The Winding Road to Industrial Safety: Evidence on the Effects of Environmental Liability on Accident Prevention in Germany
AbstractThe German Environmental Liability Law (ELL) of 1991 has introduced far-reaching civil liability for environmental damages with the aim to increase firms? efforts to prevent accidents. Previous studies find poor evidence that this goal has actually been achieved. One and a half decades after the introduction of that law, we undertake a new attempt to investigate the impact of the ELL on accident prevention. Our analysis is based on annual data on the number of environmental accidents per year, reported to the monitoring agency ZEMA, and the risk premium imposed by a large German insurer on environmental liability insurance (ELI). As reliable accident reporting has begun only after the implementation of the new law into practice, pre- and post-reform levels of accident prevention cannot be directly compared. However, the time series of ELI premiums cuts across these two periods. Once we examine the relationship between the ELI premium and accident prevention and observe the effect of the reform impulse on the former, we are able to model the dynamics of the adjustment process induced by the ELL. According to our results, the average number of environmental accidents per year has decreased from 29 before to 17 and a half after the reform. Our dynamic analysis reveals an overshooting of the insurance premiums in the first years after the reform and a successive decrease from 1997 onwards. The premiums and firms? prevention efforts achieved a new equilibrium in 2000.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Palgrave Macmillan in its journal The Geneva Papers on Risk and Insurance Issues and Practice.
Volume (Year): 35 (2010)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.palgrave-journals.com/
Postal: Palgrave Macmillan Journals, Subscription Department, Houndmills, Basingstoke, Hampshire RG21 6XS, UK
Other versions of this item:
- Reimund Schwarze & Onno Hoffmeister, 2010. "The Winding Road to Industrial Safety: Evidence on the Effects of Environmental Liability on Accident Prevention in Germany," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan, vol. 35(3), pages 416-434, July.
- Onno Hoffmeister & Reimund Schwarze, 2007. "The winding road to industrial safety. Evidence on the effects of environmental liability on accident prevention in Germany," Working Papers 2007-11, Faculty of Economics and Statistics, University of Innsbruck.
- K32 - Law and Economics - - Other Substantive Areas of Law - - - Environmental, Health, and Safety Law
- K13 - Law and Economics - - Basic Areas of Law - - - Tort Law and Product Liability
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elizabeth Gale).
If references are entirely missing, you can add them using this form.