Polluter Pays Principle

Author: Anshu Bansal, Research Associate

The polluter pays principle states that whoever is responsible for damage to the environment should bear the costs associated with it ((The United Nations Environmental Programme)). The principle is now internationally recognised and most of the countries have adopted this doctrine in their legal system including European countries Organisation for Economic Co-operation and Development (OECD) and European Community countries. This principle was probably first described by Thomas Lindhvist who belong to Swedish government. He was the first person to describe the true meaning of this principle ((The International Institute for Industrial Environmental Economics at Lund University, Sweden (2000).)). Sometimes, this principle is also known as extended producer responsibility. OECD defines EPR as “Producers accepting their responsibility when designing their products to minimise life-cycle environmental impacts, and when accepting legal, physical or socio-economic responsibility for environmental impacts that cannot be eliminated by design” ((Organisation for Economic Cooperation and Development (OECD), Environment Directorate, Paris, France (2006).)).

The principle was originally only applied to those cases where one is actually involved in polluting the environment with emissions, etc., in the strict sense of the word. The principle was subsequently extended to apply to any activity which contributes to deterioration of the environment ((Barbara Luppi, Francesco Parisi, Environmental Protection for Developing Countries: The Polluter-Does-Not-Pay Principle, Legal Studies Research Paper Series available at http://ssrn.com/abstract=1339063.)). The U.S. Superfund law requires polluters to pay for cleanup of hazardous waste sites, when the polluters can be identified ((U.S. Environmental Protection Agency, Washington, DC (1996), The Buck Stops Here: Polluters are Paying for Most Hazardous Waste Cleanups (June 1996).)). It internalises the cost of waste disposal into the cost of the product, theoretically meaning that the producers will improve the waste profile of their products, thus decreasing waste and increasing possibilities for reuse and recycling ((Id)).

It order to understand the true meaning of this principle, it is first required to answer following questions. What constitutes pollution? Who are the polluters? How much must the polluters pay? To whom they must make the payment? The correct interpretation of the polluter pays principle would define pollution as any by product of a production or consumption process that harms or otherwise violates the property rights of others ((Roy E. Cordato, The Polluter Pays Principle, The Institute for Research on the Economics of Taxation (IRET) (2001).)). Hence, the word pollution has wider application and it can constitute no. of things. It is observed that, the polluter would be the person, company, or other organization whose activities are generating that by-product. Animus is not the necessary requirement rather it includes fictitious and legal entities too. And finally, payment should equal the damage and be made to the person or persons being harmed ((Supra note 4)). The “Polluter Pays” principle as interpreted by this Court means that the absolute liability for harm to the environment extends not only to compensate the victims of pollution but also the cost of restoring the environmental degradation ((Vellore Citizens Welfare Forum vs Union of India & Ors, (1996) 3 SCC 212)).

Journey from Polluter pays regime to polluter-does-not-pay regime

The polluter pays principle as it is currently being advocated ends up being a wealth transfer from non-polluters to politically well connected non-victims ((Supra note 7)).

The principle which was earlier devised to compel the polluter to compensate for the damage caused is now being misapplied. Environmental advocates in and out of government feel free to define as pollution the emissions of almost any substance into the air or water, even ones that, according to scientific evidence, are not harming anyone. In reality, not all by-products of the production process are pollutants and not all uses of the natural environment harm people ((Id))but for the sake of arguing advocates interpret the principle as liberally as possible.

Recent trend observed in developing countries such as India, Malaysia, Taiwan, Ecuador, Chile, Costa Rica, Kenya, and South Africa, which have adopted through judicial, legislative and constitutional reforms a variation of the polluter-pays principle, focused on mitigation of the harm through governmental liability ((Supra note 4)). Application of Laws in these regimes suggest that the primary aim is to provide prompt compensation to the victims of environmental harm, and only secondarily to impose liability on the responsible parties. Over a period of time, many legal systems have recognised that their primary obligation is to provide prompt relief to the victim of environmental harm. This is a distinct shift from the regime of the polluter-pays regime, a shift that we shall refer to as the polluter-does-not-pay regime ((Id)).

India leading towards a stronger PPP regime

After Stockholm Declaration in 1972, India has taken many steps towards making domestic law in compliance with international standard. Various Legislations to check Environmental protection ((Environmental Protection Act, 1986)), water pollution ((Water Act, 1974)), air pollution ((Air Act, 1981)), and wildlife conservation were enacted. In the view of fulfilling its obligation, Indian constitution is also amended and Articles 48A ((Directive Principle guiding the state for the protection and improvement of environment and safeguarding of   forests and wild life))and Article 51A (g) ((Fundamental Duty for the citizens of India to protect and improve the natural environment))is added in the name of directive principle and fundamental duties respectively.

Environment Protection Act empowered the Indian government to make rules and regulations, formulate standards, prescribe procedures for managing hazardous substances, regulate industries, and establish safeguards for preventing accidents ((Sec 3, Environment Protection Act, 1986)). The legislation and its Rules clearly incorporated the polluter-pays principle and imposed civil liability for non-compliance. The Act also provided for criminal punishment for non-compliance with environmental standards ((Section 15, Environment Protection Act, 1986)). The Control and Regulation of Hazardous and Solid Wastes under the Environment Protection Act, 1986 specifically provided for the liability of the occupier, transporter, and operator of a facility handling hazardous waste and enforced the polluter-pays principle ((Rule 16, The Hazardous Wastes Management and Handling Rules, 1989)).

Further, The Public Insurance Liability Act was perhaps the conclusive evidence for the polluter-pays principle being applied in Indian environment law. This was the first time the government acknowledged absolute liability for accidents due to hazardous substances ((Supra note 4)). The Act specified how much compensation was to be paid for every degree of injury or death of civilians and/or workmen ((Section 3 read with the Schedule of the Public Liability Insurance Act, 1991)). In addition to this, Section 20 of the National Green Tribunal (NGT) Act, 2010 clearly lays down the principle upon which this Tribunal should function.

It was originally declared in the Brundtland Report in 1987. This principle was also adverted to in Indian Council for Enviro-legal Action vs. Union of India ((1996(3) SCC 212)). In this case, the court held that once a dangerous activity is carried out, the one who caused it will be held liable even though reasonable precautions were taken by him. In many cases during the course of hearing, court give due weight age to the polluter-pays principle ((Research Foundation For Science vs U O I & Anr. on 6 July, 2012)). It was considered as the ethos of international environmental jurisprudence in the matter of correcting a civil norm by award of cost / damages on a polluting industry. It is the integral part and parcel of National environmental law. An Industry or a person who pollutes the surrounding area or environment is bound to compensate the persons have suffered the loss because of the activity ((Hindustan Coco-Cola Beverages … vs Member Secretary, West Bengal Pcb … on 19 March, 2012)).In another case; Court stated that pollution is a civil wrong. It is a tort committed against the community as a whole. A person, therefore, who is guilty of causing pollution, has to pay damages or compensation for restoration of the environment and ecology ((M.Ramasamy vs Rep. By Its President, Papavalasu on 1 November, 2012, W.P.No.2790 of 2012)). It is also regarded as an essential feature of Sustainable Development ((M/S.Vinay Auto Copier Machine vs Union of India on 8 August, 2011)).


In order to provide speedy relief to the victim, India is also moving parallel with other countries. While imposing liability for the purpose of compensation, government is the first in the row. Government in turn make it good from the actual polluter at later point of time. Hence, the original rationale of the polluter pays principle is somehow subverted while providing compensation to the victim.

For deciding who the polluter is and who should be paid, one must first know who has rights to the resource whose use is in dispute. The entire concept of damage or harm is tied into this principle ((Supra note 7)). The recent trend shows that polluter pay principle is being extensively used by courts in many countries including India. The move is welcome but it is needed that the interpretation of the principle should be done in its true sense keeping in mind its prospective consequences on various entities and not on the whims and fancies of lawyers and other related groups.