Investigations on Economic Efficiency and Cost Sharing for
Watershed Management in Japan
流域管理のための経済効率性と費用負担に関する検討

Toshiaki Yoshida, National Institute for Land and InfrastructureManagement, MLIT, Japan
国土技術政策総合研究所‑ 221 ‑

吉田敏章

INVESTIGATIONS ON ECONOMIC EFFICIENCY AND COST SHARINGFOR WATERSHED MANAGEMENT IN JAPANToshiaki Yoshida* and Osamu Fujiki**
Ministry of Land, Infrastructure and Transport, Government of Japan

ABSTRACTThis paper describes the efforts to utilize economic instruments such as trading and taxation inwater quality management field in Japan. We discuss the issues and introduce them, mainly basedon Study Committee held by MLIT. Regulation has been common in environmental policy in Japan.
However, economic efficiency in administration take attention and several trials are going on.
Especially, trading among wastewater treatment plants seems relatively feasible in terms of steadyflow and similar players. The investigated and designed system is rather centralized, considering
financing on a watershed basis, covering only wastewater treatment plants. This seems to be adisadvantage of the system, but this has a chance to involve other point and nonpoint sources
through this adjustment system. A case study, targeting the watershed of Tokyo Bay, was conducted,
which revealed over 30% cost saving is attained. This result is certainly based on an ideal andsimple situation, but the system certainly saves the abatement cost and worth while considering
positively. Hot spots were not found in the case study. This system should be positively considered
because it is not only effective in a monetary way but also promote better management of sewerage
works, better information system and public involvement.
KEYWORDS
Economic incentive, Cost sharing, Watershed management, Wastewater management

INTRODUCTION
Command and control has been a popular method in environmental management. However, though
the compliance of the regulation prevailed, still there remains many water bodies incompliance of
the water quality standards. Recently, economic tools such as tradable permit systems are capturing
attention in the field of environment for efficiency. The United States is vigorous in adoption of
trading, while some European countries utilize taxation in environment issues. It may be time thatJapan initiates economical instruments in a positive fashion.
Under this turning point of social changes, administrative governments should take considerationsin economic tools in order to minimize the cost and seek for the better environment. Actually, the*Researcher, Wastewater System Division, Water Quality Control Department, National Institute for Land andInfrastructure Management, Ministry of Land, Infrastructure and Transport, Government of Japan
Address: Asahi 1, Tsukuba, Ibaraki 305-0804, Japan
Phone: +81-29-864-3343, Fax: +81-29-864-2917, Email: yosida-t92e5@nilim.go.jp**

Director for Watershed Management, Sewerage and Wastewater Management Department, City and Regional
Development Bureau, Ministry of Land, Infrastructure and Transport, Government of Japan
Address: Kasumigaseki 2-1-3, Chiyoda, Tokyo 100-8918, Japan
Phone: +81-3-5253-8431, Fax: +81-3-5253-1596, Email: fujiki-o2iv@mlit.go.jp‑ 222 ‑

adoption of the introduction of the economic tools is provided in the law1. Recent recommendations
by relevant council or committees provide that wastewater management should adopt economic
tools in an aggressive manner. However, wastewater management system, which evolves over
several decades and the roles are shared by several government systems, is rather complex together
with many players and rules, whether the systems are prescribed by laws or not.
In this paper, based on the discussion and the simulations of Study Committee held by MLIT, thepossible effectiveness of the proposed system is shown. The traditional system is also commented
with the comparison.
CURRENT SITUATION OF WATER QUALITY MANAGEMENT
The basic of water quality management in Japan is to set environmental goals as WQSs2 of public
water areas3, and to limit effluent standards of direct dischargers. National effluent standards are
relatively lax, and prefectural standards are set on a local basis by prefectures, which are effective
for most cases. Unlike TMDL (Total Maximum Daily Loads), this does not strictly seek forattainment of WQSs (Water Quality Standards), but is set in consideration of the feasibility oftreatment technology. Effluent standards are still prevalent in Japan, and this does not entail permit
system.
Watershed management is a key word for holistically addressing water-related issues in general.
Particularly, this approach is needed in sewerage administration because local authorities
conducting sewage works are apt to focus on their own benefits alone, leaving public welfare
beyond their administrative boundaries. The concept is as follows; administrative systems are basedon human boundaries, but as natural phenomena occur on a watershed, so the issues should be dealt
with. SWMS (2003) gives the definition of "the Approach to Watershed Management" as follows
and pointed out the need; "bringing together sewerage managers in the basin, tying them up
extensively with other bodies including local citizens and businesses, and among those stakeholders,(i) sharing a common concept and purpose, (ii) sharing the risks and the burdens required to reduce
them, and (iii) while reducing overall risks and burdens to the minimum, promoting theachievement of common objectives via co-operation." In order to address water-related issues
including water pollution, this issue must be identified as a common problem for local governments
and citizens/businesses in the basin, and a variety of efforts such as wastewater treatment must be
mobilized effectively.
Two current watershed approaches in Japan are (a) Total Pollution Control, and (b) CBPSS(Comprehensive Basin-wide Planning for Sewerage Systems). Total Pollution Control is in the
charge of Ministry of the Environment, which is above the scope of this paper. As compared withother water administrations, a sewerage administration strongly suggests the necessity of "thewatershed management approach", because sewerage managers are all local authorities. One river
basin generally has plural municipalities, and the benefit of sewage works spreads over wider area
beyond administrative boundaries. The constituents in TPC are COD4, TN, and TP. The possible
constituents are BOD in rivers, and COD, TN (total nitrogen) and TP (total phosphorus) in lakes
and coastal waters.
In light of economics5, there are not any major economic instruments adopted in the management in
1

Article 22 of Basic Environmental Law
Environmental Quality Standards, inclusive of WQSs, are provided by Article 16 of Basic Environment Law.
3
In legal and administrative areas, the term "public water areas" is used in Japan as "navigable waters" in the UnitedStates.
4
In water quality management in Japan, CODMn is employed instead of CODCr.
5
Generally, the environmental standard has three types: technology-based, ambient-based, and benefit-based standards.
2‑ 223 ‑

Japan. Subsidy to wastewater management sector, industrial firms, and agricultural sectors play nota little part in the management. Also, many indirect measures have been taken such as water quality
fees on indirect large dischargers. However, it can be said that they are not major tools to make adirect contribution to ambience water quality. Financing and subsidy is related to cost sharing.
Almost no vigorous attempts are seen for watershed management. In response, it was determinedthat cost allocation should also be studied for sharing the total cost appropriately among
stakeholders in the basin including the application of economic instruments6, and it was proposedthat cost-sharing in the whole basin should be considered from the viewpoints of the responsibilities
of both dischargers and beneficiaries in order to efficiently achieve the WQSs in basin units7.
CBPSS typifies the watershed management approaches in Japanese administration. CBPSSs, upper
level plans of sewage works plans, were formulated to implement sewage works projects mosteffectively which are required to attain WQSs in target public water areas. Prefectures formulate
CBPSSs of public water areas which suffer water pollution by sanitary sewage from two or more
municipalities and whose WQSs need to be attained mainly through sewage works8. 126 CBPSSs
had been formulated as of the end of August, 2003 (MLIT (2003)). The CBPSSs' image and items
to be considered and specified are shown in Figure-1. In this plan, pollution loads are estimated ona watershed basis, and allowable loads are determined so that WQS of the target public water bodycan be attained in a target year. Load reductions, future loads minus allowable loads, are allocatednot only to POTWs but also to other pollution sources such as urban and agricultural areas, while
natural loads such as forests, plains and rain are in principle not taken into account for load
reductions. Load reduction is often allocated in such a manner that all point sources have the sameload reduction ratio. However, the focusing target is the sewage works section, and there are
actually no legal guarantees whatsoever for any point sources other than POTWs even though load
reductions are allocated to them in CBPSSs.
B 県より BOD 負荷

BOD loadfrom Pref. B●●ｔ／日Village
Ｃ町
C

Pref.
B
B 県

Pref.
A
A県
POTW
Ｔ

City
D

D市

City
E

E市

○○川

River X

POTW
Ｔ

Items to be specified-- Basic policy on sewerage projects-- Matters regarding treatment areas-- Matters regarding the location, structure andfunctions of the basic sewerage facilities-- Prioritization of undertaking sewerage projects

目標水質
WQS:
BOD -mg/l
BOD □□ｍｇ/ｌ

Land
陸域

目標水質
WQS:
COD -mg/l

Items to be considered-- Topography, precipitation, river flow, and othernatural conditions-- Prospect of land uses-- Prospect of uses in public water areas concerned-- Prospect of quantity and quality of sanitary sewage-- Situation of the locality where effluent isdischarged-- Cost-Effectiveness Analysis of sewerage projects

Water
水域

ＣOD ■■ｍｇ/ｌ

Figure 1. CBPSSs' Image and Items to Be Considered and Specified

In case a target watershed covers two or more prefectures, a conference is to be held for theco-ordination on the allocation of load reduction to prefectures concerned. A relevant prefectural
government is supposed to have this conference with MLIT as well as the other relating prefectural
governments. On the basis of reached consensus, draft CBPSS is submitted to MLIT, which thengives the approval to the prefecture's request after discussing the proposed plan with the Ministry of
6

Action Plan for Tokyo Bay Renaissance
the Council of Decentralization Reform (2002)
8
The requirement of CBPSSs is provided by Article 2-2 of Sewerage Law and Article 2 of Enforcement Ordinance ofSewerage Law.
7

‑ 224 ‑

the Environment. That is, agreement must be reached between the relevant prefectures regarding theload reduction before formulation of CBPSS in each prefecture. The agreement is basically made on"allowable loads" which enable the public water bodies to achieve WQS. Regional bureau of MLIT
plays an important role in co-ordination among prefectures, taking fairness and efficiency into
account, on the basis of the simulation of pollution load and water quality. After allocation of load
reductions regarding sewerage to prefectures concerned, each prefectural government allocates its
own portion to POTWs. These allocations are often made so that all POTWs can have the same
effluent quality. However, some prefectural governments allocate more load reductions tolarge-scale POTWs than to small-scale ones. Allowable load of each Prefecture is allocated inproportion to future loads on the assumption that sewered areas are 100% and that every POTW has
secondary treatment. It is that a sort of equity is put emphasis on and efficiency is not considered.
Table-1 shows various loads set in CBPSS of Tokyo Bay9, which covers four Prefectures: Saitama,
Chiba, Tokyo, and Kanagawa. Allowable loads are set to achieve WQSs of Tokyo Bay. Figure-2
shows the countermeasures and allocation of load reductions. Table-2 shows the result of theallocation among Prefectures.
Table 2. Allocation of Allowable Loads to
Prefectures in CBPSS of Tokyo Bay

Table 1. Loads Set in CBPSS of Tokyo Bay
COD

TN

TP

Future Load

326

405

26.0

Allowable Load

218

220

10.5

Load Reduction
Load Reduction
by Sewerage

108

185

15.5

66

174

14.1

Note. Unit is t/day.

Saitama Pref.
Chiba Pref.
Tokyo Pref.
Kanagawa Pref.
Other areas
Total

COD
41
68
56
27
26

TN
38
54
73
30
25

TP
1.7
3.3
3.5
1.3
0.7

218

220

10.5

Note. Unit is t/day. "Other areas" are three northern
prefectures above the four Prefectures, from which
pollution loads also come into Tokyo Bay via Tone River.

Total (108) Land-based (83)

Sewerage (66) Sanitary sewage (53)

Stormwater (13)Others than sewerage (17)the Bay (25)Note. Unit is t/day.

Enlarge sewered area (4)Advanced treatment (short-term) (7)Advanced treatment (long-term) (42)Control of CSOs and discharge fromstorm sewers (13)[Resident] on-site treatment (7)[Industry] wastewater treatment (3)[Stockbreeding] wastewater treatment (1)[Tourism] on-site treatment (0)[NPSs: forest, fields, etc.] (6)Figure 2. Allocation of COD Load Reductions in CBPSS of Tokyo Bay

CBPSS is a watershed management, ambience-based approach incorporating load allocation, but noeconomic instruments, also lack in consideration of cost-sharing. This lack of financing issues is an
impediment to a reliable implementation of the plan. Financial institutions should be considered toadequately implement the plan for a more effective watershed management. Under the current
system, cost for advanced treatment of each POTW is paid by each local government. Thus,
cost-sharing and financing, together with load allocation, should be discussed to seek for a more
effective watershed management. According to Fujiki (2003a), regarding financial resources, in
9

In 1997, the committee of CBPSS of Tokyo Bay reached the consensus of load settings and allocations among the four
prefectures concerned: Saitama, Chiba, Tokyo and Kanagawa Prefectures.

‑ 225 ‑

principle discharger is responsible for treating wastewater, that is, the users of sewage works must
pay the cost. After allocation of allowable loads in the formulating process of CBPSS, each POTW
is subject to command and control. Though national subsidy is still large financial source for a local
government, there are practically no considerations on watershed-based financing. The national
government and local public bodies pay a certain proportion of the necessary expenses, taking into
account the objectives of sewage works projects, the national policy that people should receive
equal sewerage services, the fact that the construction of sewerage system requires a large
investment which is a major burden on the local public body concerned, and the fact that thesewerage system has external economic impacts on other industrial and social fields. As foradvanced treatment, the expenses might be paid by the private firms or residents who areresponsible for the treatment at the ultimate stage based on PPP (Polluter Pays Principle) under thestrengthened water quality regulation10. In principle, if there is pollution right, beneficiaries should
pay for that. If there is a PPP, then polluters have to pay. In light of beneficiaries, the study was
conducted using CVM (Contingent Valuation Method) in the watershed of Tokyo Bay. Takaso andKatagiri (2002) shows that the willingness to pay does not decline relatively with the distance toTokyo Bay (Figure-3). This indicates the cost for the protection of Tokyo Bay should be allocatedamong all entities in the watershed. Furthermore, Matsui and Harada (2003) shows that costshould be shared among all in PI (Public Involvement) questionnaire (Figure-4). This result
reinforces the indication.
0

200

400

600

800

1,000

Choice A: People living downstream should pay
because they are beneficiaries.

0-5km
5-10ｋｍChoice B: People polluting waters should pay
because it is their responsibility.

11-30ｋｍ

Choice C: All the people living in the basin should
fairly pay, setting common fund for example.
A (6%)

31kmWTP (yen/month/household)

Mean
825

Figure 3. WTP for Tokyo Bay Water Quality
Categorized by Distance to Tokyo Bay

B (16%)

No answer (9%)
C (16%)

Figure 4. People's Opinions on "Who Should Pay
for Clean Ambient Water?"

EXAMINATIONS ON LOAD ADJUSTMENT SYSTEM
In fiscal 2002 and 2003, MLIT set up Study Committee on Water Quality Trading between Sewage
Treatment Plants (hereafter referred to as Committee), in order to investigate economic instruments
and cost sharing methods of water quality control on a watershed basis. Committee is composed ofacademics and experts on this issue, and national and local government officials in sewerageplanning or managing sections, to reflect each point of views11. Considering the Japanese current
administrative system, Committee investigated the above and designed one system that may beincorporated into CBPSS. Especially three elements were considered in the investigation anddesign: efficiency, equity, and incentives. It also covered a case study of the watershed of Tokyo
Bay to quantify the system's effectiveness and to identify hot spots12, which is described in the
10 On the other hand, the cost of draining stormwater is paid by the local governments similar to the cost of flood

control, in other words, is paid from taxes.
The authors were involved in Committee, though not committee members.
12
Emissions trading, or load adjustment in this case, could cause locally deteriorated sections even when dischargers
are brought under control. Such sections are called hot spots.
11‑ 226 ‑

following chapter.
The designed system, called the load adjustment system, is to seek for economic efficiency,
equitable cost sharing, and economic incentives, by adjusting pollution loads among POTWs on awatershed basis. In this system, an allowable load of each POTW in a watershed is determined sothat the cost for achieving WQS of a target public water area can be minimised. The difference
between the allowable load and the base line of pollution loads is reflected in receiving or paying
money, which is called adjustment. Incidentally, allowable loads have to meet a minimum
requirement such as secondary treatment, ensuring technology standards. This is designed to makesure the total cost of water quality control is shared among local governments, which areresponsible for POTWs, in a watershed, considering equities. Initial allocation is critical in cost
sharing and equity. Economic incentives are preserved in institution establishment. For adjustment,a foundation will be established to administer money from and to local governments or national
government, the national government can provide a financial assistance to adjust demand andsupply or other reasons. This can be incorporated into CBPSSs in a planning stage. Furthermore,environmental benefits are expected as discrete options are available instead of continuous. Also,
this sound and rational financing is expected to promote stable implementation of the plans(CBPSSs). In the early phase of the discussion by Committee, water quality trading was positively
considered as an economic instrument. However, Committee shifted its emphasis from adecentralised system to a centralised one. It is in part because transaction costs are too high as
general, and Japan has not experienced emissions trading in environmental management. The
experiences in European countries were consulted, where effluent tax/charge and subsidy are
utilized in water quality management on a watershed basis13.
In order to materialise the above system, the two types are designed in Committee (Figure 5). In
Type I, each local government is given its base line, which could be an initial allocation in water
quality trading. This is made in consideration into equity for example the same average cost as wellas to achieve WQSs on a watershed. Each POTW pays a share or receives a dividend proportionallyto the excess over or reduction under its base line. To balance the cash flow, a lack in Foundation
comes from the finance of national government. In Type II, local governments pay shareproportionally to pollutant loads, and local governments who reduce loads by advanced treatment
receive money from the Foundation proportionally to load reduction by advanced treatment. The
rate of dividend or share is determined to balance the cash flow. If dividend is partially given to
local governments, say some portion of collected share, there is no need of national government.
However, national government can provide assistance to promote or so. One advantage of Type II isthere is no need to establish a base line. The simplified mathematical model is shown in Appendix.

13

France is a typical example.

‑ 227 ‑

National Government

National Government

AssistanceDividend

AssistanceDividend

Share

Foundation

Reduction byadvanced treatment

ExcessBase line (=Initial allocation)

Share

Foundation

Reduction

Pollution load

Pollution load

Pollution load

Base line

Local Government A(With advanced treatment)

Local Government B(Without advanced treatment)

Local Governments
TYPE IITYPE I: Money flow

: Formulation of CBPSS

Figure 5. Structures of Two Types of Load Adjustment System

In light of equity, the base line setting is critical to cost sharing. In either type, the total cost is thesame, but cost distributions are different. Basically, the adjustment is just to seek for a cost
minimization. In most cases under the current administrative system, uniform reduction ratio is
imposed to each POTW, which is thought to be equitable in a sense. However, if net average costdefined by Equations 1 and 2, instead of reduction ratio, is employed as an index for equity, asystem with less dispersion of the index is more preferable. Appendix shows that net average costs
are less dispersed in Type II than in Type I.
Net cost = Cost for advanced treatment + share - dividend
Net cost
Net average cost =Effluent volume

(1)
(2)

Though this system limits its target dischargers to POTWs in order to ensure viability (Figure 6), it
can have a possibility to cover other pollution sources for better water quality management.
Exclusion of the other pollution sources from the system reduces the economic efficiency. It comesfrom the current situation both in difficulty in quantification of NPS loads and in the complex
administrations in governmental organizations, legal issues and other conventional things.
Considering these difficulties, feasibility could lie only in each section. Thus, the system was
proposed in a feasible fashion, by limiting the players to POTWs. However, this challenging system
could make a breakthrough for unification of comprehensive water management without
administrative boundaries. One way is to lower a base line of local government14, which undertakesome pollution abatement projects in co-ordination with other entities such as agricultural sectors.
The load reduction of the other projects can be set as equivalent to the gap of base line. This is tocreate economic incentives for a better water quality. Type II is more suitable than Type I when NPS
is covered by the system (Appendix).
PS

POTWs

Residents
Firms

Firms
NPS
Direct dischargers

Indirect dischargers

Figure 6. Target Sources of Load Adjustment System
14

The concept of CDM and JI in Kyoto Mechanism is consulted.

‑ 228 ‑

Local issues may affect this load adjustment system as each local government considers not only
the target public water area but also the local benefit. Load reductions contribute to local ambient
water quality as well as large-scale public water areas. Some local governments may promoteadvanced treatment for reclamation of wastewater, and this level of treatment is more stringent thanthe load adjustment system expects. As a result, the marginal cost for each POTW is not equal, andefficiency is lost to some extent. It is shown that local governments with a local benefit from its
load reduction promote more advanced treatment in Type II than in Type I (Appendix). At the sametime, economic efficiency is lost more in Type II than in Type I.
Other than cost saving and possible load reduction, this load adjustment system could have someadvantages. The first could be to provide impetus to better management system of POTWs. The
load adjustment system takes more attention than the conventional administrative system since it isdirectly related to cost sharing and the related information is critical. Thus, better management
system is required for POTWs' managers. Secondly, the system could promote public involvement
and better decision making because it may affect wastewater fees. Lastly, it could create researchneed for loads quantification such as NPS studies and simulation models. These advantages may beconsidered in a favourable way for the introduction.
CASE STUDY OF LOAD ADJUSTMENT SYSTEM
In order to estimate the effectiveness of the load adjustment system and to check whether hot spots
occur, a case study was conducted through Committee. The watershed of Tokyo Bay was targeted.
The adopted system is the same as Committee investigated, but types are not specified because
types do not largely affect the result. In a practical calculation, Type I is selected. The base lines are
the same as the current CBPSS designates. Local conditions are neglected, and each local
government makes a decision to get the efficiency by the target water quality. Adjustable loads aredifference between allocated loads and the loads of secondary treatment or the current effluent level,
so the minimum requirement is secondary treatment. Target dischargers are seventy-five POTWs in
the watershed. The map and the profile of Tokyo Bay are shown in Figure 7. Flow chart of thissimulation is demonstrated in Figure 8. Seawater simulation was conducted to identify hot spots.
Set rate
Calculate cost of each
option for each POTW
Select the least cost option
for each POTW

Watershed of Tokyo Bay
Watershed area: 8,000 km2
Population: 26 million people
POTWs: 75 (designated in CBPSS)
Profiles of Tokyo Bay
Surface area: 1,380 km2
Water volume: 18.3 km3Detention time: 1.6 months

Totalize selling and buying
loads

Tokyo
Bay

No

Selling is equal to or
larger than buying.
Yes
Calculate payment by
Foundation: POTWs

No
20km

Figure 7. Map and Profile of Tokyo Bay and Its Watershed‑ 229 ‑

Payment of Foundation
is minimized.

Yes
End

Figure 8. Flow chart of Simulation

Other assumptions are as follows; (i) Constituents to be adjusted: COD, TN, and TP, independently,(ii) five options are set as in Table 3. (iii) Cost is assessed on an annualized basis, which consists ofannualized construction cost plus maintenance cost. Annualized construction cost is calculated by
Equation 3, (iv) completion of secondary treatment is assumed for all the POTWs, (v) the base line
for adjustment is assumed to be the same as the allocation of allowable load targets to prefectures
regarding CBPSS of Tokyo Bay, and (vi) Target year: 2012. Data were collected from the report of
CBPSSs, supplemented by questionnaires to local governments concerned.
Table 3. Options for Advanced Treatment
Options

Treatment processes

Level 1

Activated sludge process
Anaerobic-anoxic-oxic process + Sand filtration
Step-feed biological nitrogen removal process + Coagulant
Entrapping immobilization nitrification-denitrification process + Coagulant
Advanced oxidation ditch process + Coagulant
Activated sludge process + Coagulant
Oxidation ditch process + Coagulant
Bardenpho process + Sand filtration
Bardenpho process
Bardenpho process + Sand filtration + Activated carbon

Level 2-1

Level 2-2
Level 3-1
Level 3-2

Annualized construction cost = Construction cost ×

Effluent (mg/l)
COD
TN
TP
20
22
2.5
9.6
9
0.4
10
7.5
0.5
10
10
0.5
10
10
0.5
12
22
0.5
12
22
0.5
8
3
0.2
8.2
4.5
0.4
4.4
2.6
0.2

i (1 + i ) n(1 + i ) n − 1(3)⎧15years (apparatus) 16
15
where Discount rate: i = 2.1% , and Useful life: n = ⎨⎩50 years (facilities)

The results of the simulation are shown in Table 4, 5, and 6. The load adjustment system isestimated to save 31% of the advanced treatment costs in total (Table 5), and also to reduce 19% of
COD, 2% of TN, and 2% of TP in total (Table 6). The equilibrium rates of water quality
constituents are 0, 959, and 5,335 yen/kg (Table 4). Zero of COD's rate indicates the adjustment of
only TN and TP enables enough COD's reduction. When costs of POTWs are added up in eachprefecture, only Saitama Prefecture incurred increased cost with the system. This meant the otherprefectures did not have to undertake as much advanced treatment in each prefecture as without thesystem. Saitama Prefecture paid 4,837 million yen/year to the foundation, and the others received
some amount from the foundation. The difference 1,519 million yen/year comes from the national
government. In the end, all the four prefectures enjoyed plus cost saving with the system.
Table 4. Equilibrium Rates in Simulation
COD

TN
0

TP
959

5,335

Note. Unit is yen/kg.

15

2.1% was selected as an interest rate of a national government loan in July 2002.
Useful life of sewerage facilities is specified in Memorandum No. 77 dated June 19, 2003 of Sewerage Works
Division, Sewerage and Wastewater Management Department, City and Regional Development Bureau, MLIT
"Regarding Reconstruction of Sewerage Facilities."16‑ 230 ‑

Table 5. Result of Costs in Case Study
Cost without
systemCost withsystemShare Dividend

Net cost

Saitama Pref.
Chiba Pref.
Tokyo Pref.
Kanagawa Pref.

14,114
13,06328,538
10,20015,618
7,680
15,921
6,573-4,837
315
1,531
1,473

10,781
7,995
17,452
8,046

Total

65,91645,792-1,51944,273

Cost saving ratio
Real
Net
-11%
24%
41%
39%
44%
39%
36%
21%
31%

33%

Note. Unit in cost is million yen/year.

Prefecture

Saitama Pref.
Chiba Pref.
Tokyo Pref.
Kanagawa Pref.

Subwatershed

Table 6. Result of Loads in Case Study

Ara RiverNaka River
Shingashi River
Tama River
Tsurumi River
Chiba coastal

Total

Loads without system
COD
TN
TP

Loads with system
COD
TN
TP

Load reduction ratio
COD
TN
TP

41,85826,043
71,99029,67018,67527,27759,151
16,74828,38519,325
169,561

32,74819,294
61,771
22,896
17,562
19,99947,383
16,116
21,401
14,248
136,709

22%
26%
14%
23%
6%
27%
20%
4%
25%
26%
19%

37,73321,642
63,312
24,727
19,381
23,07049,24916,01423,656
16,044147,41

2,236
1,101
3,165
1,238
1,247
1,225
2,464
799
1,184
821
7,741

26,65624,02465,541
27,857
19,564
16,95644,404
19,47325,21018,471
144,078

1,743
835
3,550
1,432
1,372
914
2,193
1,030
1,375
676
7,560

29%
-11%
-4%
-13%
-1%
27%
10%
-22%
-7%
-15%
2%

22%
24%
-12%
-16%
-10%
25%
11%
-29%
-16%
18%
2%

Note. Unit in load is kg/day.

Table 6 shows some subwatersheds were expected to have 22% increase of TN loads and 29%
increase of TP loads at maximum. However, seawater simulation demonstrated that no significant
adverse changes in seawater quality were found to occur. Some adjustment confinement such asprefectures or sub-watershed boundaries did not have to be established.
The dispersion of net average costs in two types is shown in Figure 9. Apparently from Figure 9,
net average costs are less dispersed in Type II than in Type I, and the case without the system has
the most dispersed distribution. The standard deviation of each type is 7.2, 4.7, 2.3 yen/m3.

‑ 231 ‑

50

Without
adjustment

Net処理水量あたり純費用
average cost (yen/m3)

40Type I30

Type II

20

現行方式
タイプⅠ

10
タイプⅡ

0

-10
0

200,000

400,000

600,000

800,000

1,000,000

処理水量
m3/日
Effluent
volume(m3/day)

Net cost = Cost for advanced treatment + share - dividend
Net average cost = Net cost / Effluent volume

Figure 9. Dispersion of Net Average Cost in Two Types

CONCLUSIONSThe current administrative system should be improved in terms of efficiency, incentives, and equity
on a watershed basis.
“Load adjustment system” is examined and designed to reflect the above three elements in
Committee.
Case study, targeting Tokyo Bay, showed that the maximum cost saving was over 30%, and thatsome load reductions were also estimated with no hot spots.
The load adjustment system should be favourable considered also due to other advantages such as
better management of POTWs.

REFERNECE
Action Plan for Tokyo Bay Renaissance. (In Japanese)
The Council of Decentralization Reform (2002) "Opinions on Businesses and Enterprises - towards
an Autonomous, Self-governing Local Community". (in Japanese)
Fujiki, O. (2003a) 'Sewage Works Development in Japan', Proceedings of 2nd Japan-U.S.
Governmental Conference on Drinking Water Quality Management and Wastewater Control, 45-58.
Fujiki, O. (2003b) 'Watershed Management Approach in Sewage Works', Proceedings of 9th
Japanese-German Workshop on Waste Water and Sludge Treatment, 101-110.
Matsui, H. and Harada, I. (2003) 'Public Involvement in Sewage Works', Proceedings of the 40th
Annual Technical Conference of Sewage Works, Japan Sewage Works Association, 271-273. (inJapanese)
MLIT (2003) "Sewerage and Wastewater Management in Japan", Sewerage and Wastewater‑ 232 ‑

Management Department, City and Regional Development Bureau, Ministry of Land, Infrastructure
and Transport, Government of Japan. (in Japanese)
MLIT, Japan Sewage Works Association, and Association of Water and Sewage Works Consultants
Japan (2004) "Research Report of Water Quality Trading between Sewage Treatment Plants". (inJapanese)
SWMS (2003) "The Policy Concept of Sewerage Construction/Management and Watershed
Management", the Sewerage and Watershed Management Subcommittee, the Urban Planning andHistorical Landscape Section of the Social Infrastructure Council of the Ministry of Land,
Infrastructure and Transport. (in Japanese)
Takaso, T. and Katagiri, A. (2002) 'Measurement of Tokyo Bay's benefit by introducing advanced
treatment and others', Proceeding of the 39th Annual Technical Conference of Sewage Works, Japan
Sewage Works Association, 299-301. (in Japanese)

ACRONYMS
BOD: Biochemical Oxygen Demand
CBPSS: Comprehensive Basin-wide Plan(ning) of Sewerage Systems
COD: Chemical Oxygen Demand
CVM: Contingent Valuation Method
MLIT: Ministry of Land, Infrastructure and Transport, Government of Japan
NPS: Nonpoint Source
POTW: Publicly Owned Treatment Work
PI: Public Involvement
PPP: Polluter Pays Principle
TMDL: Total Maximum Daily Load
TN: Total Nitrogen
TP: Total Phosphorus
TPC: Total Pollution Control
WTP: Willingness To Pay
WQS: Water Quality Standard
APPENDIX: The Simplified Mathematical Model of Load Adjustment System
It is assumed that a target watershed has n POTWs, that m constituents loads of water quality are
adjusted, and that loads from POTWs are continuous though available options generally make them
discrete. Definitions of terms are as follows.
qi: Effluent volume of POTW i,xi,k: Constituent k load which POTW i discharges,
xi: Comprehensive load index of POTW i,
Li,k: Initial allocation of constituent k load to POTW i in Type I,
Li: Initial allocation of comprehensive load index to POTW i in Type I,
Xk: Allowable constituent k load in a watershed,
si: Cost which advanced treatment of POTW i locally yields (a function of xi),
ci: Cost of advanced treatment by POTW i,
yi: Net cost which POTW i incurs,
C: Cost of advanced treatment plant by all the POTWs in a watershed,
Y: Net cost which all the POTWs in a watershed incur,‑ 233 ‑

α k : Rate of share/dividend regarding constituent k in Type I (unit: yen/kg),

α : Rate of share/dividend regarding comprehensive load index in Type I (unit: yen/kg),
β k : Rate of share regarding constituent k in Type II (unit: yen/kg), andg: Ratio of all the dividends to all the cost for advanced treatment in Type II (from 0 to 1).
In case of Type Im∑α (x − L ) .

y i = ci +

k

i ,k

i ,k

k =1

When a net cost of each POTW is minimized,
∂c i
∂y i
+αk = 0 .
=∂x i ,k ∂x i ,k

Thus,
∂c i
= −α k ,∂x i ,kwhich means that marginal costs regarding each constituent which incurs all the POTWs are equal.
n

Y=

n

⎛

⎞

m

n

m

n

n

n

n

∑ y = ∑ ⎜⎜⎝ c + ∑ α ( x − L ) ⎟⎟⎠ = ∑ c + ∑ α ∑ ( x − L ) = ∑ c since ∑ x = ∑ L .
i

i

i =1

i ,k

k

i =1

i,k

i

k =1

i =1

i,k

k

k =1

i ,k

i ,k

i

i =1

i =1

i =1

i ,k

i =1

However, as options for each POTW are discrete,n∑n

xi ,k <

i =1

∑

n

n

i =1

i =1

instead of ∑ x i,k = ∑ Li ,k .

Li , ki =1

As a result,
n

Y<

∑c .
i

i =1

The following is paid by a foundation;
n

⎡ n

m

⎤

n

∑ c − Y = ∑ α ⎢⎢⎣∑ L − ∑ x ⎥⎥⎦ .
i

k

i =1

k =1

i,k

i ,k

i =1

i =1

In case of Type IImy i = ci +m

∑ β x − gc = (1 − g )c + ∑ β x
k i ,k

i

i

k i,k

k =1

k =1

When a net cost of each POTW is minimized,
∂y i
∂c i
= (1 − g )+ βk = 0 .
∂x i ,k∂x i , k

Thus,

∂c i
β
=− k .
∂x i ,k1− gwhich means that marginal costs regarding each constituent which incurs all the POTWs are equal.
n

Y=

∑
i =1

αk =

m
n
n m
n
⎞
⎛
⎜ (1 − g )c i +β k x i ,k ⎟ = (1 − g ) c i +β k xi ,k =ci⎟⎜
i =1 ⎝
k =1
i =1
i =1 k =1
i =1
⎠
n

yi =

βk
1− g

∑

∑

n

g

n

∑

∑∑

∑

n

n

i =1

i =1 k =1m∑ c = ∑∑ β xii =1

k i ,ki =1 k =1

When the solution in Type I is known, β k and g in Type II are determined as below.

‑ 234 ‑

msince g ∑ c i = ∑∑ β k x i ,k .

m

k

C

βk = αk

∑α X
k

C+

k

k

k =1
m

g=

m

C+

∑α X

k =1

∑α X
k

k

k =1

Impact of local conditions
In case local conditions are considered, a net cost of POTW i is expressed as follows;my i = ci +∑m

α k ( x i , k − Li , k ) + s i (Type I)

y i = (1 − g )c i +k =1∑ β x + s (Type II).
k i ,ki

k =1When a net cost of each POTW is minimized,
∂s i
∂c i
= −α k −∂x i ,k∂x i ,k(Type I)β∂c i
1 ∂s i=− k −∂x i ,k1 − g 1 − g ∂x i ,k(Type II).

In either case, marginal costs are not equal, and economic efficiency is lost in terms of the target
water quality management. The differential is lower than without the local conditions, and advanced
treatment is promoted.
∂c i
∂c i
g ∂s iinTypeII −inTypeI = −<0∂x i ,k∂x i ,k1 − g ∂x i , k

By comparison, Type II is more affected by local issues, and this means advanced treatment is more
promoted in Type II than in Type I, and at the same time the efficiency is lost more in Type II thanin Type I.
Dispersion of net average costmy i inTypeII = (1 − g )c i +∑β k x i ,k = (1 − g )c i +

k =1

m
⎛
⎞
(1 − g )α k x i ,k = (1 − g )⎜ c i + α k x i ,k ⎟
⎜
⎟
k =1
k =1
⎝
⎠
m

∑

∑

m
m
⎞ m
⎤ 1 ⎛
yi
1 ⎡
inTypeI =α k ( x i , k − Li ,k )⎥ = ⎜ c i + α k x i ,k ⎟ − α k rk
⎢c i +⎟⎜qi
q i ⎣⎢
k =1
k =1⎠ k =1⎦⎥ q i ⎝

∑

∑

∑

m
⎞
yi
1 − g ⎛⎜
inTypeII =ci +α k xi ,k ⎟⎟qi
q i ⎜⎝
k =1⎠∑

Thus, if ∆(•) means deviation, then
⎛y
⎞
⎛y
⎞
∆⎜⎜ i in Type II ⎟⎟ = (1 − g )∆⎜⎜ i in Type I ⎟⎟ for all i.
⎝ qi
⎠
⎝ qi
⎠
Thus, the following expression holds, where SD(•) means standard deviation.
⎛y
⎞
⎛y
⎞
SD⎜⎜ i in Type II ⎟⎟ = (1 − g ) SD⎜⎜ i in Type I ⎟⎟ .
q
q
⎝ i
⎠
⎝ i
⎠

‑ 235 ‑

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