A4.7.3 Polluter Pays Principle


The Polluter Pays Principle is about justice. It requires that the costs of pollution be borne by those who cause it.

The ‘Polluter Pays’ principle is that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment. E.g. a factory that produces a potentially poisonous substance as a by-product of its activities should be held responsible for its safe disposal.

PPP recognises that the polluter should pay for any environmental damage created, and that the burden of proof in demonstrating that a particular technology, practice or product is safe should lie with the developer, not the general public.

It is part of a set of broader principles to guide sustainable development worldwide, formed as the 1992 Rio Declaration. Here Principle 16 states: “National authorities should endeavour to promote the internalization of environmental costs and the use of economic instruments, taking into account the approach that the polluter should, in principle, bear the cost of pollution, with due regard to the public interest and without distorting international trade and investment.”.

The first mention of the Principle at the international level is to be found in the 1972 Recommendation by the OECD Council on Guiding Principles concerning International Economic Aspects of Environmental Policies, where it stated that: “The principle to be used for allocating costs of pollution prevention and control measures to encourage rational use of scarce environmental resources and to avoid distortions in international trade and investment is the so-called Polluter-Pays Principle.” It then went on to elaborate: “This principle means that the polluter should bear the expenses of carrying out the above-mentioned measures decided by public authorities to ensure that the environment is in an acceptable state.”

The OECD emphasizes the necessity for removal of subsidies which would prevent polluters to bear the costs of pollution which they caused, urging then those costs be internalized into the prices of goods and services: the PPP should “… not be accompanied by subsidies that would create significant distortions in international trade and investment.” This is normally referred to as weak or standard PPP.

The scope of the PPP has evolved over time to include also accidental pollution prevention, control and clean-up costs, in what is referred to as extended Polluter Pays Principle. In 1989 OECD included in the PPP costs related to accidental pollution; the Recommendation of the Council concerning the Application of the Polluter-Pays Principle to Accidental Pollution states that: “In matters of accidental pollution risks, the Polluter-Pays Principle implies that the operator of a hazardous installation should bear the cost of reasonable measures to prevent and control accidental pollution from that installation […]”.

The PPP is today one of the fundamental principles of the environmental policy of European Community. The Treaty Establishing the European Community, under Title XIX Environment, provides at article 174.2 that: “Community policy on the environment […] shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.”

The PPP is widely acknowledged as a general principle of International Environmental Law, and it is explicitly mentioned or implicitly referred to in a number of Multilateral Environmental Agreements.

One issue with the Polluter Pays Principle (PPP) is that it is difficult to apply in consideration to air pollution and global issues, where the actual ‘polluter’ is not readily identifiable. However, emission trading schemes do seek to address this by making all polluters ay a share. In this way, a financial incentive is created for an organisation to minimise its costs by reducing emissions.

Another issue is that when and how much the polluter should pay is often unclear.