Inderscience Publishers

The internalisation of environmental costs: implementing the Polluter Pays principle in the European Union

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This paper frames the problem of implementing 'the polluter pays' in the European Union as a social-political process in which conflicts emerge and must be resolved between competing interests, between people holding different value systems and different principles of judgement, and also between different representations of future states and different visions of the world. 'The polluter pays' is a principle for internalising external costs and assigning liability. Its application may seem to entail a need for monetary valuation of damages. This allows environmental impacts and protection questions to be formulated as optimal resource use problems through the extension of traditional cost-benefit analysis techniques. However, reasons such as uncertainty, distributional concerns, and diversity of ethical positions make monetary valuation difficult or inappropriate. Decision support techniques are then sought that do not depend exclusively on monetisation, such as multicriteria and deliberative methods. The process of 'internalisation' of environmental damages is thus expressed through broad societal adjustments. Procedures need to be found that are socially legitimate and effective in the sense that the stakeholders can accept it as dealing adequately with their concerns. This is a collective 'internalisation': we are all polluters; we all pay – shouldering the clean up burdens, the institutional adjustments, the worries and the risks – in more or less unequal shares. The burden distribution will inevitably be a matter of controversy.

Keywords: environmental damage, EU environmental policy, European Union, environmental costs, internalisation, polluter pays principle, liability, environmental impact, environmental protection, resource use

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