Benefit Estimation goes to Court: The Case of Natural Resource Damage Assessment

This article evaluates the feasibility of performing natural resource damage assessments under the current Superfund legislation. Using the analyses developed for two recent cases, it explains the sources of the substantial divergences between plaintiffs' and defendants' estimates of these damages. Three factors explain the differences in damage estimates: (1) the time horizon used and treatment of capitalization effects of past damages; (2) the extent of the market assumed in estimating the effects of a release of hazardous wastes on the demand for the affected natural resource; and (3) the character and availability of substitutes for the resource involved.