The polluter pays principle says that the absolute liability of damage to environment not only include to provide compensation to victim but also include the cost for restoration of environment degradation.

Sustainable development includes the restoration of environment degradation and as such polluter is liable to pay the cost of damage to the victim and cost of environment restoration.

Organisation of Economic Cooperation and development is the first organisation which based its environmental policies on polluter pays principle and recommended essential for internalization of cost of environment degradation.

Rio declaration, Principle 16 says that the nation should internalize the cost of environment by using economic instrument. Therefore, the polluter liable to pay for the harm caused by him to the environment and to the public.

Polluter pays principle demands that the cost of preventing or remedying damage to the environment by the pollution lies on the polluter who is causing the pollution, government is not liable to pay the cost of preventing damage to environment or remedying damage because if government will pay for the damage caused by the polluter than ultimately the tax payer will be burdened.

The polluter pays principle talks about the two kinds of liability of polluter. They are:

  1. Compensation for the harm caused to the victim.
  2. Cost of restoration of ecological degradation.

The principle has been promoted by Organisation of Economic Cooperation and development and later adopted by European Community under article 102 rule 2 as a fundamental strategy on environmental matters.

The Judiciary used this principle to provide preventive relief and remedial action for check and control of environment degradation. In India the court adopted polluter pays principle for providing the ordinary damages to victim of environment degradation and to provide exemplary damages for restitution of environment. The court used this principle for inventing principle of absolute liability in case concerned with environmental damages caused by industries. Legislatures also adopted this principle in many statutes like public liability of insurance act, 1991; water (prevention & pollution control) act, 1974.

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