Why does environmental compliance cost more than penalty?

Abstract

In the environmental protection field of China, due to “lower law-breaking cost but higher law-abiding cost”, it is a common case that the enterprise chooses to break through the law on purpose. The punishment to the unlawful practices by the law directly decides the law-breaking cost of the enterprise, furthermore, influences the willingness to abide by the law and the trend to break through the law. The law-breaking cost of enterprises is jointly decided by the administrative liability, civil liability and criminal liability. However, in China, the enterprises breaking through the law are mainly penalized for the administrative liabilities, focusing less on the civil compensation liability on the environmental damage and criminal liabilities on the environmental crimes. Nevertheless, a complete environmental liability system is composed by administrative punishment, civil compensation and criminal sanction, none of which is dispensable. Therefore, the three layers defense could be established on punishing and deterring the environmental law-breakers. Considering all three aspects, administrative liability, civil liability and criminal liability, this paper analyzes the systemic disadvantages of the current environmental administrative punishment, civil compensation and criminal sanction in China, and investigates the legitimate reasons for the higher law-abiding cost compared with the law-breaking cost, and it is finalized with the measures and suggestions to solve this problem.