AMITY LAW SCHOOL NOIDA

ENVIRONMENTAL LAW PROJECT

POLLUTER PAYS PRINCIPAL

SUBMITTED TO :
Ms. APOORVA ROY
(Faculty Incharge)
Submitted by :
SHUBHANKAR NEGI
A3221517092
SEC B
SEM 8
ABSTRACT
Environmental Law is one of the fastest growing aspects of law. It is commonly accepted that
those who cause damage or harm should pay, in one way or another for such damage. Such
damage can be to body, society or our environment. Due to absence of sanctions in
environmental law, it became difficult to keep a check on harmful activities. This required the
introduction of a penalty to punish people who caused harm to the environment. This gave rise to
what we know today as “Polluter Pays Principle”. The principle means that the cost of pollution
should be paid by the polluters and not by their governments. This principle is considered to be
the most efficient environment policy and has been included in various regional and international
agreements on pollution. The concept of polluter pays has been in existence even before the
Organisation for Economic Co-operation and Development (OECD) adopted it as a recognised
principle of environmental law. The research paper explores the applicability, advantages and
disadvantages of the polluter pays principle while also looking at the incorporation of the
principle in the Indian environmental domain.
Water is one of the important natural resources. River is an important component of water
resources. The river is provides water for number of natural and anthropogenic activities. These
activities introduce number of pollutants in the river and cause river pollution. The
increasing river pollution is evident throughout the world. All the living creatures including
human beings face the consequences of river pollution. It is essential to control and manage the
river pollution and its consequences. Hence the “Polluter Pays Principle” has become a popular
catchphrase in recent times which says that ‘If you make a mess, it's your duty to clean it
up'- It favours a curative approach which is concerned with repairing environmental
damage. The first major reference to the PPP appeared during 1972 in the Organisation for
Economic Co-operation and Development (OECD) as Guiding Principles Concerning
International Economic Aspects of Environmental Policies. The PPP as a guiding principle
across the world became necessary because some countries faced pollution problems
created by other countries
INTRODUCTION
Most of us agree to that fact that those who cause damage or harm should pay, in one way or
another for such damage. Such damage can be to body, society or our
environment.Environmental Law is one of the fastest growing aspects of law. This has come
about mainly due to the increasing destruction of the environment by humans as well as the
growing concern for protection of the environment. Various laws have been enacted
domestically and internationally prohibiting certain practices that harm the environment or ways
to conduct activities that might potentially harm the environment in an environmental friendly
way. Thus to create a balance between development and environmental protection the concept of
sustainable development was introduced. However, because of absence of sanctions, it became
difficult to keep a check on harmful activities. This required the introduction of a penalty to
punish people who caused harm to the environment. This gave rise to what we know today as
“Polluter Pays Principle”. It is one of the fundamental principles of modern environmental law.
Basically, the principle means that the cost of pollution should be paid by the polluters and not
by their governments.This principle is considered to be the most efficient environment policy
and has been included in various regional and international agreements on pollution.
The concept of polluter pays has been in existence even before the Organisation for Economic
Co-operation and Development (OECD) adopted it as a recognised principle of environmental
law. However, the devil lies in understanding the concept, challenges, advantages and
disadvantages of the polluter pays principle.
POLLUTER PAYS PRINCIPLE
The Polluter Pays Principle (PPP) is one of the internationally recognized principles
that influence the environmental legislation, management and economics in common. The
PPP is expressed in numerous international recommendations and treaties. The PPP was first
defined and recommended by the Organization for Economic Co-operation and Development
(OECD) in 1972 as a guideline for national environmental policy. The discussions
among economists regarding the allocation of pollution prevention costs in order to achieve
an efficient environmental policy resulted into PPP. In the Guiding Principles Concerning
International Economic Aspects of Environmental Policies of OECD, it is stated that- the
principle to be used for allocating costs of pollution prevention and control measures to
encourage rational use of scarce environmental resources and to avoid the distortion in
international trade and investment. In 1974 Swedish Government described PPP as Extended
Polluter Responsibility (EPR). The World Commission on Environment and Development 1987
explained PPP as one of the features of sustainable development. The polluter pays principle was
also reaffirmed in the United Nations Conference on Environment and Development during
1992 at Rio De Janerio. In the Rio declaration, 16th principle explains that “ 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 the principle, bear the cost of pollution, with due regards to the public interest
and without distorting international trade and investment.” And is mentioned, recalled or
otherwise referred in both agenda 21 and world summit on sustainable development-
Johannesburg plan of implementation.In simple words PPP means “ the polluter should
be held responsible for environmental damage caused and bear the expenses of carrying out
pollution prevention measures or paying for damaging the state of the environment, where the
consumptive or productive activities causing the environmental damage are not
covered by property rights." Professor Bugge stated that the Polluter Pays Principle has
several meanings and has identified four versions of the polluter pays principle, that
has found expression in various jurisdictions:
(1) The principle is an economic principle; a principle of efficiency;
(2) The principle is a legal principle; a principle of “just” distribution of costs;
(3) The principle is one of international harmonization of national environmental policy;
(4) The principle is a principle of allocation of costs between states.
WHAT IS POLLUTION?
Pollution usually occurs when acts that disturb the peace of nature are carried out, unchecked.
The commonly accepted definition or meaning of pollution is“the introduction by man, directly
or indirectly, of substances or energy into the environment resulting in deleterious effects of such
a nature as to endanger human health, harm living resources and ecosystems, and impair or
interfere with amenities and other legitimate uses of the environment.”In terms of regional
legislation the Water (Prevention and Control) Act, 1974 defines pollution as “such
contamination of water or such alteration of the physical, chemical or biological properties of
water or such discharge of any sewage or trade effluent or of any other liquid, gaseous or solid
substance into water (whether directly or indirectly) as may, or is likely to create a nuisance or
liable to render such water harmful and injurious to health”
The Environment (Protection) Act, 1986 denies pollution as “presence in the environment of an
environmental pollutant”and further defines environmental pollutant as “any solid, liquid or
gaseous substance present in such concentration as may be, or tend to be, injurious to
environment”.
Other legislations like the Air (Prevention and Control of Pollution) Act 1981 have similar
definitions of pollution. Thus it is evident from these regional as well as international definitions
that the emphasis is on the fact that pollution must have a tendency to cause harm, or must
actually cause harm. Thus basically, pollution is a trespass as under common law. If the trespass
is so nominal that it creates no harm, it will normally be tolerated. Hence, as the definition of
pollution is commonly understood, for the pollutant to result in cause pollution there must be
some consequent harm or threat of harm.

BACKGROUND OF THE PRINCIPLE

Polluter pays principle falls under the umbrella of absolute liability. The principle of absolute
liability is invoked regardless of whether or not the person took reasonable care and it makes him
liable to compensate those who suffered on account of his inherently dangerous activity.
A. V. Kneese and J H Dales were the first persons to discuss this principle. They spoke about the
ways and means, especially economic to reduce pollution in the 1960s. J. H. Dales proposed in
1968, tradable discharge invoked regardless of whether or not the person took reasonable care
and it makes him liable to compensate those who suffered on account of his inherently dangerous
activity. A. V. Kneese and J H Dales were the first persons to discuss this principle. They spoke
about the ways and means, especially economic to reduce pollution in the 1960s. J. H. Dales
proposed in 1968, tradable discharge permits, considered to be the best economic instruments for
reducing pollution. Further, the polluter pays principle was hinted at by the Committee of
Ministers of the Council of Europe issued a Draft Declaration of Principles on Air Pollution
Control. Article 6 of the Declaration states:
“The cost incurred in preventing or abating pollution should be borne by whoever causes the
pollution. This does not preclude aid from Public Authorities.”
The Organisation for Economic Co-operation and Development held a seminar in 1971, in Paris
on environmental economics where polluter pays principle was the primary topic of discussion.
This was the first instance of polluter pays principle being discussed on an international forum.
In 1972, the Organisation for Economic Co-operation and Development formally recommended
on 26 May 1972 the polluter pays principle to be the ‘Guiding Principle Concerning the
International Economic Aspects of Environmental Policies’. The recommendation clearly lays
out the usage of the principle stating:
“The principle to be used for allocating costs of pollution prevention and control measures to
encourage rational use of scarce environmental resources and to avoid distortions in international
trade and investment is the so called "Polluter Pays Principle".This principle means that the
polluter should bear the expenses of carrying out the abovementioned measures decided by
public authorities to ensure that the environment is in an acceptable state. In other words, the cost
of these measures should be reflected in the cost of goods and services which cause pollution in
production and/or consumption. Such measures should not be accompanied by subsidies that
would create significant distortions in international trade and investment., considered to be the
best economic instruments for reducing pollution.
Further, the polluter pays principle was hinted at by the Committee of Ministers of the Council
of Europe issued a Draft Declaration of Principles on Air Pollution Control. Article 6 of the
Declaration states:
“The cost incurred in preventing or abating pollution should be borne by whoever causes the
pollution. This does not preclude aid from Public Authorities.”
The Organisation for Economic Co-operation and Development held a seminar in 1971, in Paris
on environmental economics where polluter pays principle was the primary topic of discussion.
This was the first instance of polluter pays principle being discussed on an international forum.
In 1972, the Organisation for Economic Co-operation and Development formally recommended
on 26 May 1972 the polluter pays principle to be the ‘Guiding Principle Concerning the
International Economic Aspects of Environmental Policies’.
The recommendation clearly lays out the usage of the principle stating:
“The principle to be used for allocating costs of pollution prevention and control measures to
encourage rational use of scarce environmental resources and to avoid distortions in international
trade and investment is the so called "Polluter Pays Principle".This principle means that the
polluter should bear the expenses of carrying out the abovementioned measures decided by
public authorities to ensure that the environment is in an acceptable state.
In other words, the cost of these measures should be reflected in the cost of goods and services
which cause pollution in production and/or consumption. Such measures should not be
accompanied by subsidies that would create significant distortions in international trade and
investment.
THE PRINCIPLE AS AN ASPECT OF CUSTOMARY INTERNATIONAL LAW
After the Organisation for Economic Co-operation and Development recommendations in the
1970s, there was a boom in public interest in environmental issues which resulted in pressure on
the various Governments and other institutions to introduce rules and regulations to protect the
environment. This led to various international level discussions and conferences where nations
got together to find solutions to environmental degradation.
The polluter pays principle as we know today was first incorporated in Principles 21 and 22 of
the Stockholm Declaration, 1972. 12 Thereafter, various documents like the Rio Declaration13
in its Principle 15 provided for the application of the polluter pays principle.
The International Court of Justice in its landmark decision in the Case Concerning the
Continental Shelf 14 between Libya and Malta determined as to when a particular rule or
provision acquired the status of being a part of customary international law. The Court held that
the provision in question should have state practice i.e. consistent and general behaviour of states
as regards the provision in question and opinio juris i.e. a subjective obligation, a sense on behalf
of a state that it is bound to the provision in question. The Court in the same paragraph, further
goes on to say those multilateral conventions also play an important role in developing and
defining rules of customary international law.
The basic principle that a State should ensure payment of prompt and adequate compensation for
hazardous activities could be traced back as early as the Trail Smelter Arbitration case between
the United States and Canada.Since then numerous treaties, some important decisions, and
extensive national law and practice which have evolved giving considerable weight to claims for
compensation in respect of trans-frontier pollution and damage. Some commentators even regard
this as a customary law obligation.
However, the polluter-pays principle has not received the same degree of support or attention
accorded over the years to the principle of preventive action, or the attention more recently
accorded to the precautionary principle, although its use is now being taken up in other regional
agreements.17
The strong objections of some countries to the further development of the polluter-pays
principle, particularly for international relations, are evident from the compromise language
adopted by Principle 16 of the Rio Declaration18, which provides that:
“National authorities should endeavour to promote the internalisation of environmental costs and
the use of economic instruments, taking into account the approach that the polluter should, in
principle, bear the costs of pollution, with due regard to the public interests and, without
distorting international trade and investment.”
POLLUTER PAYS PRINCIPLE IN INDIA
Despite the existence of this principle since 1960s, the concept was introduced in Indian law as
late as 1996 in the Indian Council for Enviro-Legal v. Union of India19 case. In this case the
court affirmed the principle of absolute liability as stated in the M. C. Mehta v. Union of India,
also known as the Oleum Gas Leak20 case and extended it. The court stated that:
“The polluter pays principle demands that the financial costs of preventing or remedying damage
caused by pollution should lie with the undertakings which cause the pollution, or produce the
goods which cause the pollution. Under the principle it is not the role of government to meet the
costs involved in either prevention of such damage, or in carrying out remedial action, because
the effect of this would be to shift the financial burden of the pollution incident to the taxpayer.”
This principle was further re-affirmed again in 1996 in Vellore Citizens Welfare Forum v. Union
of India. Inthese cases the polluter pays principle has been justified through the constitutional
mandate under Article 21 and Article 47 of the Constitution of India, statutory provisions22 and
international customary law.
PROVISIONS RELATED TO POLLUTER PAYS PRINCIPLE IN INDIA
There is no direct implementation of Polluter Pays Principle in Indian law but there are some
provisions in various acts which provides penalties for the pollution created by polluters.
Some of them are given bellow-a) The provision from Environment (protection) Act 1986-
Section 15 (1) whoever a person fails to comply with or contravenes any of the provision of
EPA, is liable for fine 1,00,000 /- or with 5 years imprisonment, or both. The offence is
continued ,an additional fine can be imposed against the offender which may be extended
to 5000/-Sec.16 If any offence under this act has been committed by a company, every person
who is in charge will punished accordingly.b) The provision from Air ( Prevention and Control
of pollution) Act, 1981-Sec.31 A Person whoever fails to comply with the provision of the
act ,are punished with the fine and imprisonment such fine can be extended to 5000/- for
everyday. Sec.38 Provides for the punishment with the imprisonment or with fine 10000/- if he
destroy any property.Sec.39 If the contravention continued , the fine may extended Rs.5000/- per
day.c) The provisions from Water (Prevention and control of pollution) Act,1974-Sec.32 C (1) If
a person held guilty under Sec 20 (2) and (3) of Water (Prevention and control of pollution)
Act,1974 , is punishable with imprisonment and fine up to 10,000/- or both.If any person
disposes any polluting matter into any stream or well, then he is punishable with
imprisonment up to 6 months and fine.

THE ROLE OF MARKET BASED INSTRUMENTS IN SHAPING THE POLLUTER

PAYS PRINCIPLE
The application and implementation of the polluter pays principle must include a framework to
safeguard against its potentially harmful effects while reducing uncertainties about its economic
impact. The polluter pays principle is closely tied to policies usually grouped under “market
based” or “economic” instruments. These instruments are further divided into two classes,
namely, taxes and tradable permits.
The taxation approach is most direct. The tax would be paid either in the form of an emissions
fee or an excise tax on the sales of products that are associated with pollution. The tradable
permits approach would first have the government establish an overall acceptable level of
emissions for an industry and would then distribute permits for that level of emissions to
companies within the industry. The companies could then buy and sell these emissions permits
based on their needs to emit the pollutant and their abilities to find pollution abatement
techniques.
Economists have cited four reasons to question the viability of the polluter pays principle:
1.The application of the principle in urban areas where the industrial sector is dominated by
medium,
small and tiny enterprises operating in a highly competitive market is risky as any higher costs
from
emission or other effluent clean up charge might adversely affect their competitiveness in
relation to
large firms that are capable of affording the installation of necessary equipment.
2.Even though the polluter pays principle does not prohibit the polluter from passing on the
additional
costs that he might incur in terms of increased costs, thereby increasing price of his product, the
reality
in developing nations may not always be this way. These nations which rely heavily on exports
of
primary commodities for which demand in the international market is elastic may find that the
costs are
entirely borne by the producers in the form of damage to human health, property and ecosystems.
3.Representing a larger objection to the inclusion of polluter pays principle in Indian law is the
consequences it will have in the realm of the common property resource. The application of the
principle will lead to the appropriation of rights by wealthy landlords to the disadvantage of the
small
land owners, if curbs are imposed on the manner in which a resource can be used, in this instance
land.
4.The Court has not dealt with the fact that the level of charges to be imposed on the polluter are
extremely difficult to estimate and therefore will give rise to difficulties.
The implementation of the polluter pays principle has significant economic consequences,
especially in the Third World where trade is carried out in commodities that are the products of
pollution intensive industries.
To prevent the potential economic harm, the principle must be implemented via Market Based
Instruments. One mechanism suggested by Attilio Bissio, who is a principal in Atro Associates, a
consulting firm specializing in the development and evaluation of petroleum refining and
petrochemical processes, and Sharon Boots who was an engineering advisor and program
manager at Exxon’s Corporate Research Laboratory, to achieve the aforementioned object is an
environmental assurance bond.26 This bond would act as a contractual guarantee that the
principal would act in an environmentally friendly manner and would be charged a present
accurate estimate of the maximum future environmental damage.
However, as there are two sides to each coin, there are arguments against such bonds. One would
be that it would favour large firms that could afford to handle the financial responsibilities of
activities potentially damaging to the environment. Moreover, this will prevent firms that cannot
handle the financial burden from passing on the cost of the environmental degradation to the
public
LIMITATIONS OF POLLUTER PAYS PRINCIPLE
Though there are certain Provisions for controlling the pollution in Indian legislation, Polluter
Pay’s Principle is accepted all over the world; there are certain limitations of this principle.
1. Ambiguity still exists in determining who is polluter. In legal terminology, a polluter is
someone who directly or indirectly damages the environment or creates conditions relating to
such damages clearly, this definition is unsupportive in many situations.
2. Large number of poor households, informal sector, firms and subsistence formers can not bear
any additional charges for energy or waste charges.
3. Small or medium size firms from a formal sector, which mainly serves at home
markets and find it difficult to pass an higher cost of domestic endusers of their
product.
4. Exporters in developing countries usually shift the burden of cost internalization to foreign
consumers due elastic demands.
5. Many environmental problems in the developing countries are caused by an
overexploitation to common pool resources. Access to these common pool resources could be
limited in cases through assigning private property rights, however this solution could
lead to sever distributional conflicts.
6. sometimes, in the case of group of companies, it is failed to decide exactly who is polluter.
CONCLUSION
The polluter pays principle has had a long journey. From being a concept propounded in the
1960s to being to internationally discussed in 1971 to being a part of various international
agreements since the Declaration of the United Nations Conference on the Human Environment
in 1972 to its strong affirmation during the United Nations Conference on Environment and
Development in 1992. Enforcement of any law requires strict sanctions to ensure that the law is
being complied with. Thus laws regarding protection of environment were difficult to enforce as
the defaulters did not fear any punishment or penalty. This gave birth to the concept of the
polluter pays principle.
The clear advantages of the polluter pays principle are as states above that it helps in enforcing
the environmental laws and makes sure that development does the harm the environment beyond
the necessary limit. Thus the polluter pays principle goes hand in hand with the concept of
Sustainable Development. One of the disadvantages of the polluter pays principle is that there is
no gradation mechanism prescribed so that the polluter pays principle can also have a deterrent
effect on the industries. In addition to evaluating the cost of reparation of the destruction caused,
the capability and size of the industry must also be considered so that the penalty can be
determined according to that. As discussed before, larger industries would not face any trouble in
passing on the cost of environmental damage to the public.
In summary of the observations on market instruments, three aspects need to be determined by
the International Courts and Conferences at the international level and by regional courts at the
domestic level. These are:
1. Development of scientific methods to determine the potential costs of uncertainty with
reference to
environmental damage.
2. To adjust incentives so that the relevant parties pay the cost of this uncertainty.
3. To offer enough incentives to reduce the adverse effects of high risk activity.
As mentioned before, the polluter pays principle is an extension of the strict or absolute liability
principle as it does not take into account due diligence before the potentially harmful act. Since it
is a part of strict liability, governments, firms and other factions whose activities might adversely
affect the environment will be forced to be a notch more careful in conducting tests like the
Environmental Impact Assessment (EIA) before undertaking such activities. Therefore, in terms
of feasibility, the polluter pays principle promises to help in the fight again environmental
degradation and preventing the ongoing environmental crisis.
CASE STUDY
Pali is situated on Western Rajasthan region. It is located between 24.450 to 26.750 N
Lat and 72.480 to 74.200 E Long covering the geographical area of 12330.79 Km2. The
population of the town is 229,956 (census 2011). The river Luni is one of the famous rivers in
Western Rajasthan. The rive Bandi is one of its major tributaries. Pali town is situated on the
bank of the river Bandi and is 35 km south east of Jodhpur. Pali is situated at 212 MSL. Since
11th Century AD this town is famous for trading and industrial production. Hence, it is also
known as "The Industrial City". More than 1000 textile printing and dying units and
industries are located in the Pali. The River Bandi is a non perennial river hence it does not flow
in lean season. Ground water table of the entire area is depleted. This area is constantly under
the stress
of water scarcity. Considering these facts water is the costly raw material here. For the area water
is transported from a radius of more than 10 km away. Pali is famous for tie and dye printing
(Bandhani). Garment is transported from Ichalkaranji to Pali for printing and dying, tie
and dye printing. For this processing variety of chemicals, acids, alkalis are used. It also
required huge amount of water. Hence the discharge from textile processing units contains a
variety of chemicals, dyes, acids and alkalis besides heavy metals and other toxic compounds.
Per day about 35 million litters of effluent is produced in single Pali Township from the textile
processing units. Textile dyes are toxic, highly stable and do not degrade easily
and are not removed by conventional wastewater treatment methods. Pali is one of
the critically polluted areas identified by the Central Pollution Control Board in 1998.
The textile printing and dyeing industries located in Pali town are discharging industrial
effluents into the river Bandi, which is severely contaminating both the river as
well as the groundwater. There are more than eight hundred textile units in the city. Effluents
from Pali flow about 55 km downstream, making the groundwater in several riverbank villages
unfit for irrigation or drinking.Sri Kisan Paryavaran Sangarsh Samiti (SKPSS) is a group of
farmers formed in 2004 has members from 50 villages in and around the Pali town who, stood
against the pollution of the Bandi river and groundwater in and around the town of Pali, by
textile dyeing and printing industries. SKPSS has requested to Centre for Science
and Environment, Delhi (CSE) to carry out the study for pollution of river Bandi. According to
a survey conducted by the Central Groundwater Board in 2004, the groundwater has turned
alkaline and total dissolved solids, chloride, sulphate, sodium are very high in the groundwater
rendering wells in the area unfit for drinking and even for irrigation. The soil in this area has also
become hard and unfertile. In many sites heavy metals were also found. To treat the effluent
three Common Effluent Treatment Plants (CETP) were constructed with the capacity of
22.5 MLD in Pali. The installation cost was Rs. 8.13 crore. There are two units located at the
Mandia road industrial area (CETP I and CETP II). These two CETPs receive wastewater from
the Mandia road industrial area and the 130 units located at industrial area Phase I,
Phase II, Mahaveer Udyog Nagar and Maharaja Shree Umaid mill and are connected to
CETP III at Punayata Road. The CETPs are managed and maintained by the Pali Water
Pollution Control Research Foundation (PWPCRF) Trust, which is one of the very first co-
operative pollution control bodies. To run these plants, a pollution cess is levied on all industries
– Rs. 65 per bale/100 kg cloth On an average Rs. 35 lakhs are collected per month. The cost of
effluent treatment is Rs 67/1000 litre. This cost is paid by the textile processing unit
holders which means polluters are paying for the controlling the pollution. But which is not
sufficient. With initiative of CSE local people and members of SKPSS were
trained to monitor the water samples of river and groundwater by themselves. It has been
observed that still the water pollution situation was not under control as only 45 percent of
effluent was treated in the CETP. Few loopholes were found in the waste water treatment which
allowed untreated effluent to enter into the river. CETPs are not designed to treat the key
pollutant, which is present in the waste namely heavy metals. Continuous monitoring
showed that long term and persistent contamination has lead to the extensive poisoning of
groundwater in the area. CSE found heavy metal contamination in the river up to Nehada dam,
which is 50 km downstream of the town. Hence to find the solution to the problem CSE and
KSPSS has called a meeting. NGO’s from India, Experts, government officials, Political leaders
have participated in the meeting. The agenda of meeting was to form a Pradushan Mukti
Network in India, say no to pollution, to fight against pollution, to seek knowledge, to change
and improve, to find a win-win solution. As an outcome of meeting it has been decided that
government officials of Pali, KSPSS, CSE, Industrial sector and other organisations will come
together and will take measures to control the Bandi river pollution. Proper applications
of polluter pays principle should be done.