Q.What is the 'Polluter Pays Principle'?

The Polluter Pays Principle assigns the cost of pollution to the party that causes it, rather than letting that cost fall on the public or the environment itself. …

The Polluter Pays Principle (PPP) is a guiding principle of environmental policy stating that the party responsible for causing pollution should bear the cost of the environmental damage caused and of the measures required to control, remedy or prevent it, rather than that cost being borne by the public, by future generations, or by the environment itself in the form of uncompensated degradation.

The principle is essentially the policy application of 'internalising a negative externality': ordinarily, a polluter's private cost of production is lower than the true social cost, because the damage caused to third parties is not reflected in the price. By requiring the polluter to pay for the damage — whether through a pollution tax, a mandatory clean-up cost, or compensation — the Polluter Pays Principle brings the polluter's private cost into line …

Students sometimes confuse the Polluter Pays Principle with a simple fine or penalty for breaking the law — PPP is broader: it is a cost-allocation principle applying even to lawful economic activity …