Tag Archives: Polluter Pays Principle

Will the real Polluter Pays Principle please stand up?

What is “the” Polluter Pays Principle? One version of the principle says that the polluter ought to pay in proportion to her pollution. A second – and very different – version says that the polluter ought to bear a burden in proportion to her pollution.

There is a large difference between these two versions because the person who pays a tax on emissions is not necessarily the person who is actually made worse off by such a tax.

Here’s an imaginary example: Assume that consumers in Europe pay a tax on gas. This might not burden them at all (even though they are the agents who ultimately hand over money to the tax collector) because gas stations might just lower gas prices in response to the introduction of the tax. However, the gas station owners might not lose any profit, neither. Rather, they might be able to pass on the burden (the “tax incidence”) to oil producing countries by lowering the market price for oil. In an oil producing country, this might have the effect that company X goes bankrupt, as a result of which employee Y loses his job and must move to another town, as a result of which his child Z loses his friends and suffers from a depression.

There are certainly contexts in which  “Polluter Pays Principle” is used in the first sense and there are definitely contexts in which it is used in the second sense. And it is equally certain that this leads to confusion in debates over environmental policy and environmental justice! What is much less certain is whether one version is more sensible and whether one version represents the core idea behind the Polluter Pays Principle better.

An overlooked rationale for the Polluter Pays Principle

When I want to lose weight, I am often relieved to run out of chocolate in my apartment. Often the relief occurs because I know that I couldn’t resist the temptation. But, interestingly, I might be happy to run out of chocolate even if I were able to resist the temptation. Why is this so? Trivially, it’s much easier to refrain from eating chocolate when there is no chocolate around. If I simply don’t have the possibility of grabbing another bite then I am spared from constantly having to fight the urge to do so. If, in contrast, the chocolate were there right in front of me, I would use up lots of mental effort for refraining from it. I could save this mental energy by simply not having the opportunity of eating chocolate in the first place. (The internet even offers self-binding websites where people are actually willing to lose money in order to make it easier for them to reach their goals and overcome their temptations.)

Where is the link between the chocolate and the Polluter Pays Principle? Note first, that there are many different  rationales for the Polluter Pays Principle. There is…

  • …a consequentialist rationale: having to pay for pollution gives people an incentive to pollute less
  • …a corrective rationale: making polluters pay is fair because their payment can be seen as compensation for the harm they cause through their pollution
  • …a distributive rationale: the polluters typically benefit from polluting and making them hand over part of their benefits to those who are harmed by pollution yields a more equal distribution than if they could keep their gains.

I want to suggest that there is a further rationale for the Polluter Pays Principle, namely…

  • …a second consequentialist rationale: making people pay for pollution reduces the mental effort they need for refraining from pollution.

The idea is the same as with the chocolate. Assume that you are the type of person who voluntarily foregoes air travel. This sacrifice is based on your personal conviction that the heavy pollution involved in flying makes air travel immoral. You are the type of person who does not need to be incentivized by a Polluter Pays Principle in order to forego flying. Your intrinsic motivation is sufficient. The crucial point now is this: You might still be glad if your government were to tax air travel. This would make it easier for you to forego flying. Rather than having your conscience do heavy-duty work in suppressing daydreams about holidays on the Maldives, you can simply tell yourself that the taxation on the flight would make the flight too expensive for you anyway. Instead of having to rely on the burdening mental effort of intrinsically motivating yourself, the Polluter Pays Principle allows you to take the motivationally easier route of foregoing flights on the basis of your financial self-interest.

In other words: By setting up a Polluter Pays Principle, the government provides a service to environmentally conscious citizens. The government saves them the mental energy of having to exert willpower in order to perform voluntary green actions out of pure moral conviction. This rationale for the Polluter Pays Principle is genuinely different from the other rationales.