Reparation for Climate Change: The Successes and Limits of Litigation

Viktoriya Gurash

Chapter 5: Interim Reflection

The Intergovernmental Panel on Climate Change (IPCC) has concluded with high confidence that climate change has already caused “widespread adverse impacts and related losses and damages to nature and people that are unequally distributed across systems, regions and sectors.”¹ Specifically, climate change has been found to cause both economic and non-economic damage.² Some future impacts of climate change are unavoidable and irreversible.³ However, the exact magnitude of the adverse impacts and related loss and damage will depend on the mitigation and adaptation measures taken.⁴ Moreover, climate change is massively inequitable: the majority of CO2 emissions originate in wealthy countries or are generated in the production of goods consumed by those in rich countries. However, the greatest burden of the costs is, and will continue to be, borne by poorer countries.⁵ Against these complexities and uncertainties surrounding the climate change conundrum, the preceding chapters focus on how climate damage can be valued and calculated — using insights from economics and psychology — and how such assessments can inform policymaking, climate litigation, and insurance in managing climate risks.

1.Uncertainty about Climate Harm

All four contributions in this part highlight that, although climate harm is already a current reality, the major brunt of climate change lies in the future, creating uncertainty as to the exact scale and timing of loss and damage. By — S. 100 —situating the valuation of climate loss and damage within the framework of the scenarios,⁶ the authors explore various challenges and potential methodologies — drawing particularly from economic theory, psychology, and law — that may aid in assessing such loss and damage.

Leucci’s chapter provides insights into how applying economic theories helps quantify climate losses. While a law and economics approach cannot offer definitive answers, it provides a framework for analyzing issues like the Social Cost of Carbon (SCC) and the projected costs of climate change. Although the SCC has been widely adopted for policymaking, the author cautions that it remains a contentious concept, with ongoing debate over its calculation methods and a wide range of resulting estimates. Monti explains the role of insurance in developing an ex ante strategy for reducing vulnerability from the financial impacts of climate-related harm. The author acknowledges that different dimensions of the total costs of climate change (ie mitigation, adaptation, loss, and damage) are linked to one another. For example, higher investments in mitigation would reduce loss and damage and make adaptation less costly. Because climate change mitigation and adaptation efforts and specific measures are still evolving, the associated costs are difficult to calculate with precision. In addition, the barriers to perceiving the real extent of climate harm are rooted in human psychology. Rowell showed that certain characteristics of climate harm make it “especially psychologically ‘wicked’,”⁷ and that such harm may be significantly underperceived by policymakers and judges. Still, international courts and tribunals have developed valuable practices for the assessment of environmental damage in international law, a subject thoughtfully examined by Rudall. The author suggests that these practices should be further refined in the context of compensating for climate-related damage, particularly given its inherent challenges and unpredictability.

This chapter reflects on a specific question, which has emerged from the contributions of the abovementioned authors: to what extent could international adjudication, specifically the International Court of Justice (ICJ) and the European Court of Human Rights (ECtHR), rely on economics and behavioral theories when dealing with climate-related damage? It examines how the determination of climate damage should be approached and elucidated by these international courts, with due consideration to the scenarios that underpin the volume, while highlighting the key insights from the four preceding contributions. Finally, the chapter outlines emerging questions and suggests directions for further scholarly inquiry.

2.Reparations before the ICJ

In scenario 7, the ICJ is called upon to rule on reparations for climate-related loss and damage suffered by Peru due to Brazil’s failure to take the required protective measures in respect of its rainforest. Provided that the ICJ finds that Brazil has breached its international obligations, such a breach could have legal consequences, including reparations payments. The scope of reparations under general international law depends on the extent of an injury caused by the internationally wrongful act of a state, as well as the existence of a causal nexus between the act and the injury suffered.⁸

a.Injury Valuation

The notion of injury includes any material or moral damage caused by an internationally wrongful act.⁹ The “‘material” in material damage refers to the “property or other interests of the state and its nationals which is assessable in financial terms.”¹⁰ More specifically, the ICJ has confirmed that “damage to the environment, and the consequent impairment or loss of the ability of the environment to provide goods and services, is compensable under international law.”¹¹ Moral damage concerns suffering of states’ nationals, for example because of “loss of loved ones or personal affront associated with an intrusion on one’s home or private life.”¹² What is important in the context of climate change is that the injury caused by the wrongful conduct should have either already materialized or, if it threatens to occur in the future, that it has been established by the claimant with “sufficient certainty.”¹³ When addressing climate-related issues, a range of pertinent questions arises, such as: which methodologies for assessing compensation for climate-related damage are recognized within the framework of international law? Which key standards — S. 102 —guide the assessment of material and moral harm in the context of climaterelated damage? Could the ICJ take future climate-related harm into account, and, if so, under what circumstance? How should the Court engage with expert knowledge in its evaluation of climate-related harm, and what standards should govern the credibility of such expertise and its incorporation into judicial reasoning?

The preceding contributions offer valuable insights into these questions. Rudall has conducted a thorough analysis of the legal framework and contemporary jurisprudence on reparation for environmental damage, with a particular emphasis on the case law of the ICJ. As discussed by the author, to date, the ICJ, while demonstrating a degree of innovation in awarding compensation for environmental harm, has offered only broad and limited reasoning regarding its methodology. A salient point is that no specific method for valuing compensation for environmental damage is prescribed by international law.¹⁴

Here, economic methods for quantifying the adverse impact of climate change on a state’s environment should be introduced. The contributions by Leucci and Monti suggest that the field of economics has developed methods for valuing climate-related loss and damage. For example, Leucci argues that the SCC could be applied in cases involving transboundary harm and historical emissions resulting from unlawful deforestation, an approach which, as the author explains, is already being put into practice in Brazil. Notably, the National Council of Justice in Brazil has issued Recommendation No. 156/2024, which includes a “Protocol for Judging Environmental Lawsuits” calling for a uniform approach to valuing climate damage associated with deforestation.¹⁵ However, in Brazil there is no standard methodology for calculating the value of a ton of carbon. While some courts adopt the OECD’s SCC, others rely on proxy values derived from mechanisms like REDD+, including reference prices set by the Amazon Fund.¹⁶ This lack of a standardized approach has led to considerable disparities in compensation claims, with carbon valuations ranging from USD 5 to approximately USD 60 per ton.¹⁷ In view of this, the economic framework offers a range of tools that can inform the valuation of climate damage. However, economic approaches do not provide objective — S. 103 —truth in this context. Rather, methodologies like the calculation of the SCC depend on broad societal legitimacy and acceptance to function as a credible basis for the consistent assessment of climate damage, including by courts. Therefore, while economic and insurance methodologies are highly valuable for policymaking and managing climate risks, their application in climate litigation proves challenging.

To award compensation, courts must assess damage with precise accuracy in each individual case. The latter is especially problematic for future climate-related damage and the resulting loss, which are not susceptible to sufficiently precise economic quantification, as they depend on current and future mitigation and adaptation measures to address climate change. Therefore, it appears unlikely at present that claims brought before the ICJ seeking compensation for future climate-related loss and damage would have any prospect of success.

Specific methodologies for valuing climate damage may be presented before the ICJ, for example, either through the claimant’s submissions or the reports of experts appointed by the Court. The impact of economic methods for valuing environmental damage to the injured state on the ICJ’s fact-finding would depend on their scientific quality and relevance to the case at hand. If economic methods are convincing and there is consensus on their validity, the ICJ’s engagement with them is essential for the legitimacy of its judgment.¹⁸ Rudall’s contribution offers a thoughtful analysis of the challenges arising from the ICJ’s most recent case law concerning its engagement with experts in valuing damage to natural resources. For example, in its judgment in Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Uganda), the Court found the methodological approach concerning natural resources presented in the expert report generally convincing.¹⁹ However, as noted by Rudall, given that it ultimately awarded a “global sum,” it remains somewhat unclear what specific elements the Court included or excluded in its final valuation.

b.Causation Conundrum in Climate Litigation

The principle of causation in international law is grounded in state sovereignty, with international courts choosing to limit states’ responsibility to the — S. 104 —consequences they directly cause.²⁰ Langmack has noted that the “word causality sends shivers down the spine of most environmental lawyers.”²¹ The IPCC has concluded that “[c]limate change has caused substantial damages, and increasingly irreversible losses, in terrestrial, freshwater, cryospheric, and coastal and open ocean ecosystems.”²² There is strong evidence that climate change is generally causing harm. At the same time, since multiple states and other actors contribute to climate change, the question of individual causation in the climate context remains unsettled in international law. Nollkaemper has demonstrated that, in determining responsibility for climate change, courts have solved the causation puzzle by applying a causation test with substantive obligations to prevent significant harm when determining a breach.²³

However, this approach is not suitable for allocating compensation for climate change harm. For example, it is unclear which principle the ICJ would apply if a dispute similar to the one in the scenario 7 between Peru and Brazil were to emerge. Based on the science of general causation, it seems very likely that the failure to protect a rainforest is a contributing factor to climate change, and thereby adds to the risk of sea-level rise and the loss of land in Peru. However, Brazil’s omission is not the entire cause of this harm. The pertinent question is: what proportion of this harm has been caused by such an omission? In this context, Rudall suggests that the ICJ could draw valuable lessons from the practice of the United Nations Compensation Commission, which employed a range of direct and proximate causation standards to address similar challenges. The author argues that additional guidance may also be found in the Guiding Principles on Shared Responsibility in International Law.²⁴ Moreover, attribution science will be crucial in quantifying the contribution of an individual state’s GHG emissions or similar actions — such as the failure to protect rainforests — to specific events such as droughts, heatwaves, or floods.²⁵ Alongside advancements in attribution science, is there a role for economic methods in solving this “causation puzzle”? For example, would full — S. 105 —reparation by a single state to a victim state be a viable solution from an economic perspective? This inter-disciplinary development is one that demands close attention, as advocated by Leucci and Monti.

3.Just Satisfaction under the European Convention on Human Rights

The European Convention on Human Rights is a special regime, with Article 41 ECHR modifying some aspects of general international law concerning state responsibility.²⁶ The Convention identifies the notion of “just satisfaction”,²⁷ which includes reparation for pecuniary and non-pecuniary damage, as well as reimbursement of costs and expenses.²⁸ In the scenarios concerning the ECtHR, the applicants seek reparations for the reduced quality of life caused by heatwaves and the increased risk of mortality that cannot be fully averted (scenario 1), as well as for the adverse impacts on their cultural practices of indigenous communities, alleging that elements of their culture and traditional way of life, as is the case with the Sámi community, are threatened by climate change (scenario 2).

The ECtHR has handed down its first set of climate judgments,²⁹ in particular Verein KlimaSeniorinnen Schweiz and Others v Switzerland, which is the basis for scenario 1. Since the ECtHR has rejected victim status for individuals,³⁰ and the applicant association did not submit a claim for damages,³¹ it remains unclear how the Court will approach human rights issues related to non-pecuniary and pecuniary damages in climate cases. A careful legal analysis of the ECtHR’s past remedial practices³² constitutes a necessary first step.

a.Non-Pecuniary Damages

The empirical study conducted by Keller, Heri and Piskóty demonstrates that in the environmental context, the ECtHR is willing to grant non-pecuniary damage awards.³³ Specifically, “the Court awarded non-pecuniary damages in 56 out of the 85 judgments surveyed.”³⁴ Although there is no express reference to the causal link in the text of Article 41 ECHR, it remains an essential element in the ECtHR’s analysis as “the whole logic of reparation for unlawful conduct implies the existence of causality.”³⁵ The causal nexus for nonpecuniary damages stems from the understanding that moral suffering is an inherent consequence of any violation, with the primary challenge being its quantification.³⁶

The determination of the precise amount of non-pecuniary damages relies on the standard amounts outlined in tables for exclusive internal use by the ECtHR.³⁷ The legal research by Fikfak has revealed that the victim is notably absent from the central focus of the Court’s analysis in this regard.³⁸ Conversely, “all state variables have a significant impact on the determination of the quantum: the identity of the country, the qualification of state conduct and the measurement of the frequency of such conduct.”³⁹ The Court seems to prioritize state conduct, assessing damages based on how that conduct is qualified.⁴⁰ The viability of such a state-centered approach in the determination of non-pecuniary damages should be tested in the context of climate cases. As Rowell argues, any valuation of climate damage inevitably involves a range of ethical considerations, including distributional questions, such as how to weigh harms experienced by the old versus the young, the domestic versus the foreign, and the wealthy versus the poor. The climate cases will inevitably concern particularly vulnerable individuals in view of their state of health, living conditions, and lifestyles (as in the scenario concerning the — S. 107 —indigenous community). The interdisciplinary approach (law and economics) offers a valuable framework to the discussion of the extent to which an award should redress the individual circumstances of the applicant.

In addition, from the standpoint of economic analysis of law, damages can be viewed as a tool to incentivize states to alter their behavior.⁴¹ In this realm, law, psychology, and economics overlap. Applying specific behavioral assumptions is key to determining which effective remedies will ensure states’ compliance with their human rights obligations in the context of climate change.

b.Pecuniary Damages

While pecuniary damage is tied to the right to property protection, the Court grants reparation for pecuniary loss whenever it directly results from the authorities’ unlawful actions.⁴² The Court is generally reluctant to award pecuniary damages in environmental cases, however.⁴³ Empirical analysis of the ECtHR’s environmental case law has revealed that the Court awarded pecuniary damages in only a small number of the 85 violation judgments surveyed, and in the majority of these cases, the amounts granted were notably smaller than those claimed.⁴⁴

In the climate context, causation is a difficult issue in determining pecuniary damages. In the KlimaSeniorinnen case, the Court addressed the issue of causation only in relation to the existence of positive human rights obligations to address climate change. Specifically, the Court held that “each State has its own share of responsibilities to take measures to tackle climate change and that the taking of those measures is determined by the State’s own capabilities rather than by any specific action (or omission) of any other State.”⁴⁵ It considered that “a respondent State should not evade its responsibility by pointing to the responsibility of other States, whether Contracting Parties to the Convention or not.”⁴⁶ However, while this principle is sufficient to hold a state accountable for breaching its Convention obligations, it is not suitable for determining the exact amount of pecuniary damages. Once again, climate change and the resulting material harm are caused by multiple states, and it is questionable whether the entirety of this harm should be redressed by one — S. 108 —state alone. Here, economic analysis as a research method provides useful guidance to judges in evaluating pecuniary damages.

A challenging legal issue concerns the ECtHR’s jurisdiction. If the ECtHR has to determine the damage caused by the respondent state, it will inevitably need to engage with the question of responsibility of other states. However, states do not have extraterritorial obligations for climate change.⁴⁷ A similar problem might arise before the ICJ, namely, regarding the question of material compensation in a dispute between two states (eg scenario 7).

4.Integration of Loss and Damage under Different International Regimes

Climate-related loss and damage, such as property destruction or loss of life and culture, could be framed both as transboundary environmental harm and as a human rights issue. The same set of consequences are regulated in parallel by two different international regimes: general international law and human rights law. If climate disputes are brought before the ICJ and the ECtHR, these adjudicators can be expected to approach the issue of climate reparation from different perspectives, creating fragmentation in the legal system. The diversity of approaches to this essential issue threatens the cohesion of international law. However, it also creates an opportunity to develop more effective remedies. For example, interdisciplinary methods that combine legal, economic, and scientific expertise offer objective benchmarks for assessing climate-related loss and damage. The preceding chapters demonstrate how these methods can be instrumental in evaluating climate loss and damage.

Given the complexity of climate change, a wide range of tools is needed in crafting an adequate legal response, each requiring careful and nuanced analysis. By acknowledging the numerous dimensions of climate harm — such as transboundary environmental impacts and human rights violations — courts and the international community can create a more unified and effective framework for climate reparations, ultimately contributing to a more sustainable legal approach to combating climate change.