Internalizing environmental costs

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A word about the recent Supreme Court ruling in St. Lawrence Ciment Inc. v. Barrette — which heavily fined a cement maker for inconveniences its smoke and dust caused nearby residents in the Quebec City area.

Commentators up in arms about the ruling argue that by allowing citizens to make no-fault claims under the Civil Code of Quebec without tying it to a statutory violation, industry will grind to a halt.

Yet environmental regulations are designed to apply to a broad number of companies, for example by regulating dust emissions in the cement industry.  But they don’t necessarily take into account the proximity of neighbours to each cement maker.  In other words, respecting emissions limits is not enough — it’s an industry minimum, that’s all.  After that each company has to take into account its surrounding environment.  What the ruling is saying is that companies have to be responsible for establishing the appropriate buffer between themselves and their neighbours, on a case by case basis.  It shouldn’t be up to the neighbours to absorb the environmental cost of that pollution. Rather it’s up to the polluting company to internalize that cost in its production.