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The Stockholm Declaration “assimilative capacity” rule

Polluter Pays Principle has become a popular catchphrase in recent times. ‘If you make a mess, it’s your duty to clean it up’- this is the main basis of this slogan. It should be mentioned that in environmental law, the ‘polluter pays principle’ does not refer to “fault.” Instead, it favors a curative approach which is concerned with repairing ecological damage. It’s a principle in international environmental law where the polluting party pays for the damage done to the natural environment. It is regarded as a regional custom because of the strong support it has received in most Organization for Economic Co-operation and Development (OECD) and European Community (EC) countries. International environmental law itself mentions little about the principle.

In recent days, the polluter pays principle is seen as a way of internalizing pollution-related costs within the context of the economic rationality of the enterprise. There is a close relationship between a country’s environmental policy and its overall socioeconomic policy. Furthermore, under this principle it is not the responsibility of government to meet the costs involved in either prevention of environmental 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. But State practice does not support the view that all de-pollution costs should be borne by the polluter, particularly where transnational dispute is involved.

The first major reference to the Polluter Pays Principle (PPP) appeared 1972 in the OECD Guiding Principles Concerning International Economic Aspects of Environmental Policies (henceforth called OECD Guiding Principles). The PPP as a guiding principle across countries became necessary because some countries faced complaints by national firms about rising costs and a loss of international competitiveness following a national implementation of the PPP within their borders. The OECD Guiding Principles defines the PPP as an instrument for “… allocating costs of pollution prevention and control measures”.

The polluter should bear these costs in order to achieve and maintain a “… acceptable state of environment” which is determined by the public authorities. The OECD Guiding Principles also state that the PPP should “… not be accompanied by subsidies that would create significant distortions in international trade and investment.” This weak or standard definition of the PPP neither requires polluters to bear the costs of accidental damages, nor do they have to pay for residual pollution.

The range of costs to be borne by the polluter has expanded over time. In 1989, the OECD suggested extending the PPP in order to cover the costs of accident prevention and to internalize the environmental costs caused by accidents. In 2001, the OECD Joint Working Party on Agriculture and Environment stated that according to the PPP

“… 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.” This version of the PPP is referred to as the extended or strong PPP in the literature.