ESTIMATING ENVIRONMENTAL LIABILITY - QUANTIFYING THE UNKNOWN

This article describes a methodology firms can use to estimate their u nknown future environmental liabilities. The authors developed it for a U.S. manufacturing firm to help it better negotiate with its insuran ce carriers about past and future coverage. The basic method can be ap plied by any company to estimate its own overall future environmental liability. The article examines multiple categories of potential liabi lity such as hazardous waste, community exposure, occupational hazards beyond workers' compensation, product liability, and natural resource damage. Initial hazardous waste estimates can be derived from aggrega te clean-up costs for the nation as a whole. The other categories enta il more subjective estimates based on possible pathways to exposure, l egal proceedings, and comparisons against benchmark cases such as asbe stos.