexities involved, they are indicative of possible approaches to developing formulas or default values.