PHILIPPINES: ESTABLISHING AN INDUSTRIAL WASTEWATER EFFLUENT FEE
PROGRAM, LAGUNA DE BAY CASE #82
To increase the effectiveness of water pollution control efforts, a market-based policy
instrument – an environmental user fee – was implemented to complement existing regulatory
mechanisms. The user fee system was designed to reduce pollutant loading into Laguna de Bay
and its tributary rivers by requiring dischargers of liquid waste or wastewater to internalize the
cost of pollution prevention and abatement into their business decisions or actions.
ABSTRACT
Brief Description
Industrial water pollution had significantly degraded a large watershed near Manila. Following
the “polluter pays principle,” an industrial wastewater effluent fee program was developed to
create economic incentives for industry to reduce wastewater discharges and raise revenues to
finance local government management of the program. The effluent fee system was developed
for the Laguna de Bay watershed, which includes Laguna de Bay and over 20 feeder rivers.
The Laguna Lake Development Authority (LLDA) is a government agency that is responsible
for protecting and managing the largest freshwater body in the country. It was the pilot district
for the program, covering more than 500 industrial dischargers within 45 industry sectors. The
effluent fee system was designed to reflect the quantity of discharges, the costs of
environmental externalities created by industrial discharges, and the budget requirements to
administer the program. Following hands-on training of personnel, the program was
implemented by the LLDA, with portions handled by surrounding municipalities.
After LLDA implemented the effluent fee in 1997, industries responded by changing
production processes and implementing other measures to reduce the volume of effluent and
pollutants in discharges to Laguna de Bay. The pilot test of this effluent fee program resulted in
reduction of 88 percent of BOD from direct discharges between 1997 and 1999. In addition,
during the first two years the government collected over P28,000,000 from Metro Manila firms
discharging wastewater into the Laguna de Bay watershed. The regulatory monitoring and
enforcement components of the program led to closure of around 50 companies by LLDA
between 1998 and 1999 for significant violations.
Lessons learned
Water pollution charges provided incentives for industrial polluters to reduce the impacts of
wastewater discharges to a large freshwater watershed and raised revenues for program
management. Institutional design was important to ensure that the government had the most
appropriate organizational structure, personnel qualifications, training, and budget requirements
to administer the program. It was also important to integrate the pollution charges with the
regulatory and enforcement program.
Importance for IWRM
Until recently, most governments relied primarily on direct regulation in water resources
management. This case demonstrates that economic instruments offer several advantages such
as providing incentives to change behavior and raising revenue to contribute to the financial
sustainability of water authorities.
Main Tools Used
C7.2: Pollution and environmental charges
C7.1 Pricing of water and water services
A1.2: Policies with relation to Water Resources
B2.3: Regulatory Capacity
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
1
MAIN TEXT
1
Background and problems
The World Bank’s Philippines Environmental Sector Study (1993) recommended that the
Philippines adopt a system of economic incentives to promote water pollution prevention and
abatement, particularly for biological oxygen demand (BOD) and total suspended solids from
domestic and selected industrial sources. The Philippines Department of Environment and
Natural Resources (DENR) therefore commissioned a study to design a pollution charge
program that integrates economic incentives with existing water quality and wastewater
treatment permitting programs.
A pollution charge is a fee that is levied on each unit of pollution discharged by a source, such
as an industrial plant or municipal treatment facility. The purpose of a pollution charge is to
provide price signals for industry to allocate their pollution prevention and abatement resources
efficiently. By charging a fee for using environmental resources to dispose of wastes, the
government encourages firms to factor into their overall production costs the costs of using
these resources and, in turn, encourages them to reduce their resource use to a socially
acceptable level.
The DENR’s study recommended that a pollution charge program be implemented nationwide
using a phased approach. Phase 1 of the program was implemented for Laguna de Bay, a
shallow freshwater lake located about 15 kilometers southeast of Manila. The watershed area,
called the Laguna de Bay Region, is about 3,800 square kilometers and includes Manila, many
smaller cities and around 360 square kilometers of urban and industrial area that spread outward
from Manila. Twenty-one rivers flow into the 90,000-hectare lake, which is the second largest
inland body of water in Southeast Asia. Laguna de Bay is the receiving water body for the
entire watershed and is important for inland fishery production, irrigation uses, power
generation, industrial cooling, and its potential as a domestic water supply source for Manila
and adjacent areas.
The Laguna de Bay Region had experienced environmental degradation caused by rapid urban
and industrial growth and weaknesses in the traditional water pollution control regulations.
Industry was a special concern because the watershed had a high concentration of industries,
rapid industrial growth was expected to continue, and the region’s industry was important to the
country’s gross national product growth. The Laguna Lake Development Authority (LLDA) is
a regional agency whose environmental functions included carrying out surveys and inventories
on the water basin, conducting ambient water quality monitoring, issuing and enforcing
permits, and responding to complaints related to industrial water pollution. According to
LLDA, 1,481 factories occupied about 20% of the region’s land area in 1994 with most plants
using the lake or its tributary rivers and streams as a sink for waste. Industry accounted for
about 30% of the lake’s pollution, while agriculture (including livestock producers and
feedlots) contributed 40% and domestic sewage about 30%. The LLDA study found that only
about 69% of the “wet” industries in LLDA’s jurisdiction in 1994 had wastewater treatment
facilities.
Institutional Issues
The pollution charge study commissioned by DENR, with assistance from the World Bank, was
conducted by a consulting team led by Hagler Bailly (now PA Government Services). The
study recommended that a pilot program (Phase 1) for the pollution charge system be
implemented by LLDA and the program could later be expanded to the national level. LLDA
had a unique legal authority and institutional structure that gave it the ability to implement the
proposed pollution charge program without further enabling legislation. LLDA is also
administratively attached to DENR, which would facilitate transferring experience with Phase 1
of the pollution charge program if it were expanded nationwide. The institutional issues are
summarized below.
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
2
Legislative Authority
Legal requirements often present the greatest challenge to implementing a pollution charge
system. In terms of legislative authority, the primary legal requirement is that the institution be
legally authorized to assess, collect and earmark funds from all regulated water pollution point
sources within its jurisdiction. Because of previous difficulties and delays in passing
environmental legislation in the Philippines, it was important to work within the existing legal
framework if possible. The consulting team reviewed existing law and legal issues related to
imposing a pollution charge and earmarking revenues. Then the team evaluated the legislative
authority for four existing institutions that represented different models:
1. A national environmental regulatory agency (DENR);
2. A regional development authority (LLDA);
3. A water resources regulatory board (National Water Resources Board); and
4. Local government units.
On the national level, water use and wastewater discharge are regulated by separate entities.
The DENR regulated wastewater discharges and the National Water Resources Board (NWRB)
regulated water use. A review of these entities’ legal authority indicated that additional
authority would be needed to assess a fee or charge on surface water use and effluent discharge.
Under the 1976 Water Code (Presidential Decree 1067), NWRB regulated water use and
coordinated all water resources development and use activities. Because the Water Code
effectively separates the regulation of water use from regulation of wastewater discharges, the
NWRB does not have any authority for pollution control activities. Under the 1976 National
Pollution Control Law (Presidential Decree 984) and Executive Order 192 (1987), DENR has
ample authority to assess water quality needs across the country and to regulate discharges
under its permitting authority, but it lacked the authority to use economic instruments for
environmental management. Executive Order 192 reorganized the DENR and charged it with
regulating sewerage and wastewater discharges through its regional offices, except within
LLDA’s jurisdiction.
The DENR’s authorities under P.D. 984 are the basis for the Authority to Construct (A/C) and
Permit to Operate (P/O), which are the wastewater discharge permits that DENR issues, and for
regulating industrial sources of water pollution. P.D. 984 also authorized DENR to impose fees
and charges for those permits to cover the processing costs of permit issuance. Based on the
legal review, however, DENR appeared to need additional authority to assess a fee on effluent
discharge or water use. Also DENR had no authority to retain revenues collected through fees,
as the agency must rely on the budget process for its funds. National authority existed for
issuing permits and regulating water quality, but not for a pollution charge system for water
quality management.
2
Decisions and actions taken
LLDA was created by Republic Act 4850 in 1966 with the authority to evaluate development
potential and review and approve development plans and programs in the Laguna de Bay area.
In 1975, Presidential Decree 813 authorized LLDA to issue permits for the use of lake waters,
impose necessary safeguards for lake quality control and management, and collect necessary
fees for these activities. LLDA had other functions and powers defined in 1988 by Executive
Order 927, which elaborated LLDA’s authority to issue, renew or deny permits for the
prevention and abatement of pollution, discharge of sewage or industrial waste, or installation
or operation of treatment plants. A review of LLDA’s legal authority identified that within its
well-defined jurisdiction,1 LLDA is authorized to collect a fee on both the intake and discharge
of water and to issue permits for effluent discharges provided that the lake is the source and the
ultimate receiving body for the effluents.2 Unlike DENR, LLDA was authorized (by P.D. 813,
1
LLDA covered the whole province of Laguna, thirteen Rizal municipalities, Metro Manila (Manila, Pasay, Caloocan,
Quezon City, Muntinlupa, Marikina, Pasig, Taguig, Pateros), Cavite (Tagaytay, Silang and Carmona), Lucban, Quezon, and
Batangas (Tanauan, Sto. Tomas, and Malvar).
2
Under Section 4-13 of Republic Act 4850 and Section 3 of Executive Order 927, LLDA is empowered to collect annual fees
for the use of the lake waters and its tributaries for all beneficial purposes, including waste disposal purposes.
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
3
Section 6(g)) to retain the revenues collected and earmark them for management and
development of the lake and its watershed areas.
Under the Local Government Code (R.A. 7160), local government units (LGUs) also have legal
authority to issue permits and impose reasonable fees or charges for services rendered.
Although the LGU’s authority to impose a fee on the intake and discharge of water may be
limited by the national agencies, broad authority appeared to exist for local ordinances that
could establish and enforce such programs and retain the revenues collected.
Regulatory Guidance
Even when adequate legislative authority exists, rules and regulations are also necessary to
provide regulatory guidance to implement a pollution charge program. Both DENR and LLDA
regulated water quality under DENR Administrative Orders No. 34 and 35. DAO 34 defines
beneficial use classifications and ambient water quality standards. Laguna de Bay, like most
water bodies in the Philippines, was classified as Class C waters. Class C water is suitable for
the propagation and growth of fish, non-contact recreation, and industrial water use following
treatment. DAO 35 defined effluent or discharge standards and applied to all industrial and
municipal wastewater effluent. The effluent standards are intended to keep water bodies within
their designated beneficial use classifications. DENR’s permits, however, usually did not
impose limits on total wastewater discharge or pollutant loading but focused on the operation of
pollution control equipment. Nevertheless, DAO 35 provided authority for certain aspects of a
pollution charge program including imposing loading-based limits and establishing limits to
reduce the cumulative impact of multiple sources.
One aspect of a pollution charge program lacking in DAO 35 was how to establish permit fees
with respect to discharge levels. DENR’s A/C and P/O permits were essentially permits to
operate that regulated the use of specified and approved pollution control equipment. LLDA’s
Interim Rules and Regulations Implementing R.A. 4850, as amended, require discharge permits
that regulate actual pollutant loading. Consequently, the regulatory guidance for LLDA would
require fewer revisions to define the basis for calculation of permit fees based on discharge
levels under a pollution charge system.
Effluent Fee Design Issues
A pollution charge system can be designed to meet a range of environmental and economic
objectives. Through discussions with the Government of the Philippines, the consulting team
recommended that a pollution charge program be implemented nationwide after a pilot program
(Phase I) in the Laguna de Bay Region. After the pilot program was implemented, a 5-year
implementation period was planned for the proposed national program (Phase II) to allow time
for necessary changes to the legal and regulatory framework. The consulting team also
recommended that the charge be calculated to provide companies a financial incentive to reduce
the amount of pollution produced. If the charge were set at a level higher than the cost of
pollution abatement, then it would not be cheaper for industries to continue polluting and just
pay the charge.
Pollution abatement cost analyses provided the basis for setting pollution charges at levels that
would induce plant managers to cut pollution significantly. A pollution charge model was
implemented for Phase I based on the Laguna de Bay, industrial sources, and a single pollutant,
BOD. The Phase I model was applied to a synthesized data set of 535 industrial facilities
discharging into Laguna de Bay or its tributaries and run using different variations of a two-part
fee structure based on wastewater discharge volume and BOD concentration. The higher the
charge, the more firms will choose to invest in pollution reduction measures versus paying the
charge. The model suggested that loadings reductions would continue to increase until the
variable fee reached about P50/kg of BOD.
Based on the model results, two criteria were used to set the initial charge:
1. Provide incentives for firms to install appropriate wastewater treatment to comply with
DAO 35 water quality standards for Class C water bodies; and
2. Reduce total industrial BOD loading by a set amount in the first year.
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
4
The P30/kg rate for the variable fee chosen for implementation of Phase I is higher than the cost
of installing wastewater treatment systems for existing industries so firms have a strong
financial incentive to invest in treatment or pollution prevention. The model was also used to
calculate rates predicted to achieve a 50% reduction in BOD load of the lake water within the
first year of implementation.
Implementation of a pollution charge system requires several integrated functions: identifying
who will pay the fees, compiling specific data needed to calculate the fee, validating data
provided by the firm, billing the firm for the fee, collecting the charges on a periodic basis,
accounting for the collection and use of fee revenues, monitoring and inspecting the firm,
enforcing penalties for noncompliance or failure to pay assigned fees, and resolving disputes
arising from differences of opinion in terms of the data used to calculate the charge. If revenues
are earmarked for a specific purpose, then additional financial management is required to
administer the earmarked funds. The technical and institutional design for the proposed
national program for these functions would be based on the experience gained during Phase I in
the Laguna de Bay Region.
3
Outcomes
Regulation of Wastewater Discharge
The LLDA Board of Directors approved the Environmental User Fee System under Board
Resolution No. 25, Series of 1996, for implementation in the Laguna de Bay Region to enhance
the lake’s water quality by providing lake users with an incentive to reduce pollution and
allocate their prevention and abatement resources efficiently. LLDA formulated the Rules and
Regulations implementing the Environmental User Fee System in the Laguna de Bay Region,
which were approved by LLDA’s Board of Directors under Board Resolution No. 33, Series of
1996. The Rules and Regulations were adopted pursuant to the provisions of Republic Act
4850, as amended by Presidential Decree No. 813, Executive Order No. 927 and Presidential
Decree No. 984. For purposes of the Rules and Regulations, LLDA adopted a uniform effluent
standard for BOD of 50 mg/l for discharges to Laguna de Bay or its tributary rivers and
streams.
All dischargers of wastewater into the Laguna de Bay Region must obtain a discharge permit
from LLDA. After the permit application is approved and the discharge permit issued, the
discharge permit replaces collectively the previous Authority to Construct and Permit to
Operate for the wastewater treatment facility. The total annual user fee for a discharger for the
first year is assessed based on the data provided by the applicant and any self-monitoring
reports for previous years, the Industrial Effluent Guide, and other data available at LLDA. The
firm’s estimated user fees for the year must be paid before a permit will be issued. For
subsequent years when the permit is renewed, a surcharge or credit may be applied depending
on the accuracy of previous year’s assessments or actual discharge characteristics.
The user fee is comprised of the fixed fee, which is based on the volumetric rate of discharge,
and the variable fee, which is based on the unit load of pollution. The fixed fee was designed to
cover LLDA’s costs for administering the permit program and is determined by the following
schedule:
Volumetric Rate of Discharge
Within 30 cu.m/day
More than 30 but less
than 150 cu.m/day
More than 150 cu.m/day
Fixed Fee
P5,000
P10,000
P15,000
The variable fee is assessed based on the pollution load, which is computed as the product of
the volumetric rate of discharge and the effluent concentration. It was designed so that the fee
will be higher for a higher volume and concentration of pollution discharged. The two-tier
variable fee includes one charge for effluent that meets the legal standard (50 mg/L BOD
concentration) and a higher charge for effluent concentration above the standard (this higher
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
5
charge is in addition to relevant fines and penalties). The variable component of the fee can be
paid in full or in equal quarterly installments as specified in the discharge permit. The
following schedule applies for the variable fee:
Effluent Concentration
Within 50 mg/L BOD
Above 50 mg/L BOD
Variable Fee
P5 per kg BOD released annually
P30 per kg BOD released annually
LLDA eventually may cover other water quality parameters under the user fee system. User fee
rates for any additional parameters will be determined by LLDA and approved by the Board of
Directors. Any changes in the existing user fee rates are subject to approval by LLDA’s Board
of Directors.
Water Quality Self-Monitoring
Under the Rules and Regulations, LLDA requires the permit holder or discharger to submit a
quarterly self-monitoring report. LLDA will also conduct periodic monitoring inspections to
determine compliance with water quality standards, the Rules and Regulations, or permit
conditions. LLDA can impose an administrative fine in an amount not exceeding P5,000 for
failure to comply with the Rules and Regulations or permit conditions. Failure to pay the user
fee is sufficient grounds for LLDA to suspend or revoke a discharge permit. If actual discharge
conditions in terms of loadings and duration significantly exceed those allowed, LLDA can
suspend or revoke a permit and/or impose other penalties. The penalty for failure to comply
with LLDA’s orders or regulations for control or abatement of pollution is a fine not exceeding
P5,000 per day while the violation continues after due notice and hearing. Other penalties may
be imposed for failure to renew the discharge permit or refusing entry for inspection, and these
may also be grounds for suspension or revocation of a permit. LLDA can order closure of the
facility for non-payment of fines and penalties. If an applicant proceeds to discharge despite
disapproval of a permit application or suspension/revocation of a permit, LLDA can issue a
Cease and Desist Order (CDO) to stop further discharges, close the discharger’s operations, and
impose fines and penalties.
Changes in Industrial Production Processes
After LLDA implemented the pollution charge on January 29, 1997, industries changed
production processes and implemented other measures to reduce the volume of effluent and
pollutants in discharges to Laguna de Bay. Instead of sporadic administrative actions, plant
managers now had price signals that encouraged them to internalize their environmental costs
or reduce pollution to the point where the marginal cost of abatement is equal to the pollution
charge. The number of firms covered increased from 109 in 1997, to 293 in 1998, to 520 firms
in 1999. This pilot program began with industry and in later years was expanded to major
commercial and municipal sources of wastewater and housing subdivisions and condominiums.
Industries covered in 1997 included the top five polluting industries: food processing, piggeries
and slaughterhouses, beverages, dyes and textiles, and pulp and paper. Other major industries
covered the following year included grain milling, sugarcane processing, petroleum refining,
plastics and synthetics, and thermal power generation. The pilot test of the pollution charge
program resulted in BOD discharges from affected plants decreasing 88 percent between 1997
and 1999.
Increased Funds for Management and Monitoring
Eighty percent of the revenues from the effluent charge are earmarked for LLDA for water
quality management and monitoring and enforcement and 20 percent are set aside for a local
government share to be spent on environmental projects such as establishment of sewage
treatment systems. The revenues from pollution charges are remitted to LLDA and have
increased its resources for monitoring and enforcement significantly. During the first three
years, LLDA collected over P34,000,000 from Metro Manila firms discharging wastewater into
the Laguna de Bay watershed. The regulatory monitoring and enforcement components of the
program led to closure of around 50 companies between 1998 and 1999 for significant
violations.
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
6
Addressing Public Opposition to the Fee
The pollution charge system has been vulnerable to misinterpretation by some stakeholders who
have seen it as providing industry with a right to pollute as long as they pay. Although efforts
were made to educate the public about its advantages, the system initially faced strong
opposition in the media.
Numerous meetings were held with the initial 120-150 firms to inform them of how the
environmental user fee would be implemented. The reaction from industry was mixed, with
some companies who thought they could not afford to pay the fee showing some resistance and
others requesting more time to reduce their discharges. Some plant managers considered
moving away from the LLDA jurisdiction, but were informed that the fee would be
implemented nationwide in a few years. Other companies were confident that their BOD levels
would put them into the P5/kg category and publicly supported the program.4 Lessons
learned
4
Lessons Learned and replicability
•
Integrated pollution charges for water quality management efficiently served two
objectives–environmental and economic. The environmental objective is to maintain a
specified water quality standard while the economic objective is to encourage firms to
pursue the most cost-effective pollution prevention and abatement measures that would
allow them to comply with pollution load limits. In LLDA’s pilot program, the user fee
was carefully designed to provide economic incentives for industrial polluters to reduce
the impacts of wastewater discharges to a large freshwater watershed. Setting the charge
at a level higher than the cost of pollution abatement did not make it cheaper for firms to
continue polluting and just pay the charge. The system for surcharges allowed LLDA to
collect from firms whose actual BOD load was greater than the assumed load in their
permit application. More important, the system for credits provided incentives for cleaner
production because an industrial firm could reduce their charges and receive a credit from
the previous year by demonstrating that its actual discharges were less than assumed
levels in the permit application. For example, firms could shift to less pollution-intensive
products, make process changes, change their inputs, or install or upgrade pollution
treatment facilities to reduce the cost of meeting the water quality standard or reduce their
pollution charge liability.
•
The pollution charge system raised revenues for water pollution control program
management, especially for monitoring and enforcement, to strengthen the
government’s regulatory mechanisms. It was very important to integrate the pollution
charge system with LLDA’s regulatory and enforcement program. Institutional
strengthening was important to ensure that the government agency, LLDA, had an
appropriate organizational structure, equipment, personnel qualifications and training to
administer the program.
DENR has since proposed a wastewater discharge permit fee that is structured like LLDA’s fee.
This proposed fee has two components: 1) an administrative fee covering minimum
administrative and inspection costs incurred by the government for each applicant, and 2) a
load-based variable fee based on the volume and concentration (or pollutant load) of the
effluent discharged by the facility. The load-based fee would cover monitoring and other
program costs. The DENR proposes that this fee initially be collected for effluents containing
BOD for organic wastes and total suspended solids (TSS) for inorganic wastes. DENR also
added a proposed “stream factor” to computation of the load-based fee to account for
differences in ambient water quality of the receiving bodies of water. Indirectly, this stream
factor accounts for the environmental carrying capacity of these waters. For permitting
purposes, BOD would be the basis for computing the discharge fees for industries discharging
organic pollutants and TSS would be the basis for those discharging inorganic pollutants.
DENR plans to increase the number and capability of its technical staff to support the system
when implemented.
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
7
Replicability
DENR is currently examining ways to revise its permit system by merging the Authority to
Construct and Permit to Operate into a single discharge permit that would have a defined time
limit (e.g., five years). Needed changes are plant-specific discharge permits that tailor the
limits for water quality parameters that a facility must meet on a monthly and annual basis as
well as maximum limits that must not be exceeded. These revisions would allow the proposed
discharge permits to be priced using a pollution charge system.
Several impediments have hindered expanding the pilot program to the national level. There is
still no legal provision in the Philippines for DENR to retain and earmark revenues from a tax
or charge for special purposes or for its programs and operation. Efforts are being made to
revise the laws to introduce provisions for earmarking of pollution charges, but the process has
been slow. The DENR is not allowed under current law to levy a pollution tax or charge unless
through congressional action. Additionally, pollution charges require a monitoring and revenue
collection system that has relatively high institutional and human resource requirements
because it calls for specialized knowledge and measurement capabilities. The DENR’s
enforcement and monitoring capabilities are severely hampered by lack of personnel and
laboratory equipment. The budget for monitoring, upgrade of laboratory facilities, and hiring
and training of personnel is unable to cope with the increasing number of industries. Unlike
LLDA, the DENR must rely on a decision by the Pollution Adjudication Board to impose a fine
for noncompliance with P.D. 984 permits. The lack of consistent monitoring and enforcement
has created an incentive for noncompliance.
Other governments may decide that the introduction of a new policy measure such as a
pollution charge at the national level involves an unacceptable degree of political risk. In that
case, a local pilot program can be a less risky way of testing stakeholder reaction as well as
determining the effectiveness of the policy instrument. A pilot program provides the
opportunity for fine-tuning before an attempt is made to extend it to the national level.
Successful implementation of a pollution charge system must consider the monitoring and
enforcement capabilities and provide for an institutional support system. Where the feasibility
of monitoring and enforcement is low and shut-down undesirable, mandatory installation of
pollution control equipment may be preferable provided that effective use of the equipment can
also be mandated and monitored.
Importance of Case to IWRM
Until recently, most governments relied primarily on direct regulation in water resources
management. This case demonstrates that integrating economic instruments into management
plans can offer several advantages such as providing incentives to change behavior and raising
revenue to contribute to the financial sustainability of water authorities.
5
Contacts
Ken Rubin, PA Government Services (formerly Hagler Bailly), 1750 Pennsylvania Avenue
NW, Suite 1000, Washington DC 20006, USA; Tel. 202-442-2377;
ken.rubin@paconsulting.com
David Wheeler, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; Tel. 202473-3401; dwheeler1@worldbank.org
6
Organizations and References
Batcagan, Sabado T. “Proposed Wastewater Discharge Permit Fees.” Presented at the
International Workshop on Environmental and Economic Accounting, Manila, Philippines,
September 18-22, 2000.
Hagler Bailly Consulting. 1996. An Action Program for the Introduction of Economic
Incentives to Promote Water Pollution Prevention and Abatement in the Philippines: Final
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
8
Report. Prepared for the Department of Environment and Natural Resources with funding from
the Japan Grant Fund administered by the World Bank.
Philippines Environmental Sector Study: Toward Improved Environmental Policies and
Management. World Bank, Industry and Energy Division, Country Department 1, East Asia and
Pacific Region. Report No. 11852-PH. December 8, 1993.
United Nations Industrial Development Organization. Industrial Policy and the Environment in
the Philippines. Report No. NC/PHI/97/020. July 1999.
Wheeler, David et. al. 2000. Greening Industry: New Roles for Communities, Markets and
Governments. New York: Oxford University Press for the World Bank.
Laguna Lake Development Authority website: environmental user fee system
http://www.llda.gov.ph/userfee.htm
Philippines - Economic Incentives for Water Pollution Prevention and Abatement - Establishing an Industrial
Wastewater Effluent Fee Program Case #82
9