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ECONOMIC INSTRUMENTS AND CLEAN WATER: - page 14 / 30

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the levy from Bavaria, a land especially keen on Länder competence in this matter, the levy was first introduced in 1981, and in some Länder even later.

The significance attributed to the waste water levy is thus substantially smaller than envisaged in the first draft of the new water pollution control legislation. In its 1974 report, the independent Council of Experts on the Environment had warned against the use of administrative policy instruments, and stressed the efficiency of economic instruments:

"The Polluter-Pays Principle and the following the missing incentives for pollution control. also make it possible to reduce total costs" Umweltfragen, 1974).

charges would not only provide If correctly applied they would (Rat von Sachverständigen fur

The federal government had intended to give the levy more prominence, but was forced to surrender to Länder reluctance. Furthermore, because of the constitutionally prescribed Länder compet- ence in water pollution control matters, revenue from the levy is controlled by the Länder, even though the rate is uniform for all of Germany. Unlike France and the Netherlands, the Länder do not offer subsidies for industrial pollution control. Instead, revenue from the German waste water levy is used to subsidise the construction of public sewage plants by local authorities.

Except for three city Länder (Hamburg, Bremen, Berlin), there are two levels of local government in the Länder: counties (Kreise) and municipalities (Gemeinden). Larger cities are typically county-less municipalities (Kreis-freie Städte). Local governments in Germany have had a long and changeable history since reform in the early 19th century gave them basic autonomy (Gunlicks, 1986).

In pollution control matters, municipalities are responsible for the construction of sewage plants, and German local authorities were already quite active at the turn of the century. Sewage plants have been subsidised, to some extent by municipal revenue, but more importantly by Land and Federal sources. These subsidies, although violating the Polluter-Pays Principle, follow from the fiscal equalization principle (Finanzausgleich Prinzip) of the German Constitution, which intends to secure citizens in all of Germany approximately the same level of public services. As a consequence of local, Land and federal subsidies, it is estimated that German user fees for waste water treatment cover only 65-75 percent of the true costs of pollution control, relieving industries that discharge to public works of some of their costs.

Only industries that discharge directly to surface waters are required to pay the waste water levy. Payment is made on the basis of the amount of pollution discharged, but varies according to compliance with technological standards, that is, industries in compliance with branch guidelines can escape the levy. In 1986, the technological criteria were changed from a Generally Accepted Technological Standard to one of Best Available Technology (Mindestanforderung). Public sewage plants also have to pay the levy if they do not comply with emission guidelines.

The branch guidelines are negotiated in a special committee with Länder and federal environmental authorities. Because of constitutional delegation of authority to the Länder, guidelines then have to be approved in the Bundesrat. Thus, Germany is probably the only country where politicians actually approve technical standards -- something left solemnly to bureaucrats in other countries.

(Figure 5 here)

It is difficult to assess the effects of the effluent charge in Germany, despite the very detailed waste water statistics available. Emissions actually began to decline in 1981, the same year as the levy

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