An application of the polluter pays principle
Department of Water Affairs and Forestry, South Africa
This article and call for comments from the Department of Water Affairs and Forestry, South Africa is a further step in the implementation of the new water law reforms in the country. It provides a useful example of the application of policy related to water resources pollution and placing a price on the use of water for the removal of waste.
The Department welcomes comments from all sources, South Africans and abroad. Please send comments to
Attn: Suzanne Parker
WDCS Communication Office
Tel: (012) 662-2504 or (012) 662-2356
Fax: (012) 662-2504
Early in 1999, the Department of Water Affairs and Forestry (DWAF) began a three-year project aimed at developing a Waste Discharge Charge System (WDCS). The system will provide a framework for charging people who dispose of their waste into water.
The WDCS is one way in which the Department is implementing the National Water Act, 1998 (Act 36 of 1998). The Act provides for the use of economic instruments (incentives or disincentives) to encourage water conservation and the reduction of waste.
It is important for stakeholders to have an input to the development of the charge system. The WDCS must ultimately ensure that water users do not pass on the costs of pollution to society, but rather try to minimise the pollution before discharging it into a water resource. At the same time, the costs of dealing with pollution at source should not threaten the country's long-term economic growth. Finding that balance is critical, and can only be done if the purpose, as well as the implications of different charge systems on different dischargers, is fully understood.
South Africa is a water-scarce country, and the demands on this resource are growing as the economy expands and the population increases. This means that more and more water will be needed. For the country to continue to develop economically, while meeting the wide-ranging needs for water, urgent steps must be taken to protect the quality of our resources. Thus, while waste discharge into a water resource is a recognised water use, it needs to be carefully controlled if water is to reach, or remain at, a quality that serves the needs of users far into the future.
What is the Waste Discharge Charge System (WDCS)?
The Waste Discharge Charge System is one method that DWAF is developing to manage water resources efficiently and effectively. It will address the pricing of water used for waste disposal. The WDCS will form a vital component of the Department's Pricing Strategy for Raw Water Use Charges.
While much of the Pricing Strategy focuses on water use in terms of volumes abstracted or discharged, the WDCS addresses the impact that is caused by the discharge (including effluent and contaminated leachate) and the waste that it contains. The intention is to reduce the damaging effects of waste on water resources.
The system will do this by introducing economic instruments, to encourage impactors to:
internalize the costs associated with discharging or disposing of waste through water, and reduce the amount of waste that they need to dispose of into the environment.
Since the National Water Act includes watercourses, surface water, estuaries and aquifers in its definition of a water resource, charges on waste discharges will apply to both surface and groundwater resources.
Pollution charge systems are not new, having been implemented in various countries, including the former West Germany (1981), France (1970), the Netherlands (1970), Malaysia (1970s), South Korea (early 1980s), China (1979) and others.
Aims of the WDCS
The WDCS has four main aims. These are to:
promote sustainable development and the efficient use of water resources
promote the internalisation of environmental costs by impactors
recover some of the costs of managing water quality, and
create financial incentives for dischargers to reduce waste and use water resources in a more optimal way.
These aims are described in more detail in a Framework Document that DWAF has developed for discussion purposes. (More information is provided on this later in this Information Sheet).
Who will be affected by the WDCS?
Any organisation that emits waste directly or indirectly (through diffuse means) into a water resource will be required to pay charges, once the WDCS is implemented.
At this early stage of the project it is anticipated that the key groups likely to be affected will include (for example):
local or regional authorities discharging treated sewage or other forms of waste
industries whose discharges are not handled by local authorities
operators of waste disposal sites causing an impact to surface or groundwater
anyone who irrigates with water containing waste, and/or
waste producers who dispose of waste in evaporation dams.
The philosophy underpinning the WDCS
Recognition is growing around the world that greater emphasis must be placed on managing water as an economic good to ensure that it is used as efficiently as possible. It is widely agreed that an effective way to do this is to set an appropriate price for using water. This is recognised in our National Water Act.
While traditional economic systems saw natural resources simply as inputs for production (like labour and capital), they overlooked the fact that not all natural resources renew themselves at a rate that matches our use of them. One of the ways in which resource economics corrects this oversight is by looking at the opportunity costs associated with the use of resources.
The notion of an opportunity cost in this context is that whenever a decision is made to use water for one activity, that water may no longer be available for other activities.
The discharge or disposal of waste into water resources may therefore result in a cost to other water users, since they lose the chance to use the resource for their own purposes, or have to treat the water before they can use it. This is a key issue in a water-stressed country like South Africa, where competition for available water is growing fast.
Resource economics uses various tools to ensure that the users of natural resources pay the costs that arise from those uses. One of these tools is the Polluter Pays Principle (PPP), the application of which is a key element of the philosophy underlying the WDCS. Several other principles, including affordability, equity, acceptability and financial viability (to name a few) will also guide the development of the WDCS.
How the WDCS fits into South Africa's water management regime
The development of the WDCS is supported by a wide range of legislation and other regulatory measures. These include the:
Constitution of the Republic of South Africa (Act 108/1996)
National Water Act (36/1998)
Water Services Act (108/1997)
Environment Conservation Act (73/1989)
National Environmental Management Act (107/1998)
Minerals Act (50/1991)
Atmospheric Pollution Prevention Act (45/1965), and
Local Government Transition Act (209/1993).
What is the project plan for developing the WDCS?
The WDCS is being developed by a multi-stakeholder Project Task Team (PTT) and overseen by a Project Steering Committee (PSC). Representatives of the following sectors are active in these committees:
National government (DWAF, DME, Department of Finance, DEAT, DTI)
Industry (including mining, business and chemical industry sectors)
Research (Water Research Commission)
Phases of the project plan
The WDCS will be developed in four phases, each of which is linked to outputs, i.e:
Phase 1 (Apr. 1999 - Dec. 1999): Start of the process ß Framework Document
Phase 2 (Jan. 2000 - Mar. 2001): Development of draft strategies ß Draft Strategy Document
Phase 3 (Apr. 2001 - Mar. 2002): Development of the final strategy ß Final Strategy Document
Phase 4 (Apr. 2002 onwards): Implementation of the final strategy in trial management areas & Guideline documents.
Public participation process
This is where you, the affected party, can play a key role in ensuring that the WDCS accommodates both your interests and concerns as well as those of other users. Stakeholder input is essential to ensure the system promotes economic, environmental and social sustainability.
This Information Sheet is a first attempt to reach out to a broader stakeholder network, to alert you to the fact that this process is underway, and to invite your participation.
The Framework Document that has been developed during Phase 1 will be available from 1 December 1999, and provides far more detail than is possible in this short brief. It describes the legal and technical frameworks for the WDCS, including possible charge mechanisms, and the principles on which the development of the system is based. The Framework Document represents the PTT's and PSC's thinking thus far in the development process. Your comments on this document will be invaluable. If you would like a copy of the Framework Document (± 40 pages), or an Executive Summary (6 pages), please let us know (see below).
During both 2000 and 2001 a one-day stakeholder workshop will be held in each of the nine provinces, (i.e. 18 workshops in total) to discuss the Draft Strategy (2000) and the Final Strategy and its implementation (2001). The strategy will be finalised based on the inputs you make throughout the process. There will also be feedback at other times during the process, in the form of workshop proceedings, progress newsletters and press releases.
If you wish to be involved in the public participation process for the WDCS project, please complete the enclosed Reply Sheet and fax, e-mail or mail it back to the WDCS Communication Office by 10 December 1999. Contact details are provided on Page 1 of this Information Sheet and also on the enclosed Reply Sheet.