Implementation of the Polluter Pays Principle or Economic Approaches to Pollution: Command and Control, Taxes/Charges, and Tradable Discharges Permits (TDPS)

Abstract

This work presents an economic analysis of the issues surrounding pollution and the pollution pays principle (PPP) such as the conflict between economics and ecology, externalities, internalization of external costs, solutions to externalities, the economic instruments as recommended by the OECD and the European Union (EU) and their economic analysis. It describes the traditional way of reducing pollution, i.e. ‘command and control’ or CAC and the various economic instruments, i.e. emission charges and tradeable discharge permits or TDPs, overlapping between the PPP and the User Pays Principle (UPP) and the Victim Pays Principle (VPP).

Keywords: polluter pays principle, PPP, victim pays principle, VPP, user pays principle, UPP, ecology, pollution, externalities, internalization, external costs, economic instruments, OECD, EC, command and control, CAC, emission charges, taxes, tradable/tradeable discharge permits, TDPs