ASi" kUCTURE FlOR DEVELOPMENT

found that, although households were unwilling to scarcity levels (particularlv in agriculture) and linkpay
for the delivery of conventional sewerage ser- ing price to usage are.important first steps in dealvices,
only modest subsidies would be required to ing with water scarcity as well as with problems of
achieve relatively high levels of coverage with ven- salinization, mcreasing fluoride concentrations,
tilated improved pit (V1P) latrines-
and land subsidence. Influencing demand through
During the 1980s the Orangi Pilot Project in. pricing allows the user to decide how much water
Karachi, Pakistan, mobilized poor people to con- to use and how to achieve conservation.
struct, finance, and maintain their own water-borne
sewers. This action resulted in the provision of sew- Reguilatioir
erage to 600,000 people at a cost of less than $50 per
household. The low cost was due to innovative Regulation is an additional means of reducing adtechnical
solutions combined with a participatory verse environrmental consequences. It is also imporapproach
in which corruption was reduced and tant for securing infrastructure service delivery that
communities contributed thieir own resources. A meets public safety requirements- The two principal
similar story comes from northern Brazil, where the regulatory approaches are command-and-control
use of technically innovative condominial sewer- measures and regulation based on economic incen-.
age-a collective. connection system provided. by tives. Command-and-control measures-direct regcommunity-based
organizations-lowered capital ulation along with monitoring and enforcement syscosts
by up to 40 percent over conventional systems. tems-are by far the most widely used technique in
developing countries. An advantage is that they
Motivation of user efficiency
provide the regulator with a degree of certainty
about, for example, how much pollution levels will
Efforts to mitigate enviroxunental impacts dtrough be reduced. But they have the disadvantage of proconsumer
investments in energy saving are ham- viding little incentive for innovation in pollution
pered by the low consumer prices and subsidies de- control techmology once standards are achieved. In
scdbed in Chapter 2. On average, developing coun- recent years, many countries have also adopted ecotries
use 20.percent more electricty than they.would nomic instruments. Setting prices to reflect full costs
if users paid the incremental cost of supply. Once (the "polluter pays" principle). is the most powerful
econonic pricing is established, governments are and obvious of such instruments. In some countries,
able to promote. the use of more energy-efficient experiments are under way using.additional regulatechmologies,
tory instruments, such as pollution charges, mar-
Similar price increases are merited in transport ketable pemlits, subsidies, deposit-and-return sysbut
are more difficult to implement Cars using city tems, and enforcement incentives, to introduce
centers at rush hour impose congestion costs many more flexibility, efficiency, and cost-effectiveness
times higher than they do in off-peak periods, and into pollution control measures. Some of these efthe
environmental costs of vehicle use are greater in forts appear promising.
urban, than in rural areas. Urban car users can be Environmental regulation begins by specidfing
made aware of such costs through the introduction abatement standards based on the technical options
of parking fees, area licensing, and tolls. Growing available. For example, for power generation, techenvironmental
consciousness and technological nologies.are emerging that effectively reduce noxchange
are likely to increase the use of tolls and fees ious pollutants from coal-regulation can thus subin
the near future, which will encourage travelers to stantially reduce emissions. But dean technologies
use public transit or nonmotorized modes.
almost always add to the cost of coal-fired thermal
Important user efficiency problems in the water power (by 10 to 20 percent on capital costs and 5
sector stem from the underpricing of water Domesr- percent on operating costs). Consequently, such
tic consumption, sanitation, irrigation, hydroelec- technologies are still far from universally used in
tric generation, and transport aU create water de- developing countries- Where switching to gas is an
mands and raise problemis of overall supply and economnically. viable alternative, there are manv ensectoral
allocatiorL In India in 1985, 94 percent of all vironmental advantages. Poland provides an examwater
used went to agriculture. Conflicts between ple of market-based incentives to reduce noxious
industry and irrigation have emerged in some emissions. Its National Environment Fund, set up in
areas, and in cities such as Bombay, Delhi, and 1980, levies charges on all polluters and imposes
Madras problems of water scarcty have arisen In additional fines on owners of industries that violate
many countries, raising the.price of water to reflect region-specfic abatement standards. The proceeds
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