The polluter pays principle was promoted by the Organization for Economic Co-operation and Development (OECD) during the 1970s when there was great public interest in environmental issues.

The polluter pays principle makes the polluter liable to pay the costs to remedy the environmental harm caused. This principle is considered the most efficient way of allocating costs of pollution prevention and control measures introduced by the public authorities to encourage rationale use of scarce environmental resources.

The polluter pays principle demands that the financial costs of preventing or remedying damage caused by pollution should lie with the undertaking, which causes the pollution, or produces 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.

The polluter pays principle has been held to be a sound principle in Indian Council for Enviro-Legal Action vs Union of India¹⁾. Hon’ble Supreme Court ruled that—

“Once the activity carried on is hazardous or inherently dangerous, the person carrying on such activity is liable to make good the loss caused to any other person by his activity irrespective of the fact whether he took reasonable care while carrying on his activity. The rule is premised upon the very nature of the activity carried on.”

The polluting industries are absolutely liable to compensate for the harm caused by them to villagers in the affected area; to the soil and to the underground water. Hence, they are bound to take all necessary measures to remove sludge and other pollutants lying in the affected areas. The polluter pays principle 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. Remediation of the damaged environment is part of the process of sustainable development. As such, polluter is liable to pay the cost to the individual sufferers as well as the cost of reversing the damaged ecology.

MC Mehta vs UOI,²⁾

An enterprise, which is engaged in a hazardous or inherently dangerous industry which poses a potential threat to the health and safety of the persons working in the factory and residing in the surrounding areas, owes an absolute and non-delegable duty to the community. The enterprise has to ensure that no harm results to anyone on account of hazardous or inherently dangerous nature of the activity which it has undertaken. The enterprise must be held to be under an obligation to provide that the hazardous or inherently dangerous activity in which it is engaged must be conducted with the highest standards of safety. If any harm results on account of such activity, the enterprise must be absolutely liable to compensate for such harm. It should be no answer of the enterprise to say that it had taken all reasonable care and that the harm occurred without any negligence on its part.

Since the persons harmed on account of the hazardous or inherently dangerous activity carried on by the enterprise would not be in a position to isolate the process of operation from the hazardous preparation of substance or any other related element that caused the harm, the enterprise must be held strictly liable for causing such harm as a part of the social cost for carrying on the hazardous or inherently dangerous activity.

If the enterprise is permitted to carry on an hazardous or inherently dangerous activity for its profits, the law must presume that such permission is conditional on the enterprise absorbing the cost of any accident arising on account of such hazardous or inherently dangerous activity as an appropriate item of its overheads. Such hazardous or inherently dangerous activity for private profit can be tolerated only on condition that the enterprise engaged in such hazardous or inherently dangerous activity indemnifies all those who suffer on account of the carrying on of such hazardous or inherently dangerous activity regardless of whether it is carried on carefully or not.MC Mehta vs UOI³⁾

The polluter pays principal is commonly interpreted as the polluter must pay for the cost of pollution abatement, cost of environment recovery, cost of incident management and compensation costs for the victims of the damages, if any, due to pollution. It implies that those who caused environment damage by polluting should pay the costs of reversing that damage and also controlling the further damage. Though the principle is very simple, its implementation is rather difficult and complex mainly due to the difficulty in identification of the polluters and apportioning their responsibilities.

Another concern, in implementation of this principle is to how the polluter should pay. Even the difficulties in restoring the ecological system, once it is disrupted or contaminated makes the assessment of payment in the terms of loss (loss of bi-diversity, loss of habitat, loss of top soil, so on and so forth) difficult. Moreover, the payment is, at the end of the day, probably a monetary one. It is well documented that the monetary compensation does not essentially fully make up for ecological loss or loss of resource such as ground water, top soil, biodiversity. Therefore, in reality to some degree, at least, the polluter never pays the real cost of the pollution, even if, some restitution or compensation is possible. Therefore, the environmentalists generally advocate the importance of precautionary principle over the polluter pays principle in the enforcement policies.Ramubhai Kariyabhai Patel vs Union of India⁴⁾

Adv. Sunil Sharma is a writer for about 25 years and has authored more than 40 books on various subjects including Jurisprudence and Environmental Laws.