Abstract
In the overpopulated country of Holland, the natural environment is very heavily burdened. Care for the environment is becoming more and more part of government policy. One of the means by which the public authorities can try to achieve a reduction of pollution is by imposing charges upon those who bring about pollution. This method is being used in the Netherlands, albeit formally the charges are not used as a means to induce polluters to pollute less but as means to pay the cost of abating the effects of pollution.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
D. E. James, H. M A. Jansen and J. B. Opschoor, Economic Approaches to Environmental Problems Amsterdam, 1978, p. 216. Governmental statement: Instruments of environmental policy, D, Second chamber of Parliament, Assembly-year 1974–1975, pp. 142–143.
Explanatory Memorandum to the Pollution of Surface Waters Act, D, Second chamber of Parliament, Assembly-year 1964–65, pp. 11–12.
Hans Bressers, “Policy Analysis and Development of Water Quality Policy,” D, in Bestuurswetenschappen 1979 (3), pp. 70–82.
See for instance, A. Myrick Freeman HI, Robert H. Haveman, and Allen V. Kneese, The Economics of Environmental Policy (New York, 1973), pp. 97–98, and William J. Baumol and Wallace E. Oates, “The Use of Standards and Prices for Protection of the Environment,” in Peter Bohm and Allen V. Kneese, The Economics of Environment (London, 1971 ), p. 56.
This happens according to tables with conversion coefficients. The tables most used are those of central governmental charges and the model of the Union of Water Authorities.
Industries discharging less than (usually) 10 inhabitant equivalents are — for purposes of the collection of charges — considered to be private households and, as a result, pay for the fixed number of 3 or 3.5 ie’s. Since the number of ie’s is fixed in such cases there is no incentive to decrease pollution.
A charge on heavy metals is not generally applied and is in any case relatively lower than the charge on organic waste, since it covers only the cost of measurement and of eventual damage to the sewage treatment plant.
William J. Baumol and Walkace E. Oates, The Theory of Environmental Policy (Englewood Cliffs, NJ, 1975), part 1.
This definition is by P. Hennipman, Welfare Economics and Economic Policy (D, Alphen aan den Rijn, 1977 ).
See, for instance, David Collard, Prices, Market and Welfare (London, 1972), p. 3.
By economists in the tradition of Pigou.
R. Hueting, New Scarcity and Economic Growth D, (Amsterdam, 1974), p. 264.
Baumol and Oates, 1971, op cit and 1975, op cit; see also, James, Jansen and Opschoor, 1978, op cit, p. 218.
This is illustrated by the study by J. van Puttens “Haagse Machten” (Powers in the Hague), D, (The Hague, 1980), pp. 121123, about how the system of charges which was initially a central element of the Selective Investment Regulation gradually got weakened until there was only a weak reflection left of the original plans.
See, for instance, Allen V. Kneese, The Economics of Regional Water Quality (Baltimore, 1964); Lawrence J. White, “Effluent Charges as a Faster Means of Achieving Pollution Abatement,” in Public Policy vol. 24 (Winter, 1976), pp. 111–125; Stuart S. Nagel, “Incentives for Compliance with Environmental Law,” in Lester W. Milbrath and Frederick R. Inscho (eds.) The Politics of Environmental Policy pp. 74–94; Krister Hjalte, Karl Lidgren and Ingemar Stahl, Environmental Policy and Welfare Economics (Cambridge, 1977), p. 59; and the economic literature mentioned before. Very enlightening is the article by Lettie McSpadden Wenner, “Pollution Control: Implementation Alternatives,” in Policy Analysis Winter 1978, pp. 47–65.
White 1978, op cit.
Governmental statement: Instruments of environmental policy, D, op cit, pp. 152–153.
Compare McSpadden Wenner, 1978, op cit, pp. 50–52.
Nagel, 1975, op cit, p. 79
Such as the Dutch section of Friends of the Earth International.
McSpadden Wenner, 1978, pp. 63–65.
Compare for instance Hjalte, Lidgren and Stahl, 1977, p. 59.
Compare Freeman, Haveman and Kneese, 1973, op cit, p. 99
This could be other means of production as well as cheaper ways for treating discharges.
Compare James, Jansen and Opschoor, 1978, op cit, p. 225.
Compare Graham T. Allison, Essence of Decision (Boston, 1971 ).
Walter A. Rosenbaum, The Politics of Environmental Concern (New York, 1976), quotes the former American Secretary of Interior Walter Hickel while speaking about the promotion of pollution sanitation by industries: “You’ve got to hit them with a two-by-four to make them believe you.”
Local authorities I spoke to sometimes indicate that industries often pay more than necessary by not taking measures that would bring them net benefits. Among other things, which are mentioned in the text of the chapter, the investment should not only be profitable, but should be more profitable than other possible investments.
It would be more correct to divide the amount of charges paid by the added value in production but there are not suitable data for this.
In 1979 these varied between $6 and $19 per pollution unit. However, both extremes were the charges of very small water authorities. Eighty percent of the individual firms paid between about $11 and $16. The differences between the average level of the charges paid by the various branches were probably even less.
The ratio of the highest and the lowest average charges paid by the various branches is 2:1 at a maximum and probably less. The ratio of the highest and the lowest value of the factor pollution/production value is about 700:1!
Compare Michael Scriven, “The Methodology of Evaluation,” in Ralph W. Tyler, Robert M. Gagne and Michael Scriven (eds.) Perspectives of Curriculum Evaluation (Chicago, 1967 ), pp. 39–83.
If we took individual firms as our units of analysis, it is possible that heavy polluting industries per product unit would get extra attention because they pollute more than similar industries. Public opinion and government may consider this pollution unnecessarily heavy. Our analysis is carried out per industrial branch and, therefore, this possible explanation for the influence the factor may have on amount of abatement is not plausible.
Dutch Central Bureau for Statistics, Water pollution in relation to production and investment 1969, D, (The Hague, 1977).
See on the theoretical points James, Jansen, and Opschoor, 1978, op cit, p. 218; Myrick Freeman III, Haveman and Kneese, 1973, op cit, p. 99; and for empirical data, Central Bureau for Statistics, General Environmental Statistics, D, 1975 (S02redution Holland); Allen V. Kneese and Charles L. Schultze, Pollution Prizes and Public Policy (Washington D.C., 1975) (with regard to sugar production and oil refining) and Hjalte, Lidgren and Stahl, 1977, op cit, pp. 60–63 (SO2 reduction in Sweden).
This correlation would be perfect when (1) the curves do not intersect and (2) industries have identical starting points as far as abatement activity is concerned.
The fact that the average abatement costs are placed, as an independent variable, next to the factor of charge’ may cause problems. It may be that the cost of abatement will not only influence the amount of abatement itself but also the extent to which charges will lead to abatement measures being taken. In other words, at low cost and correlation between the charge factor and abatement might be stronger than at higher levels of abatement costs. In this case it would not be correct to consider the two variables as independent variables. The normal test using a multiplying factor in the regression equation was not possible because the variables had been transformed to correct for curvilinearity of relations. However, when regression was applied to partial populations, such as those with high costs and those with low costs, highly similar outcomes resulted when the influence of the two outliers (which were disturbing factors especially in small partial groups) was taken into account.
The amount of pollution units per unit production value will correlate with the amount of abatement. There is reason to expect a decrease in this correlation when moving along the line of 0% towards 100% abatement. The marginal cost of abatement is initially low, but increases curvilinearly when nearing the 100% abatement. The pressure of the charges first leads to much abatement (caused by the low marginal cost) but when increased sanitation has led to increased marginal cost, the marginal effect of the increase will not even be possible. This expected curvilinear form of the correlation can be transformed into a linear form and thus be made suitable for statistical analysis by taking from the root or the logarithm of the explanatory variable. This function has the form of y=x or y=L09.x. This last approach was chosen because empirically this appeared to be the best approach to the relationship. When looking at the impact of the average cost on the amount of abatement, a comparible problem occurs. Now, however, the correlation is negative, so that an analogue transformation would mean that one would have to take the root or the logarithm of a negative figure, which is not possible. A good approach to the expected curvilinear form of the xelation is given however by a function with the form y=a-bx, squaring the average cost to obtain a linear relation. The fact it is a declining curve does not matter because a B-coefficient can also be negative. There is no reason to expect curvilinearity in the impact of the production increase on the amount of sanitation. The impact that production increase will have on pollution per industrial branch is not exerted by means of abatement and the marginal cost that go together with it, but by means of an increase in the amount of produced goods (or a decrease). It does not matter therefore, for the relation between production amount and pollution, that the marginal cost of sanitation has a curvilinear path.
An appendix with a more detailed account of data sources can be obtained from the author. Please write to Hans Bressers, Department of Public Administration, Twente University of Technology, P. 0. Box 217, Enschede, Holland.
The significance of the correlations is shown, although most of the population of polluting branches is included in the research. This is meant not to show whether or not the population has the same relations as the sample, whether the relations can be explained by chance or are worthwhile to interpret causally.
Though fourteen branches are a very small number when making use of techniques for multi-variant analysis, I believe this to be justified because it is the only way to make full use of this data. Furthermore, correlation and regression analysis with various combinations of seven to twelve branches showed a remarkable consistency in the results. For this reason the reliability of the analysis seems to be good. Even in this small sample the beta of the charge factor is significant (Compare the ratio of standard errors and B’s). Finally, what is important here is not the precise regression equation, but the fact that the impact of the charge factor is shown not to be spurious.
Given the fact that the operation of the charges is on the level of individual firms while the analysis in this article is at the level of industrial branches, there are some methodological problems. In research which has not yet been published, I also found the same strong indications for an impact of the effluent charges in an analysis based upon the comparison of water authority areas instead of branches of industry. This would indicate that the relation found in this article is not an artifact of the level of analysis. See Hans Bressers, Policy-Effectiveness and Water Quality Policy D, (Euschede, The Hague, 1983), chapter 6.
Giandomenico Majone in “Choice Among Policy Instruments for Pollution Control,” Policy Analysis (Fall 1976), pp. 589–613, claims that even different methods of policy implementation would probably have identical results when lower relations remain unchanged. Investigations in France showed that charges became the subject of negotiation just as well as permit conditions (Kneese, quoted by McSpadden Wenner, 1978, op cit).
For the Dutch situation, see Ministry of Public Health and Environment, “Advice on Combined Granting of Licenses Based on the Air Pollution Act and the Nuissance Act,” D, 1976; Investigation on the Coordination of Environmental Legislation D, 1977; Test Project License Procedures Based on the Air Pollution Act and the Nuissance Act. D, 1977; and the Ministry of Economic Affairs, Possibilities to Improve the Governmental License Procedures D, 1976.
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1983 Springer Science+Business Media Dordrecht
About this chapter
Cite this chapter
Bressers, H. (1983). The Role of Effluent Charges in Dutch Water Quality Policy. In: Downing, P.B., Hanf, K. (eds) International Comparisons in Implementing Pollution Laws. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-1927-8_8
Download citation
DOI: https://doi.org/10.1007/978-94-017-1927-8_8
Publisher Name: Springer, Dordrecht
Print ISBN: 978-94-017-1929-2
Online ISBN: 978-94-017-1927-8
eBook Packages: Springer Book Archive