In order to realize the fundamental goals of liability rules, it is necessary to secure potential future liabilities through financial assurances. Financial assurances are key to ensuring ’prompt and adequate compensation’ and for the availability of funds to protect and preserve the environmental resources that have been harmed. This chapter examines the various types of assurances, such as insurance and compensation funds, that are currently used within civil liability regimes generally, before exploring the existing and emerging practices within the Antarctic, deep seabed and high seas regimes.

This chapter covered financial tools beyond conventional insurance, to cover self-insurance, risk-sharing agreements, forms of deposits, and various types of compensation funds. The common element is that the capital either remains solely with the actor or remains closer to the actor, so they are less costly on capital budgets. Self-insurance meant to book a financial reserve to cover certain future risks. In the late 1970s, the term began to include the concept of ‘captives,’ wherein a company owns its own insurance agency and write its own policies. Risk-sharing agreements are contractual agreements between similarly placed firms to agree to pay-up in capital, based on a pre-agreed ratio, to cover any of the co-parties’ capital needs to cover emergencies and damages. Various forms of deposits and guarantees involve a third party holding the capital of the risky first party until a certain event or time period has been successfully reached; however, this type of structure can create substantial moral hazards. Compensation funds can be created in two basic manners, the first is to have the actor pay while undertaking the risky activity in some form, while the second is to have public funds cover the cost of the funds.

Solar geoengineering holds the potential for both benefit and harm. Actors such as states could ask ex ante for assurances of compensation, possibly as a precondition for not opposing the activity, or demand ex post compensation for actual or claimed harm. Legal rules could indicate that those who conducted or approved an activity would be liable to pay damages. There could be a basis – at least in principle – in customary international law for state liability for transboundary harm caused by solar geoengineering that was contrary to international law. Although space-based solar geoengineering is presently prohibitively expensive, states would be strictly liable for harm arising from it. Compensation for other potential harm would face substantial political, institutional, and theoretical challenges, including what damages to compensate, the injurers’ and victims’ identities, and mechanisms and reasons for securing compensation. While recognizing states’ strong resistance to compensation, the chapter suggests an international compensation fund for harm from large-scale outdoor solar geoengineering research and offers initial thoughts regarding that from deployment.