Polluter Pays. But for What, Exactly?

There is something attractive about the polluter-pays principle. A product creates an environmental burden. Cleaning up that burden costs money. So instead of sending the bill entirely to taxpayers or water users, part of the cost is allocated to the producer.

Simple. Until we actually try to do it.

The European Urban Wastewater Treatment Directive, coming into force from 1/1/2027 onwards, provides a fascinating example. Pharmaceutical and cosmetics producers are required to finance at least 80% of the costs of additional quaternary wastewater treatment needed to remove micropollutants. The principle is understandable. The implementation is much more debatable.

Because the Directive does not merely say: "help solve the pollution associated with your products." In practice, it largely says: "help pay for this particular solution, at the end of the wastewater chain."

And those are two very different things.

The 80% that became controversial

The Extended Producer Responsibility - EPR, or UPV in Dutch - for pharmaceuticals has become one of the most contested elements of the new wastewater legislation. Concerns have been raised about proportionality, medicine prices, security of supply and the methodology used to allocate the costs. The issue has become significant enough to reach the European courts.

In September 2026, Advocate General Juliane Kokott advised the European Court of Justice to annul the provision allocating at least 80% of the costs of quaternary treatment to pharmaceutical and cosmetics producers. Her criticism is important: she concluded that there were material shortcomings in how responsibility for the pollution load had been calculated and allocated.

This is not yet a judgment of the Court. But it does expose something important. Perhaps we have been arguing about the wrong question. Instead of asking "Is 80% fair?", we should first ask:

“80% of what? Paying for treatment is not the same as paying for impact.”

There is another problem hidden behind the 80% figure: who exactly is the polluter, and how much should each producer pay?

One pharmaceutical company may market a substance that is persistent, highly ecotoxic and difficult to remove from wastewater. Another may produce a medicine that is readily biodegradable and has a much lower environmental impact.

Should they contribute equally simply because both sell pharmaceuticals? Probably not.

But what should determine their contribution?

The amount of active pharmaceutical ingredient sold. The amount excreted. Persistence in the environment. Ecotoxicity. The risk of antimicrobial resistance. How easily the substance can be removed by existing wastewater treatment. The actual environmental impact after use.

These are not minor details. They determine whether Extended Producer Responsibility actually rewards better environmental performance.

A system based primarily on volumes or treatment costs risks creating the wrong incentives. A producer that develops a more biodegradable medicine, reduces excretion into wastewater or prevents emissions at the source should see that effort reflected in its environmental responsibility.

Polluter pays only works properly if we can define what we mean by pollution.

Paying for treatment is not the same as paying for environmental impact

Wastewater treatment is a means, not the objective. The objective is less pollution and a cleaner aquatic ecosystem. That distinction matters, because the most effective way to reduce environmental impact is not necessarily to remove pollutants at the very end of the wastewater chain.

Under the Directive, producer responsibility is financially linked to quaternary treatment at urban wastewater treatment plants. That means treating enormous volumes of highly diluted wastewater.

By the time pharmaceutical residues reach a municipal treatment plant, they have travelled through toilets, hospital sewers, municipal sewer systems and mixed wastewater flows. What originally left a patient in a few hundred millilitres of urine has become part of thousands or millions of litres of water.

And then we start paying to remove it. Technically possible? Yes. But certainly not the most efficient place to intervene. Some pharmaceutical pollution is diffuse. Medicines taken by millions of people at home inevitably require solutions downstream. But other pharmaceutical emissions are highly concentrated and predictable. We know where certain medicines are administered. We know which patients receive them. We often know when most of the pharmaceutical substance is excreted. And in hospitals and other healthcare institutions, we can identify departments where particular pharmaceutical residues occur in concentrations many times higher than in municipal wastewater.

So why should Extended Producer Responsibility recognise only the cost of removing pollution after dilution?

Let producers pay – but give them freedom to solve the problem

There is another possible interpretation of producer responsibility. Make producers financially responsible for the environmental impact of their products but allow them to demonstrate how they reduce that impact. A pharmaceutical company could contribute to central wastewater treatment. But it could also finance source-based treatment for patients receiving its medicines. It could support collection or filtration at hospitals. It could invest in technologies that prevent specific substances from entering the sewer in the first place. It could re-engineer their products, reducing the amount dosed, excreted and thus to be removed from wastewater systems.

And where the resulting environmental impact can be independently measured, that avoided pollution should count towards its producer responsibility. That changes EPR from a debated financing mechanism into an innovation mechanism.

The difference is fundamental; if a producer must pay a fixed contribution regardless of what it does, the incentive is primarily to minimise the financial burden. This is why the issue reached European courts.

If a producer can reduce its contribution by demonstrably reducing pollution, suddenly there is a business case for prevention, better product design, source treatment and recovery. Isn’t that what Extended Producer Responsibility was supposed to achieve?

How much may clean water cost?

There is also a question we tend to avoid. How much are we prepared to pay? Healthcare is expensive. Developing medicines is expensive. Hospitals are expensive. Drinking-water production costs money. Wastewater treatment costs money. Environmental protection is not free either.

But the existence of a cost is not, by itself, an argument against an environmental measure.

The relevant questions are whether the cost is proportionate and whether we are spending the money intelligently. A €100 million solution that removes twice as much pollution as a €500 million solution is not expensive. The €500 million solution is.

This is why cost per cubic metre of treated wastewater can be a misleading metric. What ultimately matters is the environmental result: kilograms of target substances removed, ecological risk avoided, emissions prevented and, where possible, valuable materials recovered.

“The objective should not be to treat as much water as possible. It should be to prevent as much relevant pollution as possible for the resources we invest.”

We seem increasingly afraid of the bill

The pharmaceutical discussion is not unique.

Extended Producer Responsibility is appearing in more sectors as governments try to move the costs of waste and environmental impact from society towards the products that create them.

And almost every time, the same thing happens. Someone calculates what the measure might add to the price of the product. Then comes the fear. Will medicines become unaffordable? Will products disappear from the market? Will consumers pay more? Will European industry become less competitive?

These are legitimate questions. Of course they should be investigated. But they are abused by lobby and politics. So they can become a convenient reason to do nothing.

The Dutch debate about disposable nappies recently produced an almost perfect example.

Disposable nappies and incontinence products create a substantial waste stream. The Netherlands has therefore been developing an Extended Producer Responsibility scheme intended to make producers responsible for collection and recycling.

Then the discussion reached politics.

In September 2026, the Dutch House of Representatives adopted a motion calling on the government not to introduce what was framed as a “tax on poo.” It is a brilliant political slogan – in Dutch, it even rhymes. It is also a revealing one.

“No tax on poo.”

Because nobody is proposing to tax human excretion.

The issue is what we do with millions of disposable products after we have used them and who pays for that waste.

The costs do not disappear when producer responsibility disappears. Someone still collects the waste. Someone transports it. Someone incinerates or processes it. And someone pays.

Now, we all do. Even if you never use a disposable nappy.

Producer responsibility does not create that bill. It changes where the bill lands and, importantly, puts it somewhere where there is also an incentive to change what creates the bill in the first place.

Environmental costs have an interesting habit of disappearing

That is perhaps the biggest weakness in many environmental discussions. Existing costs become invisible because we have become accustomed to them.

Wastewater treatment is paid for through water charges, taxes and public infrastructure. Waste collection is paid for by municipalities and households. Drinking-water companies must invest more as the quality of their source water becomes increasingly difficult to manage.

Environmental damage often does not receive an invoice at all. But that does not mean it is free. It increases the costs of these public services today and will increase them even further in the future, while the producers that generated the economic value associated with that environmental burden are not necessarily the ones currently paying for it.

Then someone proposes making a product chain financially responsible for part of those costs – and suddenly we discover that environmental protection is “expensive”. It was already expensive.

The bill was simply somewhere else.

But polluter pays must also mean polluter can act

That does not mean every EPR scheme is automatically good policy. The pharmaceutical industry has a valid point when it questions whether the allocation of costs is scientifically sound, proportionate and compatible with medicine availability. And the latest legal developments around the Urban Wastewater Treatment Directive demonstrate that those questions cannot simply be dismissed.

But there is another conclusion we could draw. Instead of weakening producer responsibility, improve it. Broaden the range of solutions that qualify.

Instead of weakening producer responsibility, improve it.

Reward prevention. Reward source-based removal. Reward better biodegradability. Reward recovery. Reward measurable reductions in environmental impact.

And only use expensive end-of-pipe treatment for the pollution that actually needs to be treated there.

There is another way: the Re.Water Project with Bracco

Our collaboration with Bracco, a global specialist in diagnostic imaging, is a good example of what can happen when a pharmaceutical company looks beyond simply paying for downstream treatment and has the freedom to act where it can make the greatest difference.

Together, Bracco and Zereau are working on source-based solutions for contrast media used in radiology. Instead of waiting until these substances have travelled through the hospital sewer, municipal sewer system and wastewater treatment plant - without being effectively removed - the approach focuses on reducing emissions and capturing contrast media close to where they are used and excreted.

This is an area where a pharmaceutical company can have real influence. It knows its products, understands how and where they are used, works closely with healthcare providers and can help introduce solutions around the patients receiving them - from optimising doses to capturing residues at the source.

And something particularly valuable happens when responsibility moves closer to the source: environmental protection and circularity start to reinforce each other.

Capturing contrast media before dilution prevents these substances from entering the wider water cycle. At the same time, it keeps valuable materials concentrated enough to create a realistic pathway towards recovery and reuse. Instead of merely removing a pharmaceutical residue, source-based treatment can preserve it as a potential resource.

For contrast media, this is particularly relevant. Iodine and gadolinium are valuable and scarce raw materials. Once dispersed and diluted into the wider wastewater system, recovering them becomes extremely difficult. Capturing them at the source creates an opportunity to keep these materials concentrated and ultimately bring them back into useful value chains.

This combination of cleaner water and circular use of valuable raw materials is an important driver behind the Re.Water Project and one of the reasons why we greatly value our collaboration with Bracco. It demonstrates a different way of looking at environmental responsibility: invest where you can influence the outcome, prevent valuable substances from becoming pollutants, and create opportunities to use them again.

This is where Extended Producer Responsibility can become much more powerful.

Not by prescribing one solution and asking producers to finance it, but by creating incentives for producers to achieve measurable environmental results - through prevention, source-based treatment, recovery or downstream treatment.

The objective should not be to maximise what producers pay. It should be to maximise what their contribution achieves.