Insurance regarding radical uncertainty: approaches in France and in Germany for sewage sludge land spreading

Up to now, economic literature regarding the product safety has studied foreseeable risks that are known by producers. However, the literature has not analysed which liability rule and insurance schemes are efficient for radical uncertainty. This paper addresses this topic through insurance schemes in France and Germany for sewage sludge spreading. Section 1 gives an overview of economic literature regarding product safety and liability, and stresses the lack of research on radical uncertainty. Section 2 examines the content of the French and German guarantee funds. Both funds have been constituted by a contribution of sewage sludge producers. Section 3 examines to what extent the strict liability rule is efficient. If radical uncertainty has been dealt with a contribution of each sewage sludge producer, compensation is however limited. Moreover, strategic uncertainty (food industry bans of sewage sludge) and different levels of sewage sludge quality are not considered by these funds.