The Basics of Polluter Pays Principle

The ‘polluter pays’ principle is the ordinarily acknowledged practice that the individuals who pollute should bear the expenses of overseeing it to anticipate harm to human well-being or the environment. For example, a processing plant that delivers a conceivably noxious substance as a side-effect of its exercises is typically considered in charge of its protected transfer.[1]


The primary specify of the Principle at the universal 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 expressed that: “The principle to be utilized for distributing expenses of contamination aversion and control measures to empower normal utilization of scare ecological assets and to avoid distortions in international trade and investment is the supposed Polluter-Pays Principle.” It at that point went ahead to expand: “This principle implies that the polluter should bear the costs of doing the previously mentioned measures chose by public authorities to guarantee that the environment is in a worthy state.”

Be that as it may, the Polluter-Pays Principle advanced into what is called expanded or solid Polluter-Pays Principle. In 1989, OECD incorporated into the Polluter-Pays Principle costs identified with inadvertent pollution. The Polluter-Pays Principle has likewise been reaffirmed in the 1992 Rio Declaration, at Principle 16: “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.”, and is specified, reviewed or generally alluded to in both Agenda 21 and the World Summit on Sustainable Development (WSSD) Johannesburg Plan of Implementation.

The Polluter-Pays Principle is broadly recognized as a general guideline of International Environmental Law, and it is expressly said or certainly alluded to in various Multilateral Environmental Agreements.


The Evolution of this Principle in India[3]

Notwithstanding the potential that the polluter pays standard holds to secure the environment, it was anything but a piece of the law in India till it was invoked in the Enviro-Legal Action[4] case as late as 1996.In this case the court affirmed the principle of absolute liability as stated in the Oleum Gas Leak case and broadened it. The court set out, “The polluter pays principle demands that the financial costs of preventing or remedying the damage caused by pollution should lie in the undertakings which cause the pollution or produce the goods that cause the pollution.” The judgment of the above case on the polluter pays principle and the support for conjuring it was reaffirmed by another Bench in 1996, on account of Vellore Citizens Welfare Forum vs Union of India[5]. In these cases, the utilization of the polluter pays principle has been supported by means of the constitutional mandate[6], statutory arrangements[7] and International customary law.

Flaws in the Polluter-Pays Principle[8]

It is true that polluter pays principle has a positive effect to reduce pollution. The principle seems quite relevant for pollution that occurs during industrial activity, although it remains inefficient in the case of historical pollution. Most developing countries, however, have not yet subscribed to the Polluter-Pays Principle as a main environmental policy guideline. As Rege (1994) points out, this is due to adverse economic conditions. Legal theorists discovered few loopholes of this rule.

The flaws are as follows:
Firstly, ambiguity still exists in determining ‘who is a polluter’. In legal terminology, a ‘polluter’ is someone who directly or indirectly damages the environment or who creates conditions relating to such damage. Clearly, this definition is so broad as to be unsupportive in many situations.[9]

Second, a large number of poor households, informal sector firms, and subsistence farmers cannot bear any additional charges for energy or for waste disposal.

Third, 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.

Fourth, exporters in developing countries usually cannot shift the burden of cost internalisation to foreign customers due to elastic demand.

Lastly, many environmental problems in developing countries are caused by an overexploitation of common pool resources. Access to these common pool resources (in line with the Polluter-Pays Principle) could be limited in some cases through assigning private property rights, however, this solution could lead to severe distributional conflicts.

All of these problems make it difficult to implement the Polluter-Pays Principle as a guideline for environmental policy in developing countries. Despite the fact that Polluter Pay Principle was publicized by early conservationists as a means to reduce ecological pollution, still many consider it as a ‘vague idea’.[10] Some put forward their argument that under this principle a polluter fulfils his obligations when he pays at least some of administrative expenses of the agencies who regulate pollution activities. ‘Exxon Valdez’ case is the best example of this criterion of Polluter Pays Principle.[11] Others argue that it can only be satisfied by polluters when they will pay the total depollution cost. And the rest support the view that tax (like ‘Carbon Taxes’) should be legitimised on the users of the natural resources that cause atmospheric hazards.
Carbon Price

A carbon price is a cost applied to carbon pollution to encourage polluters to reduce the amount of greenhouse gases they emit into the atmosphere. Economists widely agree that introducing a carbon price is the single most effective way for countries to reduce their emissions.

Climate change is considered a market failure by economists, because it imposes huge costs and risks on future generations who will suffer the consequences of climate change, without these costs and risks normally being reflected in current market prices. To overcome this market failure, they argue, we need to ‘internalise’ the costs of future environmental damage by putting a price on the thing that causes it – namely greenhouse gas emissions.[12]

A carbon price not only has the effect of encouraging lower-carbon behaviour (e.g. using a bike rather than driving a car), but also raises money that can be used in part to finance a clean-up of ‘dirty’ activities (e.g. investment in research into fuel cells to help cars pollute less). With a carbon price in place, the costs of stopping climate change are distributed across generations rather than being borne overwhelmingly by future generations.

[1] Grantham Research Institute and Duncan Clark, “What is the ‘polluter pays’ principle?”


[3] “The Polluter Pays Principle”, Available at Retrieved 18 May 2018.

[4] Indian Council for Enviro-Legal Action v. Union of India. (1996) 3 SCC 212 at 215.

[5] (1996) 5 see 647. In this case tanneries and other industries in the state of Tamil Nadu were discharging untreated effluents into the agricultural fields, roadsides, waterways and open lands. The untreated effluents were finally discharge into the River Palar, which was the main source of water supply to the residents of that area.

[6] Under Article 21 and Article 47, The most relevant provision invoked was Article 48-A, which states that the State will endeavor to protect and improve the environment, and Article 51-A(g) which ensures the protection of the natural environment.

[7] The Water Act, 1974., The Air Act, 1981 and The Environment Protection Act, 1986.

[8] Polluter Pays Principle Polluter Pays Principle Polluter Pays Principle Polluter Pays Principle. Available from: [accessed Jul 05 2018].

[9] For example, Mr. Nitin owns a Toyota. If his Toyota emits harmful gas in the atmosphere, he will be directly liable for the emission. Furthermore, the manufacturer of the vehicle will be indirectly liable for committing ecological damage too and so the retailer of the vehicle and the fuel supplier, and the government who created ‘conditions relating to the damage’ by building roads and neglecting public transport regulations.

[10] (Who can pay for depollution? An economic approach) (Accessed on 27-02-2014)

[11] In 1989, an oil tanker owned by Exxon spilled out over 300,000 barrels of crude oil into the sea and caused significant environmental hazard. Exxon was forced to pay $125 million in fines to the federal government and the state of Alaska and $900 million into a fund for environmental projects controlled by government, habitat protection, and scientific research, among other things.

[12] What is a carbon price and why do we need one? Available at: (Accessed on July 10 2018)

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