Two kinds of victims

Compensating victims is a major theoretical and policy issue in the economics of environmental protection. It is, therefore, necessary to clarify the definition of “victims” before looking into the issue. As a matter of fact, victims fall into two categories: (1) those victimized in the course of environmental damage; and (2) those victimized in the course of environmental treatment. There are both direct and indirect victims in each category.

Direct victims of environmental damage are individuals who lose health, property and the means to earn a living, make less money, whose lives are disturbed, or whose family relationships are upset because of the damage done to their living environment. They also include businesses that suffer losses in output, product quality, revenue and property due to environmental damage.

Indirect victims of environmental damage comprise mainly those individuals and businesses whose economic interests have been impaired by the financial and other losses incurred by the aforementioned direct victims – individuals or businesses – with whom they maintain close economic ties.

Direct victims of environmental treatment include businesses that are forced to close down, reduce output or relocate, and individuals working in such businesses. These businesses and individuals make less money as a result. Such direct victims also include families that are relocated due to the needs of environmental treatment – their property may be impaired, their income may drop, and their daily lives may become disturbed or disorganized.