government &
policy
Novel approach to environmental regulation produces results
der way in the Philippines, China, India, and Mexico. According to the World Bank report, PROPER-type systems work well in the developing world because "they are compatible with standardsuring the 1970s and '80s, most de- in Indonesia and is called Program for based regulations" and "they rate environveloping countries set up institu- Pollution Control, Evaluation, and Rating mental performance in a clear, straighttions to regulate industrial pollu- (PROPER). In 1995, government officials forward format that is easy for the media tion. By and large, rather than creating rated 187 Indonesian factories with five to report and citizens to understand." Colombia, which has had very poor retheir own approaches from scratch, color codes based on degree of water polthese countries imported command- lution. The codes ranged from black for sults from traditional regulation, is inand-control-type regulations that were factories that made no effort to control volved in another type of program. "We pollution to gold for plants that made have monumental quantities of beautifulbeing used in developed countries. ly written laws," says Thomas Black ArBut by the early 1990s, it became ap- great efforts to minimize pollution. When the project began in 1995, two- belaez, director of the Office of Economic parent that these regulations were not working. Most of the rules were not en- thirds of the 187 factories were not com- Analysis in the Colombian Environment forced, in part because the governments plying with Indonesia's regulations. The Ministry. "But when the program began, lacked the power and resources to en- command-and-control system Indonesia 95% of industrial waste was still being force them, in part because of cronyism had been using for 15 years was not dumped into streams with no treatment" The program, which is planned for sevworking, says Shakeb Afsah, World and corruption. en regions of Colombia, charges the comConsequendy, innovators in some na- Bank technical adviser for PROPER. panies for each unit of ortions began experimentganic water pollution: $28 ing with other approaches per ton for organic waste to environmental regulaMany of the factories in Indonesia's water called biochemical oxytion, in some cases in colpollution control program improved their rating gen demand (BOD) and laboration with the World $12 per ton for total susBank. They began using Number of factories pended solids. The chargthe combined power of loJune December Performance es are high enough to cal communities, stock Factory characteristics 1995 1996 % Change level give factories and towns markets, the news media, Uses clean technologies, minimizes 0 0 0 Gold an incentive to cut back and the Internet to police waste, prevents pollution on pollution, but not so air and water discharges Exceeds pollution standards, practices 5 5 0 Green high that they would from private companies. good maintenance and housekeeping refuse to pay. Some significant success94 54 Meets minimum standards 61 Blue es from these approaches The Rio Negro water87 -24 Makes some effort to prevent 115 Red have been recorded. shed area near Medellin pollution but does not meet standards was the first to make For example, in CoBlack Makes no effort to control pollution, -83 strong progress under lombia and the Philipcauses serious environmental damage this system. In the early pines, water bodies have Source: Indonesia's Environmental Impact Management Agency (BAPEDAL) 1990s, it set a reduction been cleaned up by goal of 50% for organic discharging industrial facilicharges, and, as a result, ties fixed fees for each unit of pollution. Indonesia has color-codAfter rating the factories, Indonesian industry's BOD discharges fell by 28% dured 187 factories according to environ- government officials held a high-profile ing thefirstsix months of the program. mental compliance levels and published awards ceremony to honor thefivefacAccording to the World Bank report, the results in local newspapers. China in- tories that had earned the "green" code. many of the successful programs have stituted pollution charges for large facto- In private, they notified the factories relied on low-cost computer technology, ries and has been able to hold pollution that were violating the standards that which is used to gather and distribute from these units constant while industrial they had six months to clean up before information to communities and stockproduction doubled. their rankings would be made public. holders. Another effective tactic has A recent report from the World Bank, Factories that previously had made no been to cut subsidies for raw materials, "Greening Industry: New Roles for Com- effort to cut emissions started calling which has encouraged waste reduction. Research done by the bank has shown munities, Markets, and Governments," regulators tofindout what they needed describes these efforts (available online to do. Within 18 months, 33 plants had that media accounts of good environmenat http://www.worldbank.org/nipr). "In improved their ratings, and total water tal performance, such as investments in cleaner technology, can enhance a firm's the West, we think of regulation as prima- pollutionfromthe 187 plants fell 40%. rily an issue of government," says David Progress has continued as more and expected profitability and stock value. Wheeler, a senior economist at the World more factories have come into compli- "After six years of research, policy experBank and author of the report "We have ance. By December, Indonesian offi- imentation, and first-hand observation, not abandoned this idea, but communi- cials hope to expand the ranking to we believe that environmentally sustainties and markets are equally important," 2,000 facilities that account for 90% of In- able industrial development is within reach," Wheeler says. he adds. donesia's water pollution. Bette Hileman Similar programs are planned or unOne of the most successful projects is
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