ABSTRACT
The use of environmental goods typically gives rise to what economists call externalities where social costs linked to environmental degradation are passed on to the community. In accordance with the theory of externalities developed by English economist Pigou, such external costs should be internalized: that is, integrated into the price of the goods or services in question, by charging those responsible for them. As long as these costs remain hidden, markets will react to distorted price signals and make inefficient economic choices. Against this background, the polluter pays principle mirrors an economic rule of cost allocation whose source lies precisely in the theory of externalities. Accordingly, it requires polluters to take responsibility for the external costs arising from their pollution (de Sabran-Pontevès 2007).
