Colombia's discharge fee program: Incentives for polluters or regulators?

Colombia's discharge fee system for water effluents is often held up as a model of a well-functioning, economic incentive pollution control program in a developing country. Yet few objective evaluations of the program have appeared. Based on a variety of primary and secondary data, this paper finds that in its first 5 years, the program was beset by a number of serious problems including limited implementation in many regions, widespread noncompliance by municipal sewerage authorities, and a confused relationship between discharge fees and emissions standards. Nevertheless, in some watersheds, pollution loads dropped significantly after the program was introduced. While proponents claim the incentives that discharge fees created for polluters to cut emissions in a cost-effective manner were responsible, this paper argues that the incentives they created for regulatory authorities to improve permitting, monitoring, and enforcement were at least as important.