Indian Council for Enviro-Legal Action v. Union of India and The Polluter Pay Principle: An Economic Analysis

– Manasa I.

Abstract 

In this paper, the 1996 judgement of Indian Council for Enviro-Legal Action v. Union of India, has been analysed using economic tools. This case was chosen specifically due to the nature of the product involved- an acid that was used only for export purposes- and the timing of the decision, being in the same year as when the Precautionary Principle became judicially known. There was an unreasonable delay of 15 years after the judgement was declared in enforcing it, with the unfortunate reality of supposed environmental compensation not being enough for the affected residents. This is a case that has been incredibly influential in environmental law and yet, has failed to provide justice in every aspect except the academic.

By using economic tools such as a cost-benefit analysis, the concept of internalising negative externalities, along with principles of balance of trade to explain the position the respondent factories in this case served in contrast to the government, the effectiveness of the Polluter Pays Principle has been analysed, especially in context of the present case. These ideas have then been applied in an effort to improve upon the gaps this judgement left. The conclusion points towards a combination of environmental measures being the most effective, with why the Polluter Pays Principle on its own is less impactful being examined.

Keywords: Polluter Pays Principle, Economic Analysis, Environmental Law, Export Ecology, Externalities

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The author is student of Gujarat National Law University.