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Environmental Policy for Developing Countries
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Enforcing Pollution Control Laws
Originally published in Add to Cart Add to Cart. Vaughan , Clifford S. The discharge fee system was layered on top of the pre-existing command-and-control system of permits and discharge standards. Decree mandated that polluters pay fees only on emissions in excess of discharge standards, but there was no clear language in the decree about how to handle facilities that were not complying in the first place. Despite these implementation problems, a wide range of available evidence suggests that in a number of water basins, discharges dropped significantly between and For example, according to the environment ministry, during the first five years of the program, nationwide BOD discharges from point sources covered in the program fell 27 percent and TSS discharges fell 45 percent.
To what extent was the discharge fee program responsible for the emissions reductions that occurred after the program was established? Not surprisingly, proponents award it virtually all the credit, attributing this success to efficiency advantages that make discharge fees less burdensome to polluters than discharge standards.
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Although these claims are not baseless, the whole truth is far more complex. Before , permitting, monitoring, and enforcement of water pollution regulations were inadequate in virtually all CARs. To set up discharge fee programs, CARs had to remedy these deficiencies. For example, they had to develop a complete inventory of dischargers, create an information management system, calculate facilities' pollution loads, and develop monitoring systems. Each of these tasks is a precursor to effective implementation of command-and-control emissions standards as well as discharge fees.
As a result of this effort, emissions standards in many jurisdictions had a far greater impact after than before the advent of the discharge fee system. Consequently, one cannot be certain whether the reductions in emissions that occurred after were due to the efficiency properties of the new discharge fee program or to more effective permitting, monitoring, and enforcement that enhanced the performance of the new discharge fees as well as the old emissions standards. Although these factors are virtually impossible to disentangle empirically, intuition alone suggests the second factor was critical--permitting, monitoring, and enforcement serve as the foundation upon which both command-and-control and economic-incentive pollution control systems are built.
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While the environment ministry's implementation assistance efforts were important, two intrinsic features of the discharge fee system also contributed to improvements in permitting, monitoring, and enforcement. First, the discharge fee program entailed more transparency and accountability than did the old command-and-control program. CARs were required to report both to their boards of directors and to the environment ministry their progress on a number of fronts, including pollution reduction targets, pollution loads, invoices, and collections.
Previously, few CARs consistently kept records of discharges of water users.
In a sense, the discharge fee program subjected CARs to performance standards for water pollution control for the first time. Second, by allowing CARs to keep fee revenues, the discharge fee program created an economic incentive for CARs to enforce water pollution control laws. What are the implications of this case study for the debate about the use of economic instruments in developing countries?
Discussions of the advantages of using discharge fees in developing countries have focused on their efficiency, while discussions of the disadvantages have centered on the notion that they are more demanding of scarce regulatory resources than many command-and-control instruments. Yet, the evidence presented here suggests that other pros and cons may be equally important. Discharge fees potentially create incentives for regulatory authorities to improve permitting, monitoring, and enforcement.
However, grossly inadequate municipal wastewater treatment infrastructure--a pervasive problem in many developing countries--is likely to be a key barrier to implementing discharge fee programs. Among other things, the lack of such infrastructure can greatly hinder efforts to develop a culture of compliance in the discharge fee program.
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A second policy lesson from the Colombian experience is that the strategy of setting pollution reduction goals for individual water basins, and then ratcheting up discharge fees until these goals are met, is bound to be problematic when leading dischargers here municipal wastewater authorities are unable or unwilling to undertake the pollution abatement investments required to meet these goals. In such cases, fees will increase regardless of the investments made by other polluters, a politically untenable situation that is likely to damage the credibility of the program.
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