During this course the role of law and policy instruments as a remedy to environmental pollution will be analysed. Pollution will first be explained as an example of an externality; the importance of the Coase theorem and of cost-benefit analysis will be analysed. Subsequently the role of various institutions in internalising environmental risks will be discussed whereby especially liability rules and safety regulation will be compared. Also the combined use of both instruments will be discussed. Time permitting attention will also be paid to mechanisms to provide an optimal compensation of pollution damage, such as (liability) insurance and compensation funds.