Impact of Informal Regulation of Pollution on Water Quality in Rivers in India

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Impact of Informal Regulation of Pollution on Water Quality

in Rivers in India

Bishwanath Goldar* and Nandini Banerjee**


This paper presents an econometric analysis of determinants of water quality in Indian rivers. Water quality (water class) data for 106 monitoring points on 10 important rivers for five years, 1995 to 1999, are used for the analysis. To explain variations in water quality, an Ordered Probit model is estimated, in which industrialization, urbanization, irrigation and fertilizer use in agriculture, and poll percentage (a proxy for informal regulation) are taken as the main explanatory variables. A significant negative relationship is found between the level of industrialization of a district and the water quality in rivers at monitoring point(s) falling in the district. Similarly, irrigation and fertilizer consumption in agriculture are found to bear a significant negative relationship with river water quality. A significant positive relationship is found between poll percentage and water quality, and also between the proportion of people who have completed school education in a state and the water quality in rivers flowing through the state. These results point to a significant favorable effect of informal regulation of pollution on water quality in rivers in India.

JEL: Q 25

[Paper presented at the Second World Congress of Environmental and Resource Economists, Monterey, June 24-27, 2002]


* Institute of Economic Growth, University Enclave, Delhi – 110007, India

** National Council of Applied Economic Research, New Delhi, India

Impact of Informal Regulation of Pollution on Water Quality in Rivers in India

Bishwanath Goldar and Nandini Banerjee

1. Introduction

Water pollution is a major environmental concern in India. The main sources of water pollution are: (1) discharge of domestic sewage and industrial effluents, which contain organic pollutants, chemicals and heavy metals, and (2) run-off from land-based activities such as agriculture. Agricultural development is causing deterioration in water quality in Indian rivers in two ways. First, with increasing use of fertilizers and pesticides in agriculture, the run-off from irrigated lands is polluting the water bodies. Secondly, because of the growing irrigation intensity and the high rates of abstraction of ground and surface water for this purpose, rivers at many places do not have sufficient water for dilution of industrial effluents/ domestic sewage1, aggravating thereby the problem of water pollution.

It is known that the present formal environmental regulation system in India, based on ‘command and control,’ has not performed well in controlling pollution of Indian rivers. Despite a strong legal framework and the existence of a large bureaucracy for dealing with environmental regulation, the public perception is that implementation remains weak (Pargal, Mani and Huq, 1997; Murty, 1999; Murty and Prashad, 1999). Water quality monitoring data (discussed later) reveal that at many monitoring points on India rivers, the water quality is poor. Also, there is a good deal of anecdotal evidence on high levels of pollution of Indian rivers, especially in relatively more industrialized states and in the vicinity of big cities.2
The object of this paper is to analyze variations in water quality across different monitoring points on Indian rivers with a view to identifying determinants of water quality. For this purpose, an econometric model is estimated. Since industrialization, urbanization, and irrigation and fertilizer consumption in agriculture are expected to be important factors affecting water quality, these variables are included in the model as determinants of water quality. An important focus of the study is on the impact of informal regulation of pollution on ambient water quality, motivated by a growing body of literature on the role of informal regulation in controlling pollution. Accordingly, some proxy variables for informal regulation (reflecting the strength of informal regulation) are included in the econometric model for capturing the effect of informal regulation on water quality.
The significance of informal regulation for achieving environmental goals is well recognized in the literature.3 It is known that when formal regulation is weak or absent, informal regulation through local community participation can force the polluter to abate pollution. Informal regulation takes many forms, including demand for compensation by community groups, social ostracism of the polluting firm’s employees, the threat of physical violence, and efforts to monitor and publicize the firm’s emissions (Pargal, Hettige, Singh and Wheeler, 1997). Two “formal” channels of informal regulation are (1) to report violation of legal standards to the regulatory institutions (where such standards and institutions exist), and (2) to put pressure on regulators (politicians and administrators) to tighten their monitoring and enforcement.
Education, degree of political organization and environmental awareness are considered to be important factors determining the strength of informal regulation, which is influenced also by information, legal or political recourse, media coverage, the presence of non-government organizations (NGOs), and the efficiency of existing formal regulation. Many of these factors are correlated with the community income levels. Therefore, in several studies (for example, Pargal, Hettige, Singh and Wheeler, 1997), the mean community income level (or the development level) has been taken as a proxy variable in econometric analysis to capture the effect of informal regulation.

There have been two earlier studies on informal regulation of water pollution in India, one by Pargal, Mani and Huq (1997) and the other by Murty and Prashad (1999) (discussed later). Both studies have considered the discharge of effluents by large and medium scale industries and examined how this is influenced by the characteristics of local communities. The present study is different from the studies of Pargal-Mani-Huq and Murty-Prashad in that it is concerned with ambient water quality, not industrial discharge of effluents. Hence, it has a more comprehensive coverage of the sources of water pollution.

The rest of the paper is organized as follows. Sections 2 and 3 discuss the system of formal regulation of water pollution in India and the existing water quality monitoring network, providing thereby background information for the study. Section 4 quickly reviews the two earlier studies undertaken in the Indian context on informal regulation of industrial water pollution. Section 5 discusses the data and methodology used for this study. Section 6 presents the econometric results. Section 7 summarizes and concludes.

2. Regulation of Water Pollution in India
The legal provisions that empower the Indian government to enforce environmental regulations are the Water (Prevention and Control of Pollution) Act (1974) and the Environment (Protection) Act (1986).4 The Water Act prescribes both general and industry specific standards for the discharge of wastewater into water bodies. Discharge of wastewater, carrying pollutant concentrations beyond the specified standards, into surface waters, public sewers, on land for irrigation and marine coastal waters is prohibited. The Act lays down penalties for non-compliance. These standards uniformly apply to all firms within an industry, or to all firms in general (where specific standards do not exist). The standards differ according to the class of water bodies into which the wastewater is discharged (for example, the standards are most strict for discharge into surface water bodies and relatively less strict for disposal on land for irrigation). The pollution standards are concentration based, i.e. they are specified as milligrams (mg) of pollutant per liter of wastewater discharged. The Environment Act provides the Central Government with greater powers to set and enforce environmental standards than what was provided in the Water Act. However, the basic features pertaining to industrial pollution abatement remain the same.
There is a basic division of power between the center and the states in India in regard to environmental regulation, reflecting the federal nature of the Indian Constitution. The mandate of the Central Pollution Control Board (CPCB) is to set environmental standards for all plants in India, lay down ambient standards, and co-ordinate the activities of the State Pollution Control Boards (SPCBs). The implementation of environmental laws and their enforcement, however, are decentralized, and are the responsibility of the SPCBs. Anecdotal evidence suggests wide variations in enforcement across the states (Pargal, Mani and Huq, 1997).
SPCBs have the legal authority to conduct periodic inspections of plants to check whether they have the appropriate consent to operate, whether they have effluent treatment plants, take samples for analysis, etc. Some of these inspections are also programmed in response to public requests and litigation. There are penalties for non-compliance. Until 1988, the enforcement authority of the SPCBs was very weak. But, now, the SPCBs have the power to close non-compliant factories or cut-off their water and electricity by administrative orders.

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