1

ASSIGNMENT TOPIC – POLLUTER PAYS PRINCIPLE:

INTERNATIONAL AND NATIONAL PERSPECTIVE
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INDEX

S. NO. DESCRIPTION PAGE SIGNATURE

NO
1. INTRODUCTION 5-6

2. THE ECONOMIC ASPECT 7-8

3. THE INTERNSTIONAL PERSPECTIVE 9-10

4. THE INDIAN PERSPECTIVE 11-13

5. CONCLUSION 14

6. BIBLIOGRAPHY 15
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INTRODUCTION

The Polluter pays principle (PPP) basically means that the producer of goods
should be responsible for the cost of preventing any pollution caused as well
as remedy any damage so caused. It will include full environmental costs i.e.
cost of pollution or any other harm caused to the ecology and not just those
which are immediately tangible costs1.

The polluter pays principle is preventive and compensatory in nature. It may

entail fixing criminal responsibility on polluter, to make him make good the
harm or pay eco-tax or carbon tax or at least participate in preserving
environment in some way. The principle of polluters pay has been
interpreted differently in different countries and there seems to be no
common definition. For instance, some countries impose retrospective
liability on the polluter and different countries have different definitions for
who is a polluter and what constitutes pollution2; range of costs to be borne
by the polluter differs. It should also be noted that the above principle is
more of a regional custom than part of international environmental law. The
name of this rule is unnecessarily restrictive if taken literally. Pollution
(harm associated with emission of wastes into environment) is only one of
many forms of environmental degradation to which the rule has been
applied. Initially, PPP was interpreted only as government not doing the
clean up job for the polluters or the industries, but today the scenario has
changed. The most popular interpretation of PPP is that apart from the

1
Ashford Nicholas A. and Charles C. Caldert, Environmental law, policy and economics: Reclaiming the
environmental agenda, MIT press, London, 2008
2
Candice Stevens, Interpreting the Polluter Pays Principle in the Trade and Environment Context 27
Cornell Int’l L. J. 577 (1994)
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government even the specific polluters should incur the responsibility for
abating their contribution to a particular pollution problem. This is called
equitable internalization. As polluters bear all the cost the distortions in
international trade and investment arising from differential pollution
abatement financing methods could be eliminated through the adoption of
the PPP3. The polluter pays principle has been used as the beneficiary-pays
principle which favours the costs of providing conservation goods (i.e.
prevention or repair of environmental degradation) being allocated to those
who benefit from those goods. The strict version requires costs be fully
distributed among beneficiaries pro-rata to their shares of total benefits
(User pays principle) while the weaker version requires that all beneficiaries
cover full costs. (Beneficiary compensates principle)4 In recent days, the
polluter pays principle is seen as a way of internalizing pollution-related
costs within the context of the economic rationality of the enterprise. There
is a close relationship between a country's environmental policy and its
overall socioeconomic policy5. Furthermore, under this principle it is not the
responsibility of government to meet the costs involved in either prevention
of environmental damage, or in carrying out remedial action, because the
effect of this would be to shift the financial burden of the pollution incident
to the taxpayer. But State practice does not support the view that all
depollution costs should be borne by the polluter, particularly where
transnational dispute is involved.

3
Cardwell Michael, The polluter pays principle in European Community law and its impact on United
Kingdom farmers Okla. L. Rev. 89
4
Choudhary Himanshu, A short note on the Polluter Pays Principle available
at http://www.indlaw.com/display.aspx?2601 last visited on 27 January 2010
5
This is a part of the International Environmental Agreements Compendium, compiled 1995 by the
Pollution Prevention and Pesticide Management Branch, Ministry of Environment, Lands and Parks,
British Columbia, Canada .
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THE ECONOMIC ASPECT

The PPP was initially conceived as an economic theory to maximize

resource allocation. Pollution in economic terms simply means improper
cost allocation6.That is, the cost of one resource, i.e., water or air, is not
properly reflected in the product price. Initially, people had the common
belief that neither air nor water was a scarce resource and so its use was free
to all and producers could discharge waste into the air or water without
accounting for the use of that resource as part of production costs.

They simply passed the cost of using the air or water for waste disposal on to
the future users of those resources. This failure to properly allocate costs
stimulates over-production leading ultimately to a market failure. Such
failure, if not corrected, will result in pollution which needs to be adequately
paid for. This is commonly known as the theory of internalization of external
costs.

Thus, “polluter pays” strives to internalize environmental externalities,

thereby mandating that environmental harms be factored into market price.
This informs consumers of the true costs of industrial activity and
discourages environmentally harmful behavior. It could also be used to
oblige nations to reflect in market terms the environmental externalities of
their industrial development. This would diminish the incentive to pursue

6
Dam Shubhankar and Vivek Tewary, Polluting environment, polluting constitution worse than a polluted
environment? 17 J.Envtl. L. 383
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comparative advantage through a willingness to impose greater externalities

on the environment7.

PPP favours corrective justice and is concerned very less with idea of fault.
When reduced to its most basic logic and applied to the interstate level, the
polluter pays principle serves a reparative function: one who causes harm
must remedy it. This logic is particularly compelling given that these harms
impinge upon common concerns of humanity. Furthermore, under this
principle it is not the responsibility of government to meet the costs involved
in either prevention of environmental damage, or in carrying out remedial
action, because the effect of this would be to shift the financial burden of the
pollution incident to the taxpayer8.

7
Divan Shyam, Demin Rsencraz, Environment law and policy in India, second ed., Oxford University
press, London, 2002
8
De Lucia, Vito, Polluter pays principle at http://www.eoearth.org/article/Polluter_pays_principle last
visited on 9 February 2010
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THE INTERNATIONAL PERSPECTIVE

The recognition of the vice of pollution and its impact on future resources
was realised during the early part of 1970. The United Nations Economic
Commission for Europe, during a panel discussion in 1971, concluded that
the total environmental expenditure required for improvement of the
environment was overestimated but could be reduced by increased
environmental awareness and control.

In 1972, the Organisation for Economic Cooperation and Development

adopted the polluter pays principle as a method for pollution cost allocation,
including for accidental pollution. This principle was also discussed during
the 1972 Paris Summit9.

It was the EU which took the lead in promoting the PPP when in 1974, it
made it mandatory that this principle be uniformly applied to all its member
states.

The current Fourth Action Programme makes it clear that ‘the cost of
preventing and eliminating nuisance must in principle be borne by the
polluter’, and the PPP has now been incorporated into the European
Community Treaty as part of the new Articles on the environment which
were introduced by the Single European Act of 1986.

Article 130(2) of the Treaty states that environmental considerations are to

play a part in all the policies of the Community, and that action is to be
based on three principles: the need for preventative action; the need for

9
Drumbl Mark A., Poverty, wealth and obligation in international environment law 76 Tut.L.Rev.843
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environmental damage to be rectified at source; and that the polluter should

pay10.

PPP is included in Article 174 of the EU Treaty (1997) and since 1990,
when the International Convention on Oil Pollution Preparedness, Response
and Co-operation was agreed upon by the International Maritime
Organization (IMO), the PPP has been acknowledged as a ” …general
principle of international environmental law.” In US, the principle was
adopted by the enactment of Comprehensive Environment response
Compensation and liability Act, 1980.

World Commission on Environment and Development (1986) also legally

supported PPP through sustainable development principle 1011. Later
international documents like the 1992 Rio declaration: principle 1612,
Agenda 21 and the World Summit on Sustainable Development (WSSD) i.e.
Johannesburg Plan of Implementation reiterated the same principle. Some of
the salient principles of “Sustainable Development”, as culled-out from
Brundtland Report include PPP.

10
Dube Indrajit, Environment Jurisprudence: polluter liability, Lexis-Nexis Butterworths, Delhi, 2007

11
Fitzmaniaca Malgosia, Contemporary issues in International environment law, Edward elgar publishing
inc, USA, 2009
12
Havenga Peter, A Few Steps Closer Towards Establishing the ‘Polluter Pays’ Principle (1997) 9 SA
Merc LJ
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INDIA AND THE POLLUTER PAYS PRINCIPLE

POLICY:

National conservation strategy and policy statement on environment and

development, 1992 recommends “operationalisation of ‘polluter pays
principle’ by introducing effluent tax, resource cess for industry and
implementation of standards based on resource consumption and production
capacity so that environmental considerations could be integrated while
encouraging industrial growth.”

National environment policy, 2006 is more specific in recognizing the

polluter pays principle in order to achieve economic efficiency in
environmental conservation. This Principle requires that the services of
environmental resources be given economic value, and such value to count
equally with the economic values of other goods and services, in analysis of
alternative courses of action.

JUDICIARY:

The judiciary in India first recognised the polluter pays principle as a sound
principle in Indian Council for Enviro-Legal Action v. Union of India &
Ors13 (Bichhri Village case) which interpreted PPP to mean that “absolute
liability of harm to the environment extends not only to compensate the
victims of pollution, but also to the cost of restoring environmental

13
Interpretation of Polluter Pays Principle (PPP) In India available
at http://www.legalserviceindia.com/article/l54-Interpretation-of-Polluter-Pays-Principle.html last visited
on 27 January 2010
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degradation. This principle forms an important part of sustainable

development14”.

Explaining the principle, the Court held that it is not the role of the
government to meet the cost either in the prevention of such damage or in
carrying out remedial action, because the effect of this would be shifting the
financial burden of the pollution incident to the tax payers and why should
the tax payers share this burden? It should be the polluter who should be
made responsible for their wrong doings15.Thus, according to this principle,
the responsibility for repairing the damage is that of the offending industry.
Sections 3 and 5 of the Environment (Protection) Act 1986 empower the
Central Government to give directions and take measures for giving effect to
this principle.

In S. Janannath v Union of India16, applying the said principle, the Court

held the aquaculture (shrimp culture) industry that had been functioning
within the Coastal Regulatory Zone (CRZ) Notification as liable to pay the
affected persons on the basis of the polluter pays’ principle. In Vellore
Citizens Welfare Forum v Union of India17, a three judge bench went a step
further and regarded both the precautionary principle and the ‘polluter pays’
principle as part of environmental law18. Kuldip Singh, J. after referring to
the principles evolved in various international Conferences and to the
concept of ‘Sustainable Development’, stated that the PPP now governs the
14
Nash Jonathan R., Too Much Market? Conflict between Tradable Pollution Allowances and the “Polluter
Pays” Principle, 24 Harv. Envtl. L. Rev. 465, 466 (2000)
15
Sands Philip, Principles of International law: Frameworks, standards and implementation: Volume-1,
CSERGE, New York, 1995
16
Sanford E. Gaines, Polluter-Pays Principle: From Economic Equity to Environmental Ethos, 26 Tex. Int’l
L. J. 463 (1991)
17
Senagar Dharmendra, Environment law, Prentice Hall of India ltd, New Delhi, 2007
18
Shiraz Rustomjee, Global environmental law and India, 36 Int’l J.Legal Info.342
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law in our country too, as is clear from Articles 47, 48-A and 51-A(g) of our
Constitution and that, in fact, in the various environmental statutes, such as
the Water Act, 1974 and other statutes, including the Environment
(Protection) Act, 1986, these concepts are already implied. The learned
Judge declared that these principles have now become part of our law. In
fact on the facts of the case before this Court, it was directed that the
authority to be appointed under Section 3(3) of the Environment (Protection)
Act, 1986 shall implement the PPP19.

19
Sohn, The Stockholm Declaration on the Human Environment, 14 HARV. INT’L L.J. 423(1973)
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CONCLUSIONS

Even with all its success in Indian scenario, the polluter pays principle is not
a cure for all of the world’s environmental problems. It has a potential only
for problems that stem from identifiable polluters who have sufficient
economic resources to pay their way and even under the broadest definitions
of pollution, the PPP cannot assist with serious environmental issues such as
declining biological diversity or destruction of ecologically critical habitats.
Other problems, though pollution related, are the aggregated consequence of
the disparate actions of millions of individuals who are just trying to
maintain a subsistence livelihood in overcrowded cities or desertified rural
areas. The PPP would be inappropriate in such situations; these
impoverished polluters are in no position to pay for their contribution to the
world’s environmental burden.Most developing countries are yet to
completely subscribe to the polluter pays principle as a major environmental
policy guideline due to difficulty in implementing the same and due to its
vague nature. The poor households, informal sector firms, and subsistence
farmers cannot bear any additional charges for waste disposal while the
small and medium-size firms from the formal sector, which mainly serve the
home market, find it difficult to pass on higher costs to the domestic end-
users of their products. Lastly, many environmental problems in developing
countries are caused by an overexploitation of common pool resources. Yet
the Indian Judiciary and the recent national environment policy have
enthusiastically applied the policy successfully on case to case basis. Its
development into a well rounded principle can only be judged with time but
its present usefulness is very apparent.
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BIBLIOGRAPHY

THE CONTENTS OF THIS ASSIGNMENT HAVE BEEN

REFFERED FROM THE FOLLOWING SOURCES-

SOURCES-

1. http://www.legalserviceindia.com/article/l54-Interpretation-of-
Polluter-Pays-Principle.html
2. https://www.ukessays.com/essays/environmental-studies/polluter-
pays-principle.php
3. https://iasexamportal.com/courses/environment/polluter-pays-
principle
4. https://ec.europa.eu/environment/legal/law/pdf/principles/2%20Pollut
er%20Pays%20Principle_revised.pdf
5. http://iret.org/pub/SCRE-6.PDF
6. https://www.theguardian.com/environment/2012/jul/02/polluter-pays-
climate-change
7. http://www.lse.ac.uk/GranthamInstitute/faqs/what-is-the-polluter-
pays-principle/
8. http://www.mondaq.com/india/x/645232/Clean+Air+Pollution/Pollut
er+Pays+Principle
9. https://clearseas.org/en/blog/polluter-pays-principle/