What is the polluter pays principle?

The ‘polluter pays’ principle is the commonly accepted practice that those who produce pollution should bear the costs of managing it to prevent damage to human health or the environment. For instance, a factory that produces a potentially poisonous substance as a by-product of its activities is usually held responsible for its safe disposal.

This principle underpins most of the regulation of pollution affecting land, water and air. Pollution is defined in UK law as contamination of the land, water or air by harmful or potentially harmful substances.

Part of a set of broader principles to guide sustainable development worldwide (formally known as the 1992 Rio Declaration), the polluter pays principle has also been applied more specifically to emissions of greenhouse gases which cause climate change.

Greenhouse gas emissions are considered a form of pollution because they cause potential harm and damage through impacts on the climate. However, in this case, because society has been slow to recognise the link between greenhouse gases and climate change, and because the atmosphere is considered by some to be a ‘global commons’ (that everyone shares and has a right to use), emitters are generally not held responsible for controlling this form of pollution.

However, it is possible to implement the ‘polluter pays’ principle through a so-called  carbon price. As we’ll discuss in future questions in this series, this imposes a charge on the emission of greenhouse gases equivalent to the corresponding potential cost caused through future climate change. In this way, a financial incentive is created for a factory, for instance, to minimise its costs by reducing emissions.

Why do economists describe climate change as a market failure?

Many economists argue a carbon price should be global and uniform across countries and sectors so that polluters do not simply move operations to so-called ‘pollution havens’ – countries where a lack of environmental regulation allows them to continue to pollute without restrictions.

This article was written by Bob Ward and Naomi Hicks and is a reproduction of the following article “What is the polluter pays principle?” © 2012, The Guardian, used under a Creative Commons No Derivative Works licence.