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Interview — Does the polluter pay?

Article Last modified 15 Oct 2020
4 min read
Photo: © Perry Wunderlich, REDISCOVER Nature/EEA
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A simple but powerful idea lies at the heart of environmental laws in the EU: the ‘polluter pays’ principle. This principle has been applied in the form of taxes, fines and other measures, such as quotas for pollutant emissions and the Environmental Liability Directive. We talked to Professor Geert Van Calster about this principle, its benefits and shortcomings.

What is the ‘polluter pays’ principle about?

The ‘polluter pays’ principle is a simple principle based on common sense: the polluter — and this could be the actors or the activity causing the pollution — should pay to right the wrong. This could entail cleaning up the polluted area or covering the health costs of the people affected.

Historically, it has been a very powerful concept to mitigate the negative impacts of pollution. It provided a moral and legal imperative to take action. In pressing cases, it helped formulate policies and measures, which allowed for decisive action to identify pollution sources and their liability, reduce pollution levels and provide some compensation to those affected. For example, some economic activities known to release pollutants had to install filters to reduce pollutant emissions or establish sector-wide compensation funds.

But even in simple cases, where the polluter can be identified, implementation can be difficult. The ‘culprit’ may be unable to pay and the mother corporation or shareholders cannot always be held liable for the activities of a subsidiary. Not every country has a well-established legal framework to handle these cases. Even if they do, a legal process is often very lengthy and costly.

Moreover, with time, the principle has been applied to more complex cases of persistent and prevalent pollution, such as air pollution resulting from diffuse sources, where attributing responsibility and implementation get even more difficult.

How can we define who needs to pay whom?

In diffuse pollution cases, it is not easy to track and identify the polluter and connect it with the people affected. Air pollution can be caused by pollutants released from different sources and different locations, some of which may lie across international borders. We also need to think about the positive outcomes and benefits of these polluting activities. These are products and services, such as food, clothes, transport, which benefit us individually and the society as a whole.

For example, polluting activities outside the EU could be affecting local communities but the mother holding could be based in the EU and European consumers could be enjoying the products. It is difficult to hold only the operator accountable in these cases. The wider society often bears the costs.

But the costs or the harm and the benefits are not distributed equally. Lower income communities or more vulnerable groups like single parent families tend to live closer to roads and be more exposed to pollutants from road transport.

Are there any good examples of effective measures?

There are two different types of approaches. The first aims at helping those affected and there are many good examples in Europe. The noise abatement panels or similar structures built along motorways can reduce noise levels significantly and hence the harm to those living there.

The second type aims at limiting or preventing pollution or harmful activities in the first place. These could consist of imposing taxes, pollution quotas or certain technological solutions. For example, Europe is introducing cleaner fuels or is gradually decreasing carbon emissions from new cars. For some sectors, emissions allowances are capped and can be traded. Some of these measures aim at adjusting the price in such a way as to influence consumption behaviour. Similarly, many Member States now charge by the quantity extracted or used instead of the number of taps, which has changed how we use water substantially.

Are there any shortcomings in the way we apply the ‘polluter pays’ principle?

Unfortunately, the current system can be seen and used as a ‘licence to pollute’: as long as you can pay — meaning if you can afford it, you are allowed to pollute. This is closely linked to the unequal distribution of benefits and costs of these polluting activities. The inequality issue also lies at the heart of global climate negotiations, both in terms of historic emissions (the amount each country has emitted so far) and current emissions per person. In an ideal world, everyone would be given an equal amount of carbon credit.

The second main shortcoming is that the ‘payment’ hardly ever covers all the ‘costs’. The contaminated land in old industrial sites might be cleaned up to allow for people to live there. It is a very costly operation but it does not necessarily undo the harm done to the water bodies or to the people and animals dependent on that water. Costs are often limited to operational costs and do not reflect the real value of the benefits we get from nature.

Can we design a system that covers the full value?

We need a coherent and global approach that addresses all the challenges we face — environmental degradation, climate change, resource use and inequalities — in the same way that the Sustainable Development Goals do. The European Green Deal aims to bring some of this thinking into European policies.

To cover the real value, we would need a much more ambitious taxation system, both for corporate and personal tax, designed to induce a more sustainable behaviour. And, costs need to be integrated not only downstream on the consumption side but also upstream on the production side. As consumption and production systems are connected globally, integration requires an approach that extends beyond sovereign states’ rules and regulations.

To be effective, this approach needs to be backed by a governance system with regulators that can ensure and enforce a level playing field with well-defined rules. On the ground, in addition to ambitious taxes and common standards, measures like anti‑dumping duties and carbon border taxes as well as a common approach towards environmentally harmful subsidies will be necessary.

 

 

Professor Geert Van Calster
Head of Leuven Law’s department of European and international law
University of Leuven

 

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