Economic Instruments for Basin-wide
Efficient Pollution Load Reduction- Comparison between Effluent Charges
And Water Quality Trading Osamu Fujiki** Research Fellow & Director of 1st Research Department, Japan Institute of Wastewater
Engineering Technology, IKEBUKURO CHITOSE Bld. 7F, 1-22-8,Nishi-Ikebukuro,
Toshima-ku, Tokyo, 171-0021 Japan, Phone: +81-3-5951-1331, E-mail: o-fujiki@jiwet.or.jp
Abstract: Sewerage Law was amended in 2005 and a modified approach was established byintroducing the concept of transferable LRA (Load Reduction Assignment) for nitrogen andphosphorus in the basins of enclosed water bodies. The modified approach is supposed to play arole equivalent to water quality trading which has been adopted successfully in the U.S..
Meanwhile the effluent charge system combined with subsidy is widely employed with great
success in European countries such as Germany. Through simplified mathematical models, thecomparative features on equity and reflection of local conditions as well as equivalency between
the two economic instruments are theoretically discussed. The mathematics for both the effluent
charges and water quality trading suggests an equivalent cost-effectiveness in meeting apredetermined target. Water quality trading could be easily designed on the basis of the total sumof permits that is the predetermined target of the policy, while effluent charge system cannot bedesigned directly from the target. In contrast, effluent charge system is assumed to be superior towater quality trading in terms of equity and the reflection of local conditions.
Keywords: effluent charge, water quality trading, transferable permit, load reduction assignment,
amendment of Sewerage Law

1. Introduction
Economic, engineering and political studies as well as administrative experiences have revealed thattraditional “command-and-control” measures are not enough to address the externality-related issues such as environmental management strategies.
Economic instruments are considered to becost-effective alternatives, which should be applied solely or together with command-and-control
method1),2). As for the economic instruments for water pollution control, typical examples are effluent charge system and water quality trading. The former is very popular in European countries,
among which Germany has made the greatest success of pollution prevention3). The latter has
been applied to quite a few watersheds in the United States, where Environmental Protection
Agency (EPA) issued Water Quality Trading Policy in 2003 to facilitate the attainment of Total
Maximum Daily Load through water quality trading4). Comparative studies were conducted focusing on these two methods from the viewpoint of applicability to sewerage works in Japan. Furthermore there were energetic arguments for and against employing new economic incentives andscientific discussions about the design of the legislation.

2. Difficulties Relating to Advanced Treatment
The water quality has been improved gradually so far in rivers. But most of the enclosed water
bodies such as bays and lakes are not getting cleaner in spite of the progress in the population
served with sewage treatment (See Figure 1). It is no wonder that those enclosed stagnant water
bodies, which are severely polluted by eutrophication, require the reduction in nitrogen or phosphorus inflow through the promotion of advanced treatment of sewerage systems in those basins. In- 95 -

particular, advanced treatments in Tokyo Bay and Osaka Bay basins are considered to be most effective because almost 90% of population is covered by sewerage and more than half of nitrogenand phosphorus inflows into those water areas through effluent from public WWTP(wastewater
treatment plant)s. Therefore, it is no exaggeration to say that the averaged water qualities in Tokyo Bay and Osaka Bay are fundamentally controlled by the water quality of the effluent from public WWTPs. However the rate of population covered with advanced treatment is very low, 3.6% forTokyo Bay and 14.1% for Osaka Bay as of the endof fiscal 2003.

- 96 -

ٌٌ RiverType B (BOD less than 3)

Main sewer

Type A(BOD less than 2)

The requirements of advanced treatment i.e. effluent water quality that each WWTP is to meet areusually determined by CBPSS (Comprehensive Basin-wide Plan of Sewerage Systems). CBPSS was
legislated in the Sewerage Law as early as 1970.
Every prefecture is by law to formulate CBPSSs forordinance-required water bodies to drive local entities concerned to advance their sewerage construction/improvement projects toward the attainment of
EWQS (Environmental Water Quality Standard) inthe targeted water bodies (See Figure 2). Although
Figure 1: Achievement of Environmental
Sewerage construction/improvement programs shallWater Quality Standard
be made and implemented “in accordance with” the Notes :1.BOD used for rivers, and COD used for lakes/reservoirs, andrelevant CBPSS, CBPSS could not function as strictsea/coastal areas.
command-and-control measures and it is often very 2.Achievement level (%)=(no. of water bodies achieving /number of designated water bodies) u 100
difficult to guide local entities toward advanced treat- Source : Ministry of Environment
ment just as is required by CBPSS for the following
reasons;
E Town(1) Sewerage Law postulates that CBPSS should be㨀formulated taking cost-effectiveness into account. Basin- 㧰 village
wide cost-effectiveness is theoretically guaranteed on the㨀condition of the equalization of marginal reduction costs
across all the WWTPs in the basin. However prefectures
Treatment Area
formulating CBPSS cannot determine the marginal
reduction costs beforehand in reality.
C City(2) The expression “in accordance with” does not necessar- B town
ily imply “coinciding with” juridically. Therefore it is
not perceived as illegal for local entities to postpone, for 㧭 city
C City㨀
some reasons, the initiation of advanced treatment which
CBPSS requires. In other words, command-and-control
method cannot be easily applied on the basis of CBPSS.
㨀
wastewater(3) Generally speaking, local entities tend to be unwilling to Treatment Plant 
forward the program of advanced treatment in pursuit of ‫)غغ‬WNH
Type B㧦Environmental water
downstream benefit alone. Meanwhile, there is often no COD d 3mg㧔㧯㧻㧰/ l N dNGUUVJCP㧕
0.3mg / l 㧕
quality standards
sufficientreasonable
persuasivenessotherthan P d 0.01mg / ldownstream
benefit to make local entities carry out Figure 2 : Schematic Diagram
programmed advanced treatment.
of CBPSS
Taking heavily polluted lakes and bays into consideration,some kind of modified approach was obviously needed topromote the advanced treatment in Japan.

3. Modified Approach
Sewerage Law was amended in 2005 and a modified approach was established by introducing theconcept of LRA (Load Reduction Assignment) for nitrogen and phosphorus in the basin of enclosed
water bodies. Transferable LRA is somewhat similar to transferable permit in the water quality
trading employed in the U.S.. While water quality trading is founded upon NPDES (National Pollution Discharge Elimination System), LRA is a concept in CBPSS and therefore only applied tothe advanced treatment of WWTPs.
The outline of the amendment of Sewerage Law is as follows;
A. Determination of the Baseline LRA
Prefecture shall determine the baseline LRA for nitrogen or phosphorus contained in the effluentof relevant WWTPs in the CBPSS which targets on enclosed water bodies where EWQS of nitrogen or phosphorus is set.
B. Cooperation for Advanced Treatment between Local Entities
B-1 Proposal of Substitution
Local entity can submit to the prefecture a proposal that it will substitutively fulfill the LRA assigned to the other entity’s WWTP, after reaching the agreement with the local entity to be substituted for on this issue.
B-2 Registration in CBPSSThe prefecture that has received the proposal of substitution can register the information of thesubstitution including the estimated cost and its sharing in the CBPSS.
B-3 Payment for Substitution
The local entity that substitutively fulfills the LRA assigned for the other entity’s WWTP can, as
the legal effect of the registration in CBPSS, make the entity to be substituted for pay the cost forthe substitution including the cost of construction, improvement, rehabilitation, repair, maintenance and control.
B-4 Subsidy Rate
As to the construction or improvement of the facility which is carried out for the purpose of thesubstitution, the subsidy rate for the WWTP whose LRA is substitutively fulfilled is applied. In
the calculation of subsidy, the cost specified for the other WWTP is basically derived from the ratio of LRA for the other WWTP to all the LRA to be fulfilled by the facility.
Legally there is no concept of the permit for discharging pollutant, much less the concept of transferable permit in Japan. After juristic studies, the concepts of LRA and substitution for another
WWTP’s duty on LRA were introduced to substantially establish the transferable permit for discharging pollutant, i.e. transferable LRA on the basis of CBPSS. In other words, transferable LRA
is supposed to play a role equivalent to transferable permit in water quality trading. Modified approach with transferable LRA is expected to substantially abate aforementioned difficulties to guidelocal entities toward advanced treatment, because local entities, which can take the choice of substituting for the other local entities or being substituted for by the other local entities on LRA, will beable to conform to the CBPSS more easily as a whole.
In course of the studies on economic instruments for advanced treatment, it was pointed out that
effluent charge system has quite a bit advantage over water quality trading. However, the modified approach seems to have been favoured by policy makers mainly because of its plain structurethat could be designed easily on the basis of predetermined target as well as of the general public
resistance to charging/taxation.

- 97 -

4. Theoretical Comparison
This chapter deals with some theoretical considerations in order to make a comparison between effluent charges and water quality trading. Herein, let effluent charge system be combined with subsidy where the collected charges are distributed to WWTPs for their advanced treatment and “effluent charge system” or “effluent charges” is referred to as “effluent charge system combined withsubsidy” in this paper. In water quality trading, transferable permit of each WWTP can be sold toor be bought by the other WWTPs as marketable goods. The modified approach shown in the preceding chapter is similar to water quality trading system, which is referred to also as “transferable
permit system”. Figure 3 is the schematic diagram of theses two types of economic instruments.
Take notice of the relation that the permit seller is correspondent to WWTP which substitutes forthe other WWTP in terms of LRA and that the permit buyer is correspondent to WWTP that aresubstituted for by the other WWTP. Baseline load is the initial permit allocated between WWTPs.
In water quality trading system, only the portion above baseline load is transferable.
Let the targeted water be completely mixed and receive m constituents of pollutant discharged fromn WWTPs, each of which has its own cost and marginal cost functions related to any value of discharged pollution load of m constituents. Both effluent charge system and water quality trading
are supposed to be separately applied to the WWTPs in the watershed with the policy to reduce thetotal sum of pollution loads to predetermined target values. Definitions of the variable symbols
are listed in Appendix Σ.
PermitAuthority

Payment

Effluent Charge

Subsidy

Baseline (Initial Permit)
Reduction
by Advanced
Treatment

Reduction
by Advanced
Treatment

Pollution Load

Pollution Load

Pollution Load

Local Entity

Local Entity A
Permit Seller

Local Entity B
Permit Buyer

Water Quality Trading(Transferable Permit)

Effluent Charge
Combined with Subsidy

Figure 3 : Schematic Diagram of The Two Types of Economic Instruments
4-1 Equivalency between The Two Types of Economic Instruments
In water quality trading, net cost for each WWTP is expressed as follows:myici  ¦ D k ( xi ,k  Li ,k )

(1)

k 1

where (net cost) { (cost for advanced treatment)  (expenditure for acquiring permit)  (revenue
by selling permit).
As each WWTP tries to minimize the net cost for given D k ,
wyi
wci
(2)
 Dk 0wxi ,k wxi ,kThis is the condition of market equilibrium. On this condition, we have:- 98 -

wc j

wci
wxi ,kD k

wx j ,k

for

iz j

  

(3)

That is, marginal cost for advanced treatment of the constituent k is equalized to D k for every
WWTP. Eq. (2) and eq. (3) are necessary conditions and so, if the net cost is minimized for any
WWTP i, then xi ,k and D k should satisfy eq. (2) and eq. (3). In pursuit of simplification, let us
skip the perplexing discussions about the existence of appropriate solutions hereafter.
The total sum of the net cost Y is expressed as:
n

n

m

i 1

i 1 k 1¦ ci  ¦¦ D k ( xi,k  Li ,k )Y   (4)

Taking eq. (3) into account,wciwY    (5) D k D k  D k 0
wxi , k wxi ,kwhich means that Y is minimized.
If the total amount of sold permit is equal to the total amount of bought permit for every pollutant,thenn¦ (x  L ) 0
i ,k

i ,k

 

for any k

(6)

i 1

Consequently,
Y

n

n

m

i 1

i 1 k 1¦ ci  ¦¦ D k ( xi ,k  Li,k )

n

¦c

(7)

i

i 1

This means that total cost of advanced treatment is minimized as well as total sum of net cost.
nSince the condition (6) is not always satisfied and ¦ ( xi ,k  Li ,k ) % 0 for any WWTP in general,i 1n

Y % ¦ ci(8)i 1This means that some permits are usually left unsold and that some kind of system of buying thesurplus permits might be necessary to bridge the gap between demand and supply of permits.
In effluent charge system, net cost for each WWTP is expressed as follows:m(1  g )ci  ¦ E k xi ,k

yi

(9)

k 1

where (net cost) { (cost for advanced treatment)  (subsidy for advanced treatment)  (effluent
charge).
As each WWTP tries to minimize the net cost for given g and E k ,
wyi
wc
(10)
(1  g ) i  E k 0
wxi , kwxi ,k?

wci
wxi ,kwc j
wx j ,k



Ek
1 g

for

iz j

(11)

This means that marginal cost for advanced treatment of the pollutant k is equalized to

Ek
1 g

for

every WWTP.
If D k is uniquely determined through marketable permit transfers for given cost function of advanced
treatment, then correspondent relation between eq. (3) and eq. (11) gives the conclusion that xi ,k- 99 -

in effluent charge system and xi ,k in water quality trading system could be equalized to each otherby adjusting parameters D k , E k and g as follows:

Ek

Dk

1 g
The total sum of the net cost Y is expressed as follows;
n

n

m

i 1

i 1 k 1

(1  g )¦ ci  ¦¦ E k xi ,k

Y

(12)

(13)

Taking eq. (11) into account,
wc
wY
(14)
(1  g ) i  E k  E k  E k 0
wxi ,kwxi ,kwhich means that Y is minimized.
Since the source of subsidies is the collected effluent charges, total sum of subsidies could be equal
to total collected charges as:nng ¦ cim¦¦ E x(15)

k i ,ki 1

i 1 k 1

n

n

m

i 1

i 1 k 1n

(1  g )¦ ci  ¦¦ E k xi ,k

? Y

¦c

i

(16)

i 1

This means that total cost of advanced treatment is minimized as well as total sum of net cost.
From eq. (12) and eq. (15), we have:nD k ¦ ci

Ek

DkC

i 1
n m

n

¦ c  ¦¦ D xi

k i ,ki 1

i 1 k 1nm

k i ,kgnmi

k i ,ki 1 k 1

k 1

¦D X
k

k

k 1

¦ c  ¦¦ D x
i 1

C  ¦Dk X km¦¦ D xi 1 k 1
n

(17)

m

(18)

m

C  ¦Dk X k
k 1

When the market equilibrium conditions xi ,k , ci and D k are known for any i and k in the water
quality trading, then the effluent charge system which has the same results of xi ,k and ci as thewater quality trading could be obtained by eq. (17) and eq. (18).
Although the mathematics for both the effluent charge system and water quality trading suggests anequivalent cost-effectiveness in meeting a predetermined target, their practical difference is how theuniform charge rate or transferable permit price is determined. As is clear from the discussions
above, water quality trading system could be easily designed on the basis of the total sum of permits
which is the predetermined target of the policy, while effluent charge system cannot be designed
directly from the target.
4-2 Equality of Unit Net Cost
Discussions of economic instruments for water pollution control sometimes focus on equity as wellas on cost-effectiveness. Equality of unit net cost is assumed to be an indicator of the equity between WWTPs and the equality can be quantitatively evaluated by the standard deviation of unit net
costs for advanced treatment. Smaller value of the standard deviation might well be perceived asstronger equity.
Putting eq. (17) and eq. (18) into eq. (9), we have:- 100 -

CyimC  ¦Dk X k

m

m

k 1

k 1

(ci  ¦ D k xi ,k ) (1  g )(ci  ¦ D k xi ,k )

(19)

k 1

Therefore, unit net cost yi qi in effluent charge system is expressed as follows;mEffluent charge system : yi qi
Next, let baseline load Li ,kLi ,k(1  g )ci  ¦ D k xi ,kk 1

qi
be expressed as follows:

(20)

(21)

qi rk

which means that rk the baseline concentration of the constituent k is constant among WWTPs.
This condition seems reasonable from the viewpoint of equity.
Then, from eq. (1) in water quality trading,mci  ¦ D k xi ,kWater quality trading : yi qi

k 1m ¦ D k rk

(22)
qi
k 1
Comparing eq. (20) with eq. (22), we have:
V C (1  g )V T % V T(23)This means that effluent charge system is reasonably estimated to be superior to water quality trading in terms of equity.
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㪉㪇
㪈㪇
㪇
㪄㪈㪇
㪇

 

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㪋㪇㪇㪃㪇㪇㪇
㪍㪇㪇㪃㪇㪇㪇
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Figure 4 : Relation between Unit Net Cost And Effluent Flow Rate
to Evaluate The Equality of Unit Net Cost

Figure 4 shows the Difference in equality between Baseline Permit, Water Quality Trading and Effluent Charge System, which is estimated by a case study of the simulation for Tokyo Bay basin- 101 -

(See Appendix Τ ).

Here, we have V C

2.3
㧔yen/m3 ) , V T =4.7(yen/m3 ) , g=0.57 , and soeq.(23) is approximately valid as V C =2.3 | (1-0.57) u 4.7=2.021 .

4-3 Reflection of Local Conditions
Discussions have been held so far on the assumption that every WWTP has no motive of advanced
treatment other than water pollution control for targeted water area. But in reality some local entities might have stronger motive because they wish more for clean water in targeted or other water
areas for the benefit of their citizens. Other local entities might be willing to forward the advanced
treatment for beneficial use of the effluent. Since the behaviours of WWTPs are influenced bytheir local conditions as well as the predetermined target common to all the WWTPs, reflection of
local conditions is an important point of view from which the comparison could be made between
effluent charge system and water quality trading.
Let us add a term of local conditions si as a function of xi to eq. (1) ,myici  ¦ D k ( xi ,k  Li ,k )  si

(24)

k 1

From the equilibrium condition :wyi
wxi ,kwci
ws
 Dk  iwxi ,kwxi ,k

0

(25)

wci
ws
(26)
D k  iwxi ,kwxi ,kAs for the effluent charge system equivalent to the above water quality trading, we have

Water quality trading :myi(1  g )ci  ¦ E k xi ,k  si .
k 1

Therefore, eq. (11) is modified as:
wci
E
1 wsi
Effluent charge system : k 
wxi ,k1  g 1  g wxi , k
1 wsi
(27)
D k 
1  g wxi ,ktaking eq. (12) into account.
Since wsi wxi ,k is assumed to be positive and marginal cost related to load reductions is expressedas wci wxi ,k , comparing eq. (26) with eq. (27) gives the relation as follows:(marginal cost for water quality trading)% (marginal cost for effluent charge system)(28)
This means that local conditions are more likely to be reflected in the advanced treatment in effluent charge system than in water quality trading. In other words, effluent charge system is morefavourable for local entities that want to forward advanced treatment for their own benefit than water quality trading.

5. Conclusion
Sewerage Law was amended in 2005 and a modified approach was established by introducing theconcept of LRA for nitrogen and phosphorus in the basin of enclosed water bodies. Transferable
LRA is supposed to play a role equivalent to transferable permit in the water quality trading employed in the U.S.. Modified approach with transferable LRA is expected to substantially abate
externality-related difficulties to guide local entities toward advanced treatment, because local enti-- 102 -

ties, which can take the choice of substituting for the other local entities or being substituted for by
the other local entities on LRA, will be able to conform to the CBPSS more easily as a whole.
By means of theoretical comparison between effluent charge system (combined with subsidy) andwater quality trading, the following conclusions are obtained:(1) The mathematics for both the effluent charge system and water quality trading suggests anequivalent cost-effectiveness in meeting a predetermined target. Effluent charge system equivalent to a water quality trading could be theoretically obtained from the result of water quality trading.
(2) Water quality trading could be easily designed on the basis of the total sum of permits which isthe predetermined target of the policy, while effluent charge system cannot be designed directlyfrom the target.
(3) According to the comparison of the standard deviations of unit net cost, effluent charge systemis estimated to be superior to water quality trading in terms of equity.
(4) Local conditions are more likely to be reflected in the advanced treatment in effluent charge system than in water quality trading. In other words, effluent charge system is more favourable for
local entities which want to forward advanced treatment for their own benefit than water quality
trading.

6. Acknowledgement
The author would like to express the deepest appreciation for the useful advises toward the Study
Committee on Water Quality Trading for Pollution Control in Enclosed Waters (Chairman : Prof.
Kazuhiro Ueta, University of Kyoto).

References
1) T. H .Tietenberg : Emission Trading, an exercise in reforming pollution policy, Resources for the
Future, Inc., 1985
2) William J. Baumol and Wallace E. Oates : The theory of environmental policy, second edition,
Cambridge University Press, 1988
3) Federal Ministry for the Environment, Nature Conservation and Nuclear Safety : Environmental
Policy of Water Resources Management in Germany Part I – Fundamentals –, Federal Governmentof Germany, 2001
4) Mark S. Kieser and “Andrew” Feng Fang : Economic and Environmental Benefits of Water
Quality Trading – An Overview of U.S. Trading Program -, Workshop on Urban Renaissance andWatershed Management, organized by the Ministry of Land, Infrastructure and Transport and Shiga
Prefecture, 3, February 2004, in Otsu.

Appendix Σ
Notationci : Cost of advanced treatment for WWTP i,n

C : Total cost of advanced treatment (¦c ) ,
ii 1- 103 -

g : Subsidy rate (0 % g % 1)
Li ,k : Baseline Load of constituent k for WWTP i,qi : Effluent flow rate for WWTP i,
rk : Baseline concentration of constituent k,
si : Cost related to local conditions for WWTP i,
xi ,k : Load of constituent k discharged from WWTP i,n

X k : Total load of constituent k from WWTPs (

¦x )
i ,k

i 1

yi : Net cost for WWTP i,n

Y : Total sum of net cost (

¦y )
i

i 1

D k : Price of transferable permit for constituent k,
E k : Rate of effluent charge for constituent k,
V C : Standard deviation of unit net cost in effluent charge system,
V T : Standard deviation of unit net cost in water quality trading

Appendix ΤCase Study for Tokyo Bay
Case study of water quality trading was conducted focusing on Tokyo Bay. Constituents of pollutant were COD, total nitrogen and total phosphorus. By means of computer simulation, transferable permit of each constituent was separately traded among 75 WWTPs in the basin. Ten kindsof advanced treatment options were assumed including conventional method without advanced
treatment. Before trading, advanced treatment costs, which consisted of depreciation and maintenance costs, are calculated for every treatment option of each WWTP, taking into account the flow
rate, present treatment method and the difficulties in acquiring new site for treatment facilities.
Baseline concentration as well as flow rate of each WWTP was set referring to the study report of
CBPSS for Tokyo Bay. In the computer simulation, prices are tentatively set at first and then optimum option of advanced treatment, i.e. buying/selling permit or their combination is selected forevery WWTP so that the net cost may be minimized. At the end of the algorithmic procedure,
permit demand and permit supply are checked with each other. This procedure is continued until thecost for buying supply surplus that should be non-negative for every constituent is minimized.
Baseline Condition
After Trading
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Same as Baseline
Less Advanced
No Advanced- Level104 - through Water Quality Trading
Figure 5 : Shift in Advanced Treatment

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Figure 5 shows the result of the computer simulation. Each circle whose scale indicates effluent
flow rate corresponds to WWTP. The circle signs in the left figure show how the WWTPs change
their attitudes toward advanced treatment from the baseline as a consequence of trading. The costabatement rate of water quality trading throughout the basin is estimated to be 31% as shown in Table 1.
Table 1 : Total Cost of Advanced Treatment (million yen/year)
Baseline Permit

After Trading

Cost Abatement Rate

65,91645,79231%(Simulated for WWTPs in Tokyo Bay basin)
The effluent charge system that is designed equivalently to above water quality trading based on eq.
(17) and eq. (18) is also simulated by computer. Figure 4 is obtained by the results of the simulations.

- 105 -

- 106 -1

Source : Ministry of Environment

3

Notes :´
Figure 1 : Achievement of Environmental Standard
Notes :
1.BOD used for rivers, and COD used for lakes/reservoirs, and sea/coastal areas.
1.BOD2.Achievement
used forandCOD
for lakes/reservoirs,
and sea/coastal areas.
levelrivers,(%)=(no. of water
bodiesachieving used
/ no.of designatedwater bodies)100
Source : Ministry of Environment
2.Achievement level (%)=(no. of water bodies achieving / no. of designated water bodies)×100

Achievement of Environmental Water Quality Standard

Courtesy of Prof. Masahiko Isobe of Tokyo Univ.

Osamu FUJIKI
Research Fellow & Director of 1st Research Division
Japan Institution of Wastewater Engineering Technology

Red Tide in Tokyo Bay

Economic Instruments for Basin-wide
Efficient Pollution Load Reduction- Comparison between Effluent Charges
And Water Quality Trading -

93.0
95.4

Ise Bay
Osaka Bay

85.7

57.0

87.6

As of 2003

94.7

92.7

92.8

Target

14.1

17.3

3.6

As of 2003

Rate of Advanced Treatment(Removal of N and/or P)

産業系合計
21%

COD
（247ｔ/日）

その他系合計
11%

ＣＯＤ

生活系合計
68%

産業系合計
16%

Industrial
Wastewater

生活系合計
65%

Municipal Wastewater
Ｔ－Ｎ（254ｔ/日）

その他系合計19%

Others

Ｔ－Ｎ
Ｔ－Ｎ

産業系合計
16%

Ｔ－P
（21ｔ/日）その他系合計
20%

Ｔ－Ｐ

生活系合計
64%

4

Pollution Source Structure of Tokyo Bay (As of Fiscal 1999)

95.7

Tokyo Bay

TargetRate of the Population
Served with Sewerage

2

Source : Dr. Ando, Tokyo Metropolis

Symptom of Dying Tokyo Bay

Red Tideand Blue Tide

Pollution Sources of Three Big Bays andPresent State of Sewage Works

Red Tide- 107 -5

やる必要があるんだ。

Ｃ町下水道管理者- Town C Why
Should We, Thoughとなりの市が高度処理を
the Neighboring
Big City
やっていないのに
Does 何でうちの町が
not ?

Ｃ町

Ｄ町 下水道管理者- TownDWe Do Advanced
湖をきれいにTreatment
for the Clean
するために
Water
in Our Lake.
高度処理が必要だ。

This Wateris
住民
Tasteless.
水がまずい。

○○川

湖

Water Quality Trading

Small
Catch of Fishery
海が汚れていてBecauseof the Dirty
魚があまり取れないな。
Waters

漁師

大都市Ａ市

D町

7

Market-based approach to improve and preserve water quality

Troubled○○湾
Gulf

We Cannot
Play on the
せっかく
Beach
Because of Dirty
海浜公園があるのに汚くて遊べない。
Waters.

We Want Upstream Areas○○湾の浄化のために、
to Forward
Advanced
高度処理が必要だ。
Treatment.

Ａ市
下水道管理者- CityA-

B市- City
BB市
下水道管理者
Water Quality in Tokyo
地先の河川はきれいなのに
Bay IsNo Concern of
何で○○湾のために
Ours,
Because It Is Far
高度処理をやる必要が
From Here.
あるんだ。

Why Advanced Treatment Not in Progress ?

Source : Yambe (NGK)68• Sewerage construction/improvement programs
shall be made and implemented “in accordance
with” the relevant CBPSS•
But• CBPSS could not function as strict commandand-control measures.
•
Because• Sewerage Law postulates that CBPSS should beformulated taking cost-effectiveness into
account and it is very difficult to satisfy thiscondition.

Revenue and Expenditureof Effluent Charge inSchleswig-Holstein StateThe fund collected througheffluent charge is allocatedfor water resources andenvironment.

Effluent Charge
System in Germany- 108 11• B-3 Payment for Substitution• The local entity that substitutively fulfills the LRA
assigned for the other entity’s WWTP can, as the legal
effect of the registration in CBPSS, make the entity to be
substituted for pay the cost for the substitution including
the cost of construction, improvement, rehabilitation,
repair, maintenance and control.

• B-2 Registration in CBPSS• The prefecture that has received the proposal of
substitution can register the information of thesubstitution including the estimated cost and its sharing
in the CBPSS.

9

Moretheoreticallytheoretically•More• Basin-wide cost-effectiveness is guaranteed on thecondition of the equalization of marginal
reduction costs across all the WWTPs in the basin.
However prefectures formulating CBPSS cannot
determine the marginal reduction costs beforehandin reality.
•
Therefore• Command-and-control method cannot be easily
applied on the basis of CBPSS.

Modified
Approach
Modified
Approach

Water Quality Trading(U.S.A.)
Transferable Permit for
Discharging Pollutant
Selling Transferable Permit

Buying Transferable Permit

Modified Approach in
CBPSS (Japan)
Transferable LRA (LoadReduction Assignment)
Substituting for theother WWTP on LRA
Being substituted for by
the other WWTP on
LRA

Equivalency between Modified Approachand Water Quality Trading

12• A. Determination of the Baseline LRA• Prefecture shall determine the baseline LRA (Load Reduction
Assignment) for nitrogen or phosphorus contained in theeffluent of relevant WWTPs in the CBPSS which targets on
enclosed water bodies where EWQS (Environmental Water
Quality Standard) of nitrogen or phosphorus is set.
• B. Cooperation for Advanced Treatment between Local
Entities• B-1 Proposal of Substitution• Local entity can submit to the prefecture a proposal that it will
substitutively fulfill the LRA assigned to the other entity’s
WWTP, after reaching the agreement with the local entity to10
be substituted for on this issue.

•• Sewerage Law was amended in 2005 and a modified approach
was established••- 109 -- 50,000

鶴見川

新河岸川

10万以上50万未満
100,000-500,000
50万以上 500,000

5万以上10万未満
50,000- 100,000

5万未満

3 /日)
Daily日最大処理水量(mMax Flow (m3/D)

多摩川

入間川

荒川

隅田川

綾
瀬
川

中
川

江
戸
川

小
糸
川

Baseline Condition

小
櫃
川

養
老
川

13

鶴見川

高度処理しない
No
Advanced

現行計画よりも低いレベルの高Less
Advanced
度処理

現行計画通りの高度処理
Same
as Baseline

More
Advanced
現行計画以上の高度処理

多摩川

入間川
新河岸川

荒川

隅田川

綾
瀬
川

中
川

江
戸
川

小
糸
川

小
櫃
川

Under Economic Instrument

Shift in Advanced Treatment Level- Result of Computer Simulation for Tokyo Bay -Schematic Diagram of the Two Types of
Economic Instruments

養
老
川

15

Target of
the Policy

Baseline Load

14

Effluent Charge System

16

Effluent Charge Rate cannot determined easily

Allowable Load
(Total Sum of Permits)

Water Quality Trading

Water quality trading could be easily designed on
the basis of the total sum of permits which is thepredetermined target of the policy, while effluent
charge system cannot be designed directly fromthe target.

2. System Designing

Marginal cost for advanced treatment is equalized to for every
WWTP in both approaches.

∂c j
∂ci
=
= −α k : constant for every WWTP
∂xi ,k ∂x j ,k

• The mathematics for both effluent charge
system and water quality trading suggests anequivalent cost-effectiveness in meeting apredetermined target.

1. Equivalency in cost-effectiveness- 110 -50

3. Equity0

100,000

300,000

500,000

600,000

処理水量 m3/日

400,000

700,000

Effluent Flow Rate (m3/D)

200,000

800,000

900,000 1,000,000

Relation between Unit Net Cost
And Effluent Flow Rate

19

17

Baseline
現行方式
Permit
Water
取引方式
Quality
Trading
Effluent
負担･分配方式
ChargeThe Biggest problem related to effluent charge system is generalpublic resistance to charging/taxation.

5. Public Acceptance / Resistance

-10

0

10

20

30

Effluent charge system is estimated to be superior
40
to waterquality trading in terms of equity.

Unit 処理水量あたり自己費用
Net Cost (yen/m3)円/m3 )VielenDank

Effluent charge system
is more favourable for local entities whichwant to forward advanced treatment for theirown benefit than water quality trading.

Local conditions are more likely to bereflected in the advanced treatment in effluent
charge system than in water quality trading.

4. Equity

20

18