POLLUTER PAYS PRINCIPLE

This principle is concerned with the re-allocation of the social costs of environmental degradation by regulating to ensure that such costs are borne by the parties to the transaction rather than by society at large. The principle therefore internalises externalities . The price charged may be levied directly (e.g. as taxes on the process which generates pollution) or as purchase price of licences which entitle the holder to generate specific quantities of pollution. Alternatively, in a reversal of principle, measures may take the form of direct payments from the public purse to polluters not to pollute. The difficulty with either procedure is to decide the -right- price to charge, or the -right- subsidy to pay; both involve an assessment of the monetary value of a clean and unimpaired environment. It is however a useful tool in the coastal context since it should result in improved allocation of scarce resources by imposing the full cost of any use of a resource (including the cost of any incidental damage to the environment) on the user. Scialabba (1998)