Polluter's Pay Principle

Polluters Pay Principle is used in order to make party or an individual to pay for the damage caused to the environment. This article will give a brief description of the Polluter’s Pay Principle within the context of the IAS Exam.

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Overview of the Polluter’s Pay Principle

In environmental law, the polluter pays principle is enacted to make the party responsible for producing pollution responsible for paying for the damage done to the natural environment. It is regarded as a regional custom because of the strong support it has received in most Organisation for Economic Co-operation and Development (OECD) and European Community (EC) countries.

The polluter pays principle underpins environmental policy such as an ecotax, which, if enacted by government, deters and essentially reduces greenhouse gas emissions. Some eco-taxes underpinned by the polluter pays principle include: the Gas Guzzler Tax, in US, Corporate Average Fuel Economy (CAFE)- a “polluter pays” fine.

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Importance of Polluters Pay Principle

Greenhouse gases have the potential to cause harm and damage through climate impacts. As such they are considered a major source of pollution. In a 2012 survey the World Health Organisation estimated that to 12% deaths were caused by air pollution. Despite this society has been rather slow in recognizing the link between human activities and the increasing rates of greenhouse gases emissions that cause climate change. As a result those that emit these gases are not held responsible for their actions.

When the pollution cost from the release of greenhouse gases is not imposed on emitters, these costs are thus ‘externalised’ to society, representing what economists describe as a ‘market failure’. Society bears these costs as greenhouse gases are emitted into the atmosphere, which is described as a ‘global commons’ as everyone shares and has the right to use.

Thus the Polluters Pays Principle can be applied to greenhouse gas emitters in the form of a carbon price. The charges imposed can be equivalent to the corresponding potential cost caused through future climate change – thus forcing emitters to internalise the cost of pollution. In this way, a financial incentive is created for a factory, for instance, to minimise its pollution costs by reducing emissions.

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