Polluter Pays Principle Issues - Essay Example

Argumentative essay Argumentative Essay on the ‘Polluter Pays’ Principle Introduction All human activities contribute to changes in the natural environment. Whether it is the simple act of breathing in and breathing out or a more complex industrial activity such as power generation, all our actions result in polluting the atmosphere to varying degrees. This is not limited to just the air but to water, land and to the ecosystems around us – in other words, to the natural environment in all respects. The greatest adverse impact on our environment is caused by the economic activities of various nations in pursuit of development and providing higher standards of life for their peoples. It is this relentless pursuit of growth around the world that is causing increasingly dangerous levels of environmental degradation and giving rise to the phenomenon of climate change with all its consequences. Environmental concerns of the earlier years that focused on adverse effects on human health have since long moved to the more universal concerns regarding the very survival of life on this planet. These concerns have led to concerted efforts at national and international levels to enact stringent laws to safeguard our environment. These laws embody the principle of ‘polluter pays’ and are intended not only to control and regulate emissions / discharges (including, due to unforeseen incidents) from any economic activity, but also to forewarn the businesses of the penal liabilities for failing to confirm to regulations. However there are arguments supporting and opposing the effectiveness of this principle. This article examines them in the light of specific incidents and proposes that the principle of ‘polluter pays’ is a sufficient and necessary deterrent for any Argumentative essay 2 business, which may otherwise neglect its corporate social responsibility of environmentally sustainable operations. A sample statute The polluter pays principle came into vogue in 1973 and was incorporated into the European Communities Treaty in 1987 (Coffey and Newcombe, 2002, p.1-3). The European Communities Act, 1972 (UK) enabled the government of UK to implement European Community Law as a domestic law through regulations brought before the Parliament to make the necessary changes to the UK laws (UK Law online, 2009). The Environmental Damage (Prevention and Remediation) Regulations 2009 is one such instance concerning the UK environmental laws and it came into force on March 1, 2009 embodying the polluter pays principle. By using the terms remediation and liabilities, the concept of making good any damage to the environment / suffering penalties, is brought forth through these regulations. In other words, businesses that conduct specified activities in all the three economic sectors not only have to prevent environmental damage but also have the responsibility for remediation in case a violation occurs. Action against environmental damage can not only be initiated by the designated enforcement officer but also any person who has sufficient interest in the matter and is thus a deterrent. Pro arguments The body of opinion that supports legislative action to punish polluters by making them pay for the damage believes that penal liability provisions are sufficient to force business operators to take preventive measures so that their operations do not cause Argumentative essay 3 environmental damage. This opinion has merit since the impact of an adverse situation is indeed multifold. A business survives and grows on the strength of not only its profitability but also of its goodwill. Ensuring appropriate equipment, systems and procedures to comply with the environmental regulations may appear to be costly in the initial period, since such investments do not directly contribute to the profitability of operations. However, in the absence of such investments, the liabilities that may arise can not be fully assessed or provided for. If the operations do indeed create environmental damage then there will be no way to avoid the investments which would otherwise have been made in the beginning itself, except to close the business itself. In other words, the operator pays for future damage control as well as for remediation apart from suffering other collateral damages such as compensation, prison term, or worse. Such liabilities can be very costly if the experiences of Exxon Valdez oil spill or the Bhopal Gas Tragedy are kept in mind – the former resulting in billions of dollars of remediation and the latter winding up operations worldwide apart from paying high compensation. According to ThinkQuest, on March 24, 1989, the oil tanker Exxon Valdez, owned by the Exxon Corporation and carrying 1.2 million barrels of oil, hit Bligh Reef near Alaska and resulting in damage to its hull and hence, the largest oil spill in the US history (1999). The oil spill quickly spread over 1776 sq. miles of area across 3167 mile coast line. It was a major environmental calamity and impacted marine life like seals, sea-otters and whales, killed birds in thousands, and poisoned fish. Exxon had to spend $ 2.2 billion in clean up operations, while the total cost was then estimated to be much higher (ThinkQuest, 1999). Argumentative essay 4 The Bhopal Gas Tragedy is equally informative. Notorious as the ‘Hiroshima of the Chemical Industry’), the event lead to the death of more than 2000 people and injured over 300,000 (Pratima, 1998). Union Carbide Corporation (UCC), USA, set up its unit in Bhopal (UCIL), India, to manufacture methyl isocyanate (MIC) chemical and from it, Sevin pesticide. According to Protima, on the night of 3rd December 1984, water entered into a large MIC storage tank resulting in a chemical reaction, leading to temperature and pressure rise, generation of toxic gases and emergency blow out of pressure release valve. Huge volumes of poisonous MIC gas engulfed the city of Bhopal, killing people and animals immediately (1998). Over 500,000 people suffered permanent health damage. Engineering practices adopted by UCC & its Indian operations came under severe criticism; the corporation settled the case with the Indian government for a meager sum of $500 millions; the corporation could not survive the adverse publicity and wound up its operations worldwide. Further, in these days of round-the-clock coverage of events worldwide by the electronic media, disaster events get publicised in real time causing irreparable damage to the goodwill of a corporation and threatening its very survival. Therefore, it is easy to understand that major corporations try their best to avoid the kind of bad publicity associated with environmental incidents such as Exxon Valdez oil spill or the Bhopal Gas Tragedy. It is this combination of penal provisions and the associated publicity in the polluter pays principle that supports the argument that statutory measure is effective in compelling corporations to reduce or eliminate such incidents. Argumentative essay 5 It may be argued that the issue of adverse publicity is not very relevant for everyone and that violations by not so well-known entities do not attract media attention. While cases of major disasters involving international corporations get exposed widely, the same may not hold good for small and medium size enterprises that may get away with lenient penalties for causing environmental pollution. This argument is not entirely true. It is important to realise in the first place that the absolute number of such businesses is substantial compared to the large corporations and to that extent their violations compound to a large impact. Secondly, such firms have limited ability to bear penalties or undertake expensive remediation work without suffering serious damage to their businesses. The polluter pays principle works effectively to influence the managements of such businesses to be proactive to conform to regulations. They tend to be more cautious to avoid expensive litigation or penalties and play safe by adhering to the regulations as economically as possible. Since the ultimate objective of the legislation is to compel conformity with regulations, the polluter pays principle can then be said to have achieved its objective. Con arguments While the polluter pays principle has found it maximum support in OECD and EU countries, its acceptance has not been universal (Choudhary, 2007). According to him, the principle works against the interests of poor and developing countries and to their vast populations. The case of small and medium size businesses was discussed above and can be considered as more appropriate in a developed country rather than in a developing country. In the latter case, the products and services are essentially meant for domestic Argumentative essay 6 markets with limited purchasing power, which may or may not be in a position to pay for higher costs if such costs are inflated by environmental concerns. In the case of export oriented units in these countries, the additional charges on product or service price due to implementing the principle are likely to cause a demand decline in view of the elasticity of demand, as per Choudhary (2007). Further, a very large proportion of the poor populations in these countries still depend upon traditional methods of living – exploitation of land, forest and water resources for food gathering, production, and / or cooking. Many of these activities like shift cultivation or firewood burning are sources of environmental pollution. It is impossible and impractical to apply the principle of polluter pays to these poor people. Abel points out that the polluter pays principle is “clearly insufficient in itself as an effective and equitable mechanism of environmental protection” (1996, pp.201-03). He argues that while the cost of treatment of say, waste water is possible to estimate and charged to customers, the additional costs such as the administrative costs of regulation or consequential economic costs such as damage to fisheries etc. are difficult to ascertain and thus puts a limit on the practicality of the principle. He further argues that it is equally difficult to calculate the economic benefits of the treated water as against the untreated water to the community, which after all should be considered if a penalty is to be paid. He also mentions the fact that it is not possible to identify all the polluters and to that extent, punishing a few culprits is not equitable. He draws attention to the moral and philosophical issues involved in the principle. For example, if the polluter pays principle is taken to its logical conclusion, any one who is able and willing to pay the price, can get Argumentative essay 7 away with polluting the environment and can treat the act as a right under the law! If this position is accepted, Abel argues, then even totally unacceptable forms of pollution such as radioactivity or toxic chemicals release can be claimed as lawful in a distorted way (1996, pp.201-03). PPP and administration At this stage, it is appropriate to refer to the implications of the polluter pays principle to the practitioners, who have to implement the law. In a case involving percolation of chemical waste spill into the ground water resource, it was held that the defaulting leather products company was not liable for water contamination since it did not anticipate that the waste spill would seep through the flooring and reach the underground water source (Cambridge Water Co. vs. Eastern Counties Leather plc., 1994). In other words, the principle becomes inapplicable if the damage is caused by unforeseen or unexpected incidents. Under this judgement, even the major culprits such as Exxon or Union Carbide may renege on responsibility for the accidents that shook the world conscience. Another limitation is that the principle may be quite relevant for pollution that occurs during an industrial activity, and does not account for historical pollution (Choudhary, 2007). The European Union commission is moving ahead aggressively in incorporating the principle in its various statutes. Starting with the payment for the cost of pollution abatement in the early 1970s, it was subsequently extended to the recovery of administrative costs incurred by the authorities (Coffey & Newcombe, 2002. pp. 1-3). Argumentative essay 8 The ambit of ‘polluter’ which was earlier restricted to industries was subsequently extended to any activity that causes pollution directly or indirectly and accordingly, the complementary principle of ‘user pays principle’ has also evolved whereby anyone who uses and depletes a natural resource is liable to pay for the depletion, according to Coffey et al. Notwithstanding these historical developments, they record the fact that there is divergence of views for acceptance or otherwise of the polluter pays principle and point out to the exceptions that are in practice. They revolve around the amount of charges, the justification for treating different polluters differently, whether the charges should cover the costs of restoration or restoration and administration etc. State support for compliance for small businesses / research and development work, or to enable firms to reach compliance stage quicker etc. are further issues that complicate the debate. Other issues involved in implementing the principle is whether to penalise a sector of economy (e.g., tanneries) operating as a cluster or individual units within the cluster, uniformity of the costs imposed for remediation etc. However, as pointed out by Coffey et al. the movement is towards strengthening the polluter pays principle as a policy ( ibid p.3). Agricultural operations in particular create special difficulties to the executors / administrators of this principle. According to Grossman, “…in part because the diffuse nature of emissions from agriculture poses regulatory obstacles and because agriculture is sometimes exempt from environmental controls that apply to other industries” (2009). In a similar manner, Lutz mentions that, “... in the case of pesticides, strict implementation of polluter payment is complicated by the difficulty and cost of clearly identifying who Argumentative essay 9 the polluters are, to what degree each user contributed to the damage and the need to estimate the optimal level of pesticide use” (1998). Conclusion Economic growth is spreading rapidly to the more populous and hitherto underdeveloped nations of Asia, Latin America and Africa. To reach the standards of life being enjoyed by the developed countries of Europe, North America, Japan etc., the economies of the developing and the underdeveloped nations are rapidly expanding, assisted by the phenomenon of globalization. This trend will continue and will add to the already depleted natural environment and natural resources. At the same time, it has been realised that there is a limit to the extent of pollution permissible or to the extent of utilisation of natural resources beyond which life becomes unsustainable on this planet. In order to avoid such a catastrophic situation, stringent limits have been developed for various forms of pollution that can be permitted. These limits are sought to be imposed by penalising violators with the costs of remediation and compensation, together with penal liabilities like prison term. Environmental laws in European Union and in the UK have been framed to give effect to such objectives and they embed the principle of polluter pays. In economic terms, the current situation can be summed up as one where the governments around the world are progressively moving to strengthen the polluter pays principle and the instruments they choose may be taxes, subsidies, tradable emission permits like carbon credits, subsidies and penalties, as seen the foregoing paragraphs and discussion. Argumentative essay 10 Experience of major corporations such as Exxon and Union Carbide has shown that it does not pay to neglect responsibilities towards environmentally sustainable operations. There may be issues, mostly technical in nature, while implementing the principle: the extent of liability; whether it should cover remediation or administrative costs of regulation also; who pays for past pollution even if one agrees to pay for current pollution; whether to treat firms of different size (big, medium & large) with the same standard of stringency; whether it is appropriate to subsidise or support R&D work by small businesses to implement better and faster pollution control measures; the moral issue of permitting trade in carbon credits and permitting some to pollute by simply paying up since they have the financial muscle to do so, etc. In the final analysis, there will always be issues to any progressive measure that touches upon so many hundreds of thousands of economic activities and lives of everyone on this planet. Till such time as a better alternative evolves, the polluter pays principle is the best option. Argumentative essay 11 References Abel P.D. (1996), Water pollution biology, Taylor & Francis, London., pp.201-3. Available: http://www.jncc.gov.uk/pdf/thepollute2.pdf [Accessed December 27, 2009]. Cambridge Water Co. vs. Eastern Counties Leather plc. (1994).Available: http://www.safetyphoto.co.uk/subsite/case%20abcd/cambridge_water_co_v_eastern_.htm. [Accessed December 27, 2009]. Choudhary H. (2007). Legal service India.com, Interpretation of polluter pays principle (PPP) in India. Available: http://www.legalserviceindia.com/article/l54-Interpretation-of-Polluter-Pays-Principle.html. [Accessed December 27, 2009]. Coffey C. and Newcombe J. (2002). The polluter pays principle and fisheries: The role of taxes and charges, Institute for European Environmental Policy, London. Grossman M.R. (2009). Agriculture and the polluter pays principle, British Institute of International and Comparative Law. Lutz E (1998). Agriculture and the environment: Perspectives on sustainable rural development, Ernst Lutz (ed.) World Bank Publications, p. 43 & 247.. Pratima U., (1998), Bhopal Gas Tragedy: An analysis. Available: http://72.14.235.104/search?q=cache:1cLHQrrlK9QJ:www.hu.mtu.edu/hu_dept/tc%40mtu/papers/bhopal.htm+bhopal+gas+tragedy&hl=en&gl=in&ct=clnk&cd=2 [Accessed December 27, 2009]. ThinkQuest (2006), History, Exxon Valdez. Available: http://library.thinkquest.org/26026/History/exxon_valdez.html [Accessed December 27, 2009]. UK Law online, (2009). Available: http://www.leeds.ac.uk/law/hamlyn/european.htm. [Accessed December 27, 2009]. Read More