Firms whose economic activity might pose an environmental risk are sometimes required to post performance bonds before the activity is allowed to commence. The amount of the required bond would be equal to the present value of anticipated damages. Any restoration of the site resulting from a hazardous waste leak could be funded directly and immediately from the accumulated funds. Any unused proceeds would be redeemable at specified dates if the environmental costs turned out to be lower than anticipated.

What is the difference in practice between an approach relying on performance bonds and one imposing strict liability for cleanup costs on any firm for a toxic substance spill?