cs51: policy study on market-based instrument for water pollution control by ge chazhong

8/3/2019 CS51: Policy Study on Market-based Instrument for Water Pollution Control by Ge Chazhong

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Meetin on Findin s of the Final Re ort of TA4967-PRC

Policy Study on MarketPolicy Study on Market--basedbased

ns rumen or a er o u onns rumen or a er o u on

ControlControl

Chinese Academ for Environmental PlanninChinese Academ for Environmental Plannin

May 19, 2010May 19, 2010

环境保护部环境规划院1



• Introduction

• Water Pollution Control In China

• Pollution Control In China

Pollution Control

• Design o Water Qua ity Tra ing in Tai La e

• Concluding Remarks

环境保护部环境规划院



• With the development of market economy and

improvement

of

environmental

management, market approach for environmental management is getting more attention.

• The project is to look at the possibility of more role for MBIs in water pollution control in China.




Water

Pollution

Control

In

China(1)• Water pollution is one of priority issues in China

env ronmen a pro ec on

• Improvement has been made in the past years

Water

between2001 and

SevenMajor RiverBasins




Water

Pollution

Control

In

China(2)• The Chinese government has played a very

ac ve ro e an a en measures n wa er pollution

control

–

• Water pollution control law

• Dischar e standards

• Water quality standards

– Nationwide total load control

– Water pollution

control

planning

for

key

rivers

and lakes


• ose own, c eaner pro uc on, rea men ac es



COD reduction by provinces over 2005-2008




Changes of COD concentration at sections over 2005-2009




emphasized in environmental protection in China

Pollution liability insurance (1991)

Urban sewage treatment fees (1994)

Paid use of wastewater discharge facilities (1993)

Direct investment (1984)

Ecological compensation pilots (2008)

New discharge fee schemes (2003)

Water pollution rights trading (2002)

Pollution permits trading (1987)

Discharge fees (1982)

1980 1985 1990 1995 2000 2005 2010

Pollution compensation, fines (1979) Environmental and resource accounting（2002）




• The questionnaire survey reported 73% of the

respon en s g v ng a pos ve eva ua on o e

quality of

the

water

environment




Pollution Control In China(1)

• Fee‐based MBIs

– Pollution levy

– Wastewater treatment

fee

– Environmental tax




Media 2002 2003 2004 2005 2007 2008 2006

Total (billionyuan) 6.78 7.31 9.42 12.32 17.36 17.68 14.41

62.3 Na 36.4 29.6 20.3 16.0 23.6

water(%)

62.3 Na 36.4 29.6 20.3 16.0 23.6

Waste air(%) 23.8 Na 52.7 61.5 73.7 78.8 69.4

Noise(%) 8.6 Na 7.3 5.9 4.4 4.5 4.9

Solid

wastes(%)

5.3 Na 3.6 3.0 1.6 0.7 2.1


regulation went into effect in 2003



• 475 cities out of 661 had introduced

wastewater treatment

fee

according

to

China

Water Network Survey in 2005；

• Wastewater treatment fee was 0.15‐

1.17 uan m3 and

cover

rate

of

8.33%

‐46.63%

with 120 city data；

•

to the operation。




Market Based Instruments for Water


• Allowance‐based

MBIs

–

permits

–

• International experience

• Domestic piloting




Market Based Instruments for Water


• ncent ve‐ ase s

– Environmental investment policies

• Channels of environmental investment

•Public environmental investment

– overnmen sca po cy

• subsidy




M rk B In r m n f r W r Pollution Control In China(4)

• MBIs and

Laws

– Current related laws do not explicitly sanction the use of

MBIs

• MBIs and

Institutions

– Main role of oversight agencies such as NDRC and MOF

– MEP only has recommendation right

• MBIs and

Technologies

– MBIs may induce changes of treatment technologies




Market-Based Water Pollution Policy Framewor

Incentive-based MBI

and Policies

Fee-based MBI and

Policies

Allowance-based

MBI & Policies

Subsidy Policies Pollutant Discharge Fees Pollutant Discharge

Investment andFinancing Policies

Earmarked Funds

an axes

Ecological Compensation

Wastewater treatment

tariffs

PPP

Trading

……


……. ……



Design of Water Quality Trading in Tai

Lake(1)

Background on Tai Lake water pollution controlackground on Tai Lake water pollution control

Status of water environment: deteriorating water quality in Tai lake, total

discharge of main pollutants is remaining high periodic improvementsischarge of main pollutants is remaining high, periodic improvements

have been made; pressure for further improving remains.

Environmental economic policies have been widely practices as comparednvironmental economic policies have been widely practices as compared

to other areas: ecological compensation policy, payable use of allocation

of permits, emission trading.

Provincial regulations to guide the use of environmental economic policy for

water pollution control.





General Consideration

Lake(2)

Objective: least cost to achieve the reduction target

Scope:(1)the same administrative area under province or city within the basin;(2)avoid

hot spot effect; (3)sufficient sources in the trading area.





Selection of targeted pollutants

a e

Selection of targeted pollutants

– Main pollutants in the area

– Homogenous affect between different areasomogenous affect between different areas

– Difference in marginal abatement cost

– Measurable

– Currently, COD

– Total Nutrient and Total Phosphate to be included

– Combined Control





Types of Trading

Lake(4)

yp g

Point sourcesTwo industrial point sources

urban wastewater treatment plant

Industrial point source connected to the pipeline and urbanwastewater treatment plant

Multiple sources

Point source and Non- oint source




D i n f Wat r alit Tra in in Tai Lak 5

• Allocation – All sources to be allocated initial allowance (fare)

– Targeted sources

to

be

allocated

initial

allowance

(realistic)

– Grand fathering vs payable obtaining of initial allowances

• Allowance trading vs Reduction trading – Allowance Trading：

• Cap + Allowance allocation；• omogenous sources；

• Reduction to be decided by total emission and cap

– Reduction trading：

• Decide reduction；

• Difference sources；• Direct link to national reduction target

– Reduction trading may be more appropriated for water pollution





a e

•Procedure

National Supervision Agency

Local Management AgencyTrading Management

StructureTrading Consulting Service Agency

•Marketmana ement

Pollution Rights Quota Allocation

Determination of Initial Price

Payment of User Fees

Quota Allocation

Subsystem

•PlatformPollutant Discharge

Rights

Selection of Trading Method

Trading Procedure

Trading

Subsystem

•Anticorruption

ay-per- se an

Trading

System

Environmental Monitoring

Quota Tracking

Trading Supervision

Subsystem

po cy anmechanisms

c egua on o ra ng n es

Participation of Other Stakeholders

Financing/Tax Policy AssurancesTrading Assurance

Subsystem


Framework Design of Pollutant Discharge

Trading System

Legal and Regulatory Assurances

Performance Assessment



Concludin

Remarks 1• The current water pollution control policy in

na s s om na e y s w e s s

playing an

increasing

role.

Currently,

MBIs

in

taxes, but few of trading.

•

,

developed countries, have shown advantages

of MBIs a ainst C&Cs. Nevertheless water

quality trading

is

still

practiced

in

a limited

scale.




Concludin

Remarks 2• A framework for MBIs for water pollution control is

implementation

is

also

recommended.• There is a strong demand for use of MBIs for water u , y

developed areas with limited environmental

assimilation capacity

(e.g.

Jiangsu

province).

• Nationwide implementation of water quality

trading is not yet ready due to institutional capacity

constraints.

• Water quality

trading

policy

needs

to

be

introduced

in China through piloting in a phased manner.




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cs51: policy study on market-based instrument for water pollution control by ge chazhong

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