Society Loses when the Polluter is made to Pay
After almost ten years of deliberation at the end of 2001, the European Commission’s Environment Directorate launched a proposal for a ‘Directive on the Prevention and Restoration of Significant Environmental Damage’. Rather than people being held to account for their actions this example and extension of the so-called ‘polluter pays’ principle will be a recipe for confusion, will have a chilling effect on innovation, and contribute to social fragmentation. It shows why we desperately need to restore political debate to the heart of public life.
So how could anything that sounds so right, be so wrong? The first question one should always ask is ‘why now?’ and this is particularly pertinent in this case. The proposed Directive has a long history. However it was only last year that the relatively new Commissioner for the Environment, Sweden’s Margot Wallstrom, upped the tempo with the publication of a White Paper on Environmental Liability.
The White Paper received wide-ranging criticism from industry and government agencies. A key concern is that in its all-encompassing sweep any new legislation would have the effect of doubling up on existing laws protecting people and property. By proposing a civil law opening for compensation, rather than rely on the existing legal statutes, a ‘double-jeopardy’ would be effectively created where a company could be taken to court more than once for a single incident. It would also significantly distort the balance of evidence required to prove liability.
More interestingly, the White Paper suggested a central role for non-governmental organisations (NGOs) within the overall process. They would effectively have acted as state sponsored whistle-blowers, revealing their ever-growing and ever more intimate relationship to government and industry. This interdependence been made clearer with the appointment of the former Director of Friends of the Earth, Jonathan Porritt, to Chair the Government’s Sustainable Development Commission, and the former Director of Greenpeace, Lord Peter Melchett, working for Public Relations giant Burson-Marsteller, advising BP and Monsanto.
The proposal for a Directive took such criticisms on board and is a diluted version of the White Paper. However, the White Paper and the ensuing proposal for a Directive should both be understood as a contemporary manifestation of the precautionary climate at the heart of Commission affairs, growing in the aftermath of BSE. Rattled by things having appeared to go so publicly wrong, all initiatives emerging from Brussels are now heavily circumscribed by the impossible aim of preventing all error. This bears little relation to the reality of modernisation.
Take the Chemical Industry sector as an example. It is odd that these regulatory obsessions coincide with industry having cut back releases of its most noxious emissions, the so-called ‘red list discharges’, by 95% over the last decade. The existing regulatory regime is gradually working. Establishing a new Directive now will simply feed the public perception that there is a problem needing to be addressed without necessarily contributing towards resolving it.
Worse - the proposals when examined are a recipe for complete confusion. It is simply not evident as to who would be accountable to who, for what and by how much. By making the proposal a Directive the Commission have effectively left it to the discretion of individual member states to determine how it is implemented so long as they achieve the desired outcomes. This means that the European Commission will need to oversee fifteen member states, who will in turn establish unique monitoring and enforcement mechanisms, involving NGOs and regulatory agencies. These will identify any infringements by ‘operators’, itself a term that requires clarification. This is an ideal mechanism for blame deflection, blame shifting and blame diffusion, or a complete confusion of accountabilities.
This is compounded by the fact that many of the definitions of ‘Significant Environmental Damage’ are too loose to be of use. Nor is it clear how damage is to be costed. How will it be shown that an individual firm ‘caused’ the purported incident? The measure of ‘biodiversity’ and even ‘pollution’ is open to subjective interpretation.
It is certain that as the price of regulatory policing and insurance goes up, and emissions permits get harder to come by, it is the larger companies who will be the most capable of withstanding the regulatory shock. There will also be a chilling effect upon innovation in general, as companies become more cautious and less willing to take risks and experiment. Why develop new products if you could be accused of polluting the environment in five years time? All of this ultimately feeds back to the consumer as the price of production is handed down through greater commodity costs. But the cost of caution more generally can never be audited.
The only winners will be the people seeking to drive the ‘polluter pays’ agenda. Ten years in the making, consultants and researchers have gained through all of the studies they have been commissioned to provide. Next in line to benefit will be the monitors and the enforcers, bureaucrats and lawyers.
There is also something particularly insidious about the ‘polluter pays’ approach these initiatives rest upon. ‘Polluter pays’ has tremendous purchase and a wide constituency of supporters because it bridges the divide between a politically correct attack on ‘polluters’ and the market orthodoxy of ‘payment’. But surely we all benefit collectively from the products companies provide? It is also the case that nobody sets out willfully with the sole aim of destroying the environment. When mistakes are made or accidents happen, tragic as they may be, we all learn from them. So is it really the best way forwards to hold individual companies responsible when things go wrong?
At a time when governments all over the world are concerned about the erosion of social bonds surely the ‘polluter pays’ principle is simply a formula for more social fragmentation? If applied more widely, what would stop me from arguing (as I do not have any children) that I should not have to pay taxes for education, or even get involved when I see a child in trouble down my street. Maybe the parent should pay? In fact the environment (like children) is a collective good, and we should restore a broader sense of social responsibility rather than individual blame for the management of such issues. Some things in life are best left out of the market mechanisms that dominate all else.
Accidents happen, and we need to relearn how to act in a socially responsible fashion to mitigate their consequences, rather than simply pointing the finger at people and telling them to sort it out.
First published by Audacity, 26 September 2002