Industrial Effluent Quota Systems
Hydrographic systems such as bays and rivers are often subject to discharge of effluents above their debugging capacity. The continued dumping of excessive levels of effluents gradually leads to environmental degradation of these hydric bodies with consequent impacts on water quality, health, biodiversity and so on.
Examples of hydric bodies severely affected by excessive effluent releases are the Guanabara and Sepetiba Bays in Rio de Janeiro. In the case of Guanabara Bay, efforts have been made for many years, for example, through the Guanabara Bay Pollution Control Program (PDGB), initiated in 1994, based on command and control measures.
Market mechanisms, such as cap & trade schemes, in some circumstances lead to environmental targets at a lower overall cost than command and control alternatives. In the case of Guanabara Bay, the characteristics of the effluent sources, distributed in a high number of points and with release limits already established by the environmental agency, suggest that the use of this type of quota system can be an effective tool to promote reduction of effluent discharge in hydric bodies.
In order to analyse the potential of a cap & trade system for the industrial liquid effluents from Guanabara Bay, BVRio has joined with Funbio and the companies E2 Socio Ambiental, Ecometrika and Grael Ambiental to develop a study feasibility of this proposal. The study was funded by a grant from the Swiss Agency for Development and Cooperation (SDC) under the project “Scaling Up Payment for Ecosystem Services to Meet the Global Water Crisis” coordinated by the American NGO Forest Trends.
The study “Sistemas de Cotas Negociáveis e o Controle de Efluentes Industriais na Baía de Guanabara” was published in 2013. The main conclusions of the study are summarised bellow:
– the system of liquid effluents is more complex than the one GHG, demanding the elaboration of a mechanism of cap & trade much more elaborated;
– the main complexity is related to the model of effluent circulation in the Bay of Guanabara, which does not lead to homogeneous dispersion and dilution of effluents released at different locations in the bay. This non-dilution prevents direct compensation between different effluent sources;
– at the same time, the problem of industrial effluents also interacts with discharges of domestic sewage (one of the main sources of pollution in the bay today). In some regions, river water quality is already so poor because of domestic sewage that the industry needs to clean the water before using it. And sometimes the water returned to the rivers is cleaner than the water captured by the industry. This distortion makes it difficult to engage companies in this initiative;
– given the challenge of reducing domestic wastewater in the region, the issue of industrial effluents is given a lower priority by environmental agencies.
The combination of the above points suggests that it is still premature to focus efforts to promote a market mechanism for this sector. At the same time, it has been shown that the architecture of a system of effluent quota trading must take into account mechanisms that can deal with the heterogeneity of the impact of emissions from different sources.