Implementation of the polluter pays principle in China

The polluter pays principle aims to correct market failure and its resulting social injustice by shifting pollution costs from the public at large to polluting enterprises, at the same time reducing the amount of pollution produced. China has taken important steps to implement the principle as a key instrument of its environmental legal regime. However, China's implementation falls short in one key respect: it has not sought to support the development of a necessary parallel system of independent third‐party verification of the monitoring and reporting practices of polluting enterprises. Instead, verification of the reported data is still being carried out by the government itself, through on‐site inspections by teams of government agents. In its eagerness to enforce environmental law in a society where violations by polluters are the norm more than the exception, China's government is contravening the polluter pays principle's implied requirement of ‘independence’ in the verification of pollution data. This article argues that, in the name of fairness and overall good governance, China's legislature should begin to facilitate the development of an industry of environmental verifiers in the country's nongovernmental sector. Such a reform may seem ambitious just now, but as the rule of law strengthens in China, the basis of resistance to independent third‐party verification should fall away.