Polluter Pays is the idea that any party, such as a business, that causes environmental damage or pollution is held responsible for any costs borne by the community at large including specific victims. If a chicken farm pollutes a river so that fishermen downstream lose their livelihoods the principle means the farm owners should compensate them. The principle has wide applications for making good damage caused by commercial activities of all kinds and has implications for policy that is widely accepted by governments. It is even incorporated into the 1992 Rio Declaration on the Environment.
Along with other environmental aspirations such as the Precautionary Principle, it is more often quoted than applied, even though air pollution’s damaging effect on both human health (including heart disease and asthma) and nature (reducing crop yield directly and depressing the range and efficiency of pollinators) is well established, while pollution of rivers, streams, and the ocean resulting from industrial processes is well documented. In the UK while nine year old Ella Kissi-Debrah is the only person thought to have been killed by local air pollution, recent reports suggest that it can affect the entire population, reducing life expectancy by as much as eight years in some countries including India and Bangladesh – territories where, unfortunately, the value of single human life may not be very high.
If the Polluter Pays principle is to be applied, the costs of pollution need to be quantified whether arising from single identifiable sources like factories with smokestacks, or widely dispersed sources like vehicle exhausts. Leaving aside excess carbon dioxide emissions (which I will discuss next time), the effects of some other pollutants have been estimated with some confidence. While it seems difficult to get politicians to take this issue seriously perhaps the insurance industry is the place to look for some common sense.
The Belgian Insurer Mutualities Libres has been investigating the relationship between health costs and pollution by particulates (PM2.5, produced by fuel burning and emitted in vehicle exhausts), and the results of their research make interesting, if unsurprising, reading. They analysed the costs of nearly 4m GP consultations and half a million hospital emergency visits made by citizens in Belgium aged 10 to 64. After excluding social and economic factors they found a close association between these costs and the level of particulate pollution in local neighbourhoods. They concluded that if these airborne pollutants were reduced across Belgium to the level of the least polluted areas, around €43m (£37m) in overall health costs could be saved. Studies elsewhere have produced similar conclusions. In UK for example, Public Health England estimated the combined effect of particle pollution and nitrous oxides for the period 2017 to 2025 cost the National Health Service £5.56 billion or around £700m a year. Assuming the political will, could additional health costs like these be tracked back to actual sources and the ‘Polluter Pays’ principle applied?
In 2016 at Neville Island, Ohio, USA the closure of a coal-processing plant for steel-making resulted in an immediate reduction in airborne pollutants including particulates, sulphur dioxide and arsenic (the latter by 90% and 66% respectively). Concentrating on the effects on cardiac health, researchers at New York University studied people living in the Neville Island area and compared their health with that of people living further away. For communities near the plant, they found a 42% decrease in emergency room visits for heart problems in the first year and further declines in the three years following closure. The substantial financial implications weren’t estimated by the team, but perhaps local health insurance companies would have a figure. The question is, using the Polluter Pays principle, if the actual health costs had been known would the business model of the plant ever have stood scrutiny?
Industrial units burning coal are notoriously bad polluters and the damage caused can be attributed directly, but dispersed sources are another matter. Road vehicles are responsible for a range of pollutants from particulates that arise from tyre wear to the range of compounds in the exhausts. Particularly insidious are nitrous oxides which react under ultra-violet light to produce ozone, a serious pollutant damaging the entire ecosystem. Human health suffers and plant growth is affected, depressing crop yields and reducing both quality and nutritive value. ‘Current estimates suggest that ozone is causing between 3% and 12% reductions in yield causing an estimated annual loss of $20billion globally.’ Also at particular risk are insects; reports confirm reductions in both diversity and effectiveness of pollinators.
One application of the Polluter Pays principle is to charge motorists for the pollutants caused by their vehicles, especially when these are older vehicles with less efficient technology. In some cities such as London, strategies for reducing air pollution have included graded charges to motorists from central Congestion Zones out to Low Emission Zones in the suburbs. Other measures such as increasing the tree cover and encouraging green roofs would also contribute but few cities have a comprehensive ‘greening’ policy, and in London it is vehicle emissions that have been the focus. The application of a ULEZ (Ultra Low Emission Zone) to outer London faces opposition from some residents, perhaps with good reason. Targeting motorists instead of vehicle and tyre manufacturers is an example of shifting the Polluter Pays principle away from the producer and onto the consumer. This may be politically more acceptable but is it fair? Furthermore, the money raised by London’s ULEZ scheme is not used directly to subsidise health costs, but is invested in improved public transport (run on renewables), with the idea that the gains in air quality benefit the whole community.
The British Government’s most recent statement on environmental principles (dated 31 January 2023) claims to take Polluter Pays into account as part of what it calls ‘our new approach to environmental protection’. Unfortunately, as with so many government claims, implementation and practice leave a lot to be desired. The only scheme consciously applying this principle is the Carbon Pricing Scheme which levies businesses for their excess carbon dioxide emissions. According to the Grantham Institute (which masterminds the scheme) climate change is considered a ‘market failure’ by economists. By this logic the prevalence of heart conditions and asthma in polluted areas should be seen as a ‘market failure’ too. Perhaps we need a Particulates Price and a Nitrogen Price to go along with the Carbon Price? As with other pollution issues we ultimately come back to economics. Too many polluting industries currently get away without any charge on their activities for the damage caused, making their balance sheets unrealistic, their business models a work of fiction. In cases like tyre and vehicle manufacturers there is also the future pollution caused by the use of their products which may last for decades. It seems much easier for politicians to ignore all this and instead burden consumers with direct extra costs thus directly influencing consumer choice. I think specialist economists should pay more attention to this whole issue; if we had a better idea of the detailed costs of pollution at every stage it would help counter the lobbying pressure exerted by polluting industries. It is no coincidence that the Pope in his recent encyclical alerted followers to the dangers of modern business that obscured the true costs of consumer goods to both environment and human health. As he was at pains to emphasise, everything is connected on this finite planet. If the polluters aren’t required to pay, then we all will.
Planetary Health Weekly: Biodiversity Blog 19 – by Edward Milner (views my own)
N.B. First published in Planetary Health Weekly, a free weekly blog about the health of the planet.
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