Hedging Strategies and the Financing of the 1992 International Oil Pollution Compensation Fund

André Schmitt and Sandrine Spaeter

Working Papers of BETA from Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg

Abstract: The maritime oil transport is regulated by the 1992 Civil Liability Convention for Oil Damage and the 1992 Oil Pollution Compensation Fund. In this compensation regime, contributions of oil firms are based on the aggregate risk of the Fund and are assessed each time an oil spill is registered. In this paper, we present the main characteristics of such a compensation regime and we explain why oil firms would benefit from a reorga- nization of the financing of the Fund by introducing appropriate hedging mechanisms. As standard insurance is shown to be too limited for the coverage of oil spills, we high- light the arguments that justify the introduction of financial hedging instruments in the management of the compensation system related to oil spills.

Keywords: Oil spill; IOPC Fund; risk management; insurance; financial hedging. (search for similar items in EconPapers)
JEL-codes: D80 G22 K32 Q25 (search for similar items in EconPapers)
Date: 2005
New Economics Papers: this item is included in nep-ene, nep-fin, nep-fmk, nep-ias and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:ulp:sbbeta:2005-12

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