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F. Does the Polluter Pay? Costs for Using the Environment and Liability for Environmental Damage.
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F. Does the Polluter Pay? Costs for Using the Environment and Liability for Environmental Damage.
During socialism when the state took care of all economic activity, there was no need to pay for using natural resources. Now each of the three states has introduced the principle that the one driving economic activity is liable for paying a charge for using natural resources as well as polluting the environment. In Russia the principle for paying for polluting (waste water, air pollution) was introduced with the earlier law on the protection of the environment stemming from the last months of the Soviet Union. The state has introduced also payments for using various natural resources (land, forest, water, below ground resources) with special laws on the issues.
It is, however, not possible to move directly from free use to payments which reflect actual costs. Not even the EU has reached such a level of implementing the polluter pays principle. Especially in the southern parts of the EU, water is understood as a necessity which should be affordable and available for everyone (The application … 2000). Taking into consideration all the social and economic impacts that the payment principle may have in transition economies, it may take a long time before real costs can be charged for using such necessities as water which used to be free of charge for everyone.
When polluting does not stay within the regulated limits, there is a special payment which can be ordered administratively. In Russia the payment is determined calculating the excess pollution and using a five-time co-efficient. The Ministry of Natural Resources and Environmental Protection and its territorial organs have a right to calculate the damage to the environment and require damages from the polluter. The polluter can question the damages and submit the decision to the court.
Payments do not free the enterprises for their responsibilities to take care of the environment. Enterprises are required to submit a plan for protecting the environment when they apply for a licence.
Damage for the health of citizens or to their property has to be taken before the court of arbitration or the ordinary general court. Starting a court procedure is everywhere a right in principle, but difficult to manage and time consuming in practice. Often people do not believe in their chances against the state or an influential enterprise.
There is no such group action which in the United States and some other common law countries makes it possible to get damages for a big amount of individual victims when the individual amount of damages is not significant but the total amount is.
It is the plaintiff who has to prove that there has been a damage and that it has been caused by the fault of the polluter. Proving both the damage and the fault in practice needs to be done in cooperation with state environmental authorities. Fault based liability can be divided among several polluters according to their share of the pollution. Probably partly because of traditions stemming from socialism when huge damages where not needed since the state took the responsibility, the courts are reluctant to order damages. They require quite certain proof both for the fault and the damage as well as for the causal connection between them (Kotova 2001). It is also understandable that the judges may feel responsibility for not causing closing down of an enterprise offering jobs for local people.
Criminal liability is also possible, if the prosecutor starts to prosecute for an environmental crime. Courts can also handle cases where an enterprise has questioned the penalty fee ordered by environmental authorities. In such cases the evidence from the authorities is probably highly valued.
Environmental liability and proving the damage has been an important issue in the EU countries and has lead to changes in environmental legislation. In many countries so called abnormally dangerous activities have had strict liability and gradually the area of strict liability has increased. Germany was the first European country establishing strict liability for environmental damages with its Environmental Liability Act in 1990. Strict liability has then been introduced in many other countries’ legislation, too. Strict liability means that even if there is no fault from the part of the polluter, he still pays. Sometimes there are some grounds which can set the polluter free such as an Act of God (force majeure) - usually only an unforeseen natural catastrophy. In the White Paper on Environmental Liability concerning significant damage on the environment (biodiversity, water) the EU Commission suggests using both strict and fault based liability.
All the Nordic countries have adopted strict liability as well as lowered the requirements for showing the amount of damage in environmental crimes or accidents. The reasons for such changes are that often the fault could not be proved in court and especially the causal connection between the damage and the fault was almost impossible to prove in environmental accidents. Also the damages ordered were not only difficult to get but also quite small amounts to be able to repair the actual damage. Even nowadays, Nordic countries which have accepted the principle of adjustment of unfair damages, dilute strict liability with adjustment when the damages are so high that the polluter has difficulties to pay them. The polluter pays principle is assessed with other legal principles and there have been opinions which do not allow full legal value for the polluter pays principle, which is then understood more as an economic principle not completely suitable for direct legal assessment (Ekroos 1998, Rubenson 2001).
Unfortunately there is not enough court practice for this new kind of strict liability. There are, however, studies showing that strict liability does not necessarily either frighten enterprises away or raise costs to a considerable extent (Bartch 1998).
Russia, Ukraine and Byelorussia have all established environmental funds which can be used for paying the costs of environmental pollution. In Ukraine national, Crimean and local funds were introduced in 1997. Byelorussia established republican and local funds for the protection of the environment by the Decree of the Council of Ministers from 31 May 2000 No 728. In Russia federal and territorial funds were established in 2000, but were abolished by the new Budgetary Code in 2001 together with all the other external funds outside the state budget and established again as reserve funds of the government. In Russia 50 % of the payments for use of natural resources go to the reserve funds and 10 % of the sum is used regularly for environmental protection such as cleansing activities and supporting environmental programs. The idea is that damages for persons could also be paid from these funds. All the fines ordered by the inspection authorities go to these funds. However, they have to be increased for quite a long time, before any bigger accident can be repaired not to mention financing cleansing of polluted areas. Especially in Byelorussia with heavy consequences of the Chernobyl accident, it has been observed that a catastrophe reserve fund would be needed.
The problem is even bigger in counties with completely new and weak insurance companies. Environmental damages are, however, not easily insurable in developed countries either. In countries with a strong insurance branch insurance companies have had an important indirect role in preventing environmental accidents by applying their compliance programs for preventing damage to their customers. Finding weak spots of the enterprises' security systems have contributed to investments in better technology.
It should be borne in mind that the polluter pays principle is controversial. If the principle were applied strictly, it should always be the polluter who pays cleansing. The EU for example has financed cleansing programs from its cohesion funds (The application 2000).
In the case of transition countries, the polluter actually has been the state, and therefore it is not fair to ignore the responsibility of the states to invest in cleansing operations for earlier polluted areas. On the contrary the state should allocate resources for cleansing operations and credits for investments in environmental friendly technology.
Economic incentives are often recommended to be included in environmental policy. EU countries use tax reductions when enterprises invest in environmental friendly technology. Also consumers in many countries prefer environmentally friendly produced products, which makes environmental protection profitable for enterprises. In Russia, Ukraine and Byelorussia the social problems of transition always compete with environmental investments, and when people have to choose between their jobs and better environment, they tend to choose their jobs even when they are worried about the pollution of the environment and the health problems it causes in the long run.
In Ukraine there are no tax incentives for ecological activity at the moment. In Byelorussia local authorities can allow tax reductions or other incentives with the acceptance of the Ministry of the Environment and the President. In Russia the payments for use are smaller when the environment is under a minor burden. For instance circulation systems of thermal energy and atomic energy are charged 7 –10 times lower payments of water use than other industry. Byelorussian payments, on the other hand are always the same without any reductions on the basis of resource saving technology.
Tax reductions are a difficult means for encouraging environmental friendly activity since the great amount of tax reductions is one of the major problems in post-soviet tax legislation. Tax reductions should in principle heavily be reduced to increase tax revenues, which are not adequate at all at the moment. Taxing environmentally dangerous activity should be considered along with incentives, even if it is a heavy burden for both households and enterprises. In spite of the problems of state economy which post-soviet countries struggle with, cleansing and investment in environmental friendly technology should not be left to be solved with international aid or long-term credits from international organizations, but should be included in domestic policies.
