Environmental Liability Could Help Remedy Biodiversity Loss

Monday, July 26, 2021

In a rural community in North Sumatra, Indonesia, an environmental NGO recently filed one of the first natural resource liability suits for illegal resource exploitation against a zoo holding critically endangered animals. Extending the “polluters-pay” principle, the case has the potential to set a global precedent for holding illegal wildlife traffickers accountable for repairing the harm they cause—not only to individual plants and animals, but also to species survival, ecosystem health, and human well-being.

Pongo the Stolen Orangutan, credit Jaclyn SchwankeThe illegal exploitation of resources—including illegal wildlife trade, illegal, unreported and unregulated fishing, and illegal logging—is one of the top two factors devastating global biodiversity and driving species to extinction. Valued at more than $216 billion per year, the global trafficking of wildlife, fish, and timber has become a serious threat not only to the environment, but also to the rule of law and political stability, as well as the economy, public health, and cultural heritage in many countries. By contributing to the extinction of many species and damaging ecosystems and rural livelihoods, illegal trade robs countries of badly needed revenues and undermines conservation efforts, as well as efforts to eliminate rural poverty.

As the scale of illegal wildlife trade has increased, scientific, government, and international organizations have sharpened their calls to combat it. Groups such as the U.N. General Assembly have recommended criminalizing violations of trade and resource protection laws, and prosecuting corruption, fraud, racketeering, and financial crimes linked to illicit trafficking.

However, criminal sanctions alone do not remedy the environmental harm and restore biodiversity. I am part of an international team of conservationists, economists, and lawyers that advocates adding environmental liability suits to the policy toolkit for illegal resource exploitation. Funded by the U.K. Government’s Illegal Wildlife Trade Challenge Fund and led by Jacob Phelps of Lancaster University, the team has deep experience with biodiversity conservation and with U.S. and global environmental liability litigation.

As outlined in our recent paper in Conservation Letters, liability suits can be used strategically against defendants involved in illegal wildlife trade that have the financial means to provide remedies, such as corporations and organized crime groups—typically as a complement to criminal prosecution. In addition to providing financial resources to remedy the harm, the suits may also provide additional deterrent incentives.

Our team also launched a guide, Pioneering civil lawsuits for harm to threatened species, which explains how to develop lawsuits in wildlife cases, such as the one in North Sumatra, as well as a website (www.conservation-litigation.org) that provides additional resources.

The guide was developed to address issues that surfaced in our recent study of environmental liability in tropical biodiversity hotspots. The good news is that the necessary laws are in place to bring liability suits in many countries spanning a range of economic statuses and legal systems—including Brazil, China, Democratic Republic of Congo, India, Indonesia, Mexico, and the Philippines. However, few natural resource liability cases have been brought in the global South, and the ones that have been brought typically have had low damage awards relative to the injuries.

One reason we identified for the underutilization of the liability provisions is that public agencies—and particularly civil society—lack awareness and appreciation of them. Further, where the related legislation is comparatively new, the implementing policies and procedures are still a work in progress. In particular, one of the problems cited is difficulty in valuing the damage claim.

To address this issue, the guide builds on the restoration-based approach for valuing claims, which values damages based on the cost of restoration projects to remedy the harm to biodiversity and compensate for losses incurred in the interim, rather than placing a value on the harm done. Following the 1989 Exxon Valdez oil spill and the subsequent passage of the Oil Pollution Act (OPA) of 1990, the approach was pioneered in the regulations written to implement OPA, for which I served as lead economist. In the United States, the restoration-based approach to valuing damage claims—which has been widely adopted for other liability statutes—has been shown to expedite the restoration of resources after a case is resolved. This approach is also more readily transferable to developing countries than the approach of putting a dollar value on the harm.

The guide also identifies a variety of remedies for illegal resource exploitation cases, including animal rehabilitation and actions to promote species conservation, as well as public apologies and environmental education.

Fortunately, environmental liability suits for harm to biodiversity are beginning to emerge in the global South. In the Indonesia illegal wildlife exploitation case mentioned earlier, WAHLI (Friends of the Earth) North Sumatra and Medan Legal Aid Institute filed a lawsuit in April 2021 against PT. Nuansa Alam Nusantara, an Indonesian company that was operating a zoo without permits and illegally displaying at least 43 animals of 18 protected species. Included among the protected species are the Sumatra orangutan and the Komodo dragon, which are critically endangered with extinction and endemic to Indonesia.

Focusing on the Sumatra orangutan injuries, the plaintiffs have asked for remedies including financial compensation to cover the cost of long-term care of the rescued Sumatra orangutan, which cannot be returned to the wild, as well as additional patrols and scientific monitoring of the orangutan population in North Sumatra, funding for educational exhibits about the environmental, economic and community impacts of illegal wildlife trade, and a public apology.

A few other cases in biodiversity hotspots have addressed harms from land use change due to illegal deforestation, which is another top source of harm to biodiversity. In 2012, the government of Indonesia set a global precedent by successfully suing the palm oil company PT Kalista Alam for illegally burning down a peatland forest in a protected area and converting it into agricultural land. The lawsuit held the company liable for more than US$20 million in remedies, including to reforest the affected site.

And in April 2021, the Brazilian Public Prosecutor’s Office filed a civil action against a rural landowner, seeking the landowner’s accountability for alleged illegal deforestation connected to breeding cattle in the Amazon. In addition to demanding compensation for environmental damages, collective damages, and profits illegally gained, the prosecutor is one of the first to seek compensation for climate damages from deforestation.

Despite some promising developments, barriers to building environmental liability cases still exist, though some work-arounds are available. For example, widespread corruption may compromise government implementation and enforcement of environmental statutes. However, many countries have provisions for suits from civil society that provide an alternative, which is the origin of the recent North Sumatran case.

Inadequate budgets also may compromise the ability of detection and investigation agencies, prosecutorial services, and the judiciary to fulfill their enforcement responsibilities. One strategy for keeping the incremental costs of environmental liability suits down is to leverage successful criminal prosecutions.

Nonetheless, adding the strategic use of environmental liability suits to the policy tool kit to address harm to biodiversity has the potential to expand the resources available to restore biodiversity in selected cases.