| This research attempts to analyze civil liability and compensation mechanisms in Indonesia. The Indonesian experience on this issue will be compared to European system on liability and compensation for catastrophic environmental damage. As a tool to analyze the comparison, this research will use a law and economic approach. In this regard, strict liability will be compared to negligence rule in its effectiveness to induce the polluter to take an optimal level of care. After discussing the choice of liability rules, this research will analyze how the victims should be compensated. In this vein, the research will analyze whether there should be compulsory liability insurance for those who undertake hazardous activities and whether compensation fund could be promoted as a substitute for liability insurance. Finally, the issue of whether Indonesian policy makers should rely more on regulation than on liability will also be analyzed. |
