A per day fine system for environmental protection ?

The environmental pollution situation in China is now calling for severe penalties for heavily polluting companies. The solution that the Chinese authorities seem to be looking at is the “per day fine” system.

First, let us have a look at what the “per day fine” system is. The principle is that if there is a continuous violation of the law, the authorities create a fine that is payable every day of the violation. The aim of such a system is to set a fine high enough to motivate the wrongdoers to end the violation as quickly as possible.

The per day fine system is set up for a simple goal : the longer the violation of the law endures, the heavier the penalties are. The main problem as of now is that many companies pay the fines while continuing to pollute because there are one-time fines which amount are not so high compared to the profits of running the polluting business.

The first attempt to use the per day fine system for environmental protection was in Chongqing in 2007. It has proved very effective, with around 2/3 of the companies modifying their behavior quickly.

Today, Chinese authorities are considering the inclusion of the per day fine system in the Environmental Protection Law. What is also unknown as of now is whether authorities will decide to adopt a deadline system as well. This already exists in other countries such as the USA or France, and it means the failure to modify the behavior by the specified deadline is the condition precedent for setting up a per day fine.

We will keep you updated on how this situation evolves.