At present, Thailands environmental protection agencies fail to enforce
its existing environmental laws and regulations in an effective manner. Thailand
has developed a reputation for relatively poor environmental performance and
the country ranked 46th out of 56 countries according to the World
Economic Forum (2002).
Thailand employs an end-of-pipe approach (water quality standard) to environmental
regulation. Factories and industrial parks are legally obligated to treat their
wastewater in order to meet industrial effluent standards. These standards only
specify the concentration of contaminants allowed in the effluents. This shortsighted
approach fails to take into consideration the total amount of contaminant loading.
This renders the environmental regulations ineffective in protecting the environment
due to failure to curtail the total amount of waste released in effluents, which
exceed the carrying capacity of the receiving river ecosystem (PCD,
Twenty-five river basins in Thailand are continually subjected to pollution
loading exceeding their respective carrying capacities according to PCD
PCD (1997) states the Thachin River faced a particularly
serious problem with surface water quality due to accumulation of upstream wastewater
discharges. Subsequently, PCD (2003a, b,
2005a-c) details the nature and
magnitude of wastewater overloading in the Thachin River originating from an
array of industrial, agricultural and urban sources.
From a technological standpoint, there are a number of approaches that may
be employed to reduce wastewater discharge into river basins. Bauman
et al. (2008) explained that innovations in pollution control have
the capacity to maximize the amount of social welfare derived by optimizing
the tradeoff between environmental protection and industrial production. The
discourse on environmental protection approaches has been of significant interest
to economists since at least the mid-1970s. A survey conducted by Jaffe
et al. (2003) summarizes the consensus of findings: market based
instruments for environmental protection provide better incentives than command-and-control
approaches for the cost-effective diffusion of desirable, environmentally friendly
Wastewater treatment surcharge planning as Polluter Pay Principle in Thai (PCD,
2003b) reported that many researchers have suggested use of a non-technological
approach that utilizes tariffs to control wastewater effluents from industrial,
agricultural and domestic sources. At present, the pollution control act applies
a uniform tariff to control pollution emissions nationwide. This policy has
proven to be unsuccessful in inducing sustainable pollution levels, because
carrying capacity of pollution loading is different in each water body.
A more comprehensive approach should be considered. The taxation model must
be adjusted to account for control the Total Maximum Daily Load (TMDL) of pollution
as well as the aggregate amount of wastewater contaminant in the surface water.
This approach is capable of prohibiting waste loading from exceeding the carrying
capacity of the river ecosystem. To solve these problems based with a non-technological
method, an incentive based method coupled with a prudently applied taxation
scheme could effectively control and reduce pollution discharge into rivers
(Thompson, 1998; Glachant, 2002).
Based on this premise, uniform and non-uniform tax policies are applied to explore
their efficacy in controlling waste effluent.
The approach taken in this study is to optimize the mathematical model in order to control the surface water quality of the Thachin River. The two primary objectives of the research are as follows:
||To determine the appropriate effluent tax system suitable
to control pollution loading in the Thachin River
||To develop and optimize the mathematical decision making model
in order to maximize utility with sensitivity to economic and environmental
constraints thus ensuring pollution discharges do not exceed the total maximum
daily loading in the Thachin River
The results of study should provide useful information about the optimal taxation
level for controlling pollution emissions in each sub-basin of the Thachin River.
MATERIALS AND METHODS
Study site: This study was conducted since 2006 to 2008, the focus of
that covers the boundary of Thachin River as shown in Fig. 1.
It is located in the central region of Thailand and is the main river traversing
south along nine provinces. The report of PCD (1997) defines
that Thachin River is the only major river in the Thachin River. It has been
known in many different names depending on location it passes through, such
as Makhamtao canal, Supanburi River, Nakornchaisri River and Thachin River.
However, it is commonly known as Thachin River. It originates from stream that
separate from the right bank of Chaopraya River at Ban Paakklongmakhamtao, Makamtao
subdistrict, Watsing district, Chainat province. It then passes through Hanka
district, Chainat province, going to Supanburi province through districts of
Dermbangnangbuat, Samchuk, Sriprachan, Muang, Bangplama and Songpinong. It passes
through Nakornpathom province at districts of Banglane, Nakornchaisri and Sampran
and flow into the gulf of Thailand at Samutsakorn province by passing through
Banprao, Kratumban and Muang districts. Total length of the river is 325 km.
The Thachin River serves the domestic, agricultural and industrial needs of
approximately eight million people. The basin covers 11,763 km2 (7.35
million Rai) across 9 provinces including Bangkok, Ayutthaya, Nonthaburi, Chainart,
Uthaithani, Suphanburi, Nakornphathom and Samutsakorn. PCD
(2005a) illustrates that the significant pollution-generating sources in
Thachin River are divided into four main point sources. A number of pig farms
are dispersed along the middle and the lower regions of the Thachin River basin
in Nakornphathom and Suphanburi provinces. A number of densely populated communities
are major point pollution sources dispersed along the river, especially the
lower basin. Located in the centers of provinces and districts, these communities
sustain many commercial and noncommercial activities that generate significant
amounts of wastewater on a scale similar to city municipalities. Aquaculture,
cultivating primarily prawns and fish, is practiced along the middle and lower
parts of Thachin River. Industrial activities are the main pollution generators
due to the discharge of massive amounts of wastewater directly into the river.
The quantity and variety of waste effluent from each site differs depending
upon the raw material, products, processes and machinery each factory utilizes
in production. Some factories produce no waste effluent as no water is required
for the production process. Of the factories that do require the use of water,
most have wastewater treatment systems that process waste effluents to meet
concentration standards before release into the river. A variety of factory
types are scattered along the Thachin River with a higher concentration along
the lower stretch of the basin.
|| The boundary of Thachin River Basin. PCD
|| Sub-basin which has potential to cause water quality deterioration.
Thailands Pollution Control Department (PCD) is responsible for monitoring
and collecting wastewater discharge data. Data and information for this study
was sourced from the PCD databases.
Total Maximum Daily Loading (TMDL) and Target of emission reduction:
A TMDL is the sum of the allowable loads of a single pollutant from all contributing
point and non-point sources. The calculation must include a margin of safety
to ensure that the water body can be used for the purposes the State has designated.
The calculation must also account seasonal variation in water quality (Enviornmental
Protection Agency, 2007).
PCD has divided Thachin River into 33 sub-basins which have potential to cause water quality deterioration as shown in Fig. 2. Eighteen sub-basins are identified as generating high Biochemical Oxygen Demand (BOD), details are in Table 1. In this study, BOD is used as a proxy of waste effluent.
|| Percentage of pollution from any sources in each sub basin
and target of emission reduction
||Simulation of current water quality in Thachin River using
BOD loading from each sub-basin. PCD (2005a)
The monitoring of water quality in the Thachin River from the Pollution Control
Department (PCD, 2002) found that Thachin River has continuously
deteriorating BOD values and dissolved oxygen as pollution indicators. The Thachin
River catchment has a BOD higher than the surface water standard which should
not exceed 4.0 mg L-1 for downstream, 2.0 mg L-1 for midstream
and 1.5 mg L-1 for upstream sections. Correspondingly, the dissolved
oxygen is lower than the standard limit 2.0 mg L-1 for downstream,
4.0 mg L-1 for midstream and 6.0 mg L-1 for upstream sections.
Figure 3 shows current situation of BOD loading in Thachin
River, the simulation start from Kilometers 325th at Chainat province to Kilometers
0th at Samutsakorn province. Three colors lines are substitute for dry season
without rain, dry season with rain and rainy season by orange line, green line
and blue line, respectively. As Fig. 3 indicates, the orange
line shows BOD concentration higher than water qualification standard (dash
line) entire the river and green line and blue line in some part of the river.
How to deal with this situation, PCD (2005a) explains
how the waste effluent reductions are derived for each sub-basin utilizing the
Mike 11 water quality model for analysis originating from Hanley
et al. (1998).
PCD (2005a) found that the problems of water resources
have been continuously deteriorated due to the carrying capacity are incapable
to receive the load of activities such as agriculture and especially industry.
The activities of industry need a load of water which generates the wastewater
as well. The wastewater from industry has highly contaminated with organic matter
and non-organic matter; however, the control pollution act has been compelled
the manufactures treat their waste in the standard compulsory. The controlling
emission standard has been considered only the effluent loaded-concentration
but unaware of effluent loading lead to the volume of effluent excess than the
carrying capacity. The solution of this problem is to control the pollutant
sources by limiting the effluent volume to match the carrying capacity. Each
of basins has different capacity to receiving the pollutant. From Ministry
of Science (1992) appointed to define the effluent standard for the pollutant
generators in industrial park.
PCD (2005a) estimate the Total Maximum Daily Loading
(TMDL) of BOD effluent allowable without causing unacceptable deterioration
in the river ecosystem in each sub-basin.
As Table 1 indicates, each sub-basin has its own reduction target to meet water quality standards. Relative pollution from four major pollution release is detailed as well For example, sub-basin RF has a reduction target at 85.00%, it mean this sub-basin has allowable pollution permit at 15.00%. In this number of all pollution release in RF sub-basin, Pig farm, Aqua culture, Urban community and Industry have percentage of pollution release at 67.27, 17.73, 14.38 and 0.62%, respectively.
||Simulation of BOD values after reducing BOD loading accord
to target of emission reduction. PCD (2005a)
The simulation of PCD (2005a) shows the water quality
of Thachin River after reducing pollution loading accord to target of emission
reduction as Fig. 4, it passes the water quality standard
and meet total maximum loading of entire the river .
Marginal Abatement Cost (MAC): Klepper and Peterson
(2006) and McKitrick (1999) explain the concept
of a Marginal Abatement Cost Curve (MAC) is derived from company or plant level
models of reducing pollution. This is a straightforward interpretation in production
theory. Whereas certain activities in the production process lead to emissions
of wastes, marginal abatement cost pertains to either the marginal loss in profits
from avoiding the last unit of emissions or the marginal cost of implementation
of abatement technologies to reduce waste for each marginal product. Costs associated
with implementing abatement technologies are straightforward. Determining losses
due to output avoidance or adjustment of a companys output induced by
emission constraints requires further consideration. According to Klepper
and Peterson (2006), marginal abatement cost curves are the standard tool
used to analyze the impacts of the Kyoto Protocol and emissions trading. Other
authors have used the MAC approach such as Brechet and Jouvet
(2008), Collinge and Bailey (1983), Den
Elzen et al. (2005), Gallaher et al.
(2005), Markusen (1997), Misiolek
(1980), Murty et al. (2006) and Soloveitchik
et al. (2002).
Non-uniform and uniform tax: The underlying reasoning for the use of
Non-uniform tax and Uniform tax policies are detailed in Economic Efficiency
and Equity in Water Quality Control (Herzog, 1976).
|| Non-uniform tax equivalent to CAC
|| Uniform tax
If the regulator employs an non-uniform tax policy (Fig. 5),
differentiated taxes are applied to each point source in order to control the
pollution discharge of all activities. Under this plan, the regulator requires
each main point source to reduce their effluent from E1 to E*. Main
point source 1 has marginal abatement cost function of mac1 and main point source
2 has marginal abatement cost function of mac2. The regulator applies a tax
rate for main point source 1 at P1 and applies a tax rate for main point source
2 at P2. The abatement cost of main point source 1 is equal to the area of d
and tax expense of main point source 1 is equal to the area of b. The abatement
cost of main point source 2 is equal to the area of c + d and tax expense is
equal to the area of a +b.
If the regulator adopts a uniform tax policy (Fig. 6), the regulator must determine the maximum allowable the waste effluent levels to achieve acceptable ambient water quality. Under this policy, tax rate is equal to MAC1 = MAC2. This results in that main point source1 having an abatement cost equal to the area of b + d and a tax expense equal to a while main point source2 having an abatement cost equal to the area e + d and a tax expense is equal to a + b + c.
Within each sub-basin, the uniform tax policy achieves the same degree of improvement
of ambient water quality as the non-uniform tax policy. While the non-uniform
tax policy uses differentiated pricing to induce the same level of reductions
for each emitter, the uniform tax policy uses a single tariff to induce differentiated
emission reductions for each emitter dictated by their unique marginal abatement
curves. Generally, sub-basins with higher levels of waste effluents due to higher
amount of economic activity are forced to make greater abatements on aggregate.
Callan and Thomas (1996) and Moffatt
et al. (1991) concludes the point where MAC1 = MAC2
= Emission Charge represents the least-cost allocation of abatement responsibilities
across the two polluters and satisfies the equi-marginal principle of optimality.
Mathematical Decision-Making model: This model is created for simulate
the effect of tax enforcing to the four main point sources activities by the
objective function representing the maximization of system profits is:
is the system profit in sub-basin. ∏pj is the system profit
of aggregate pig farm activities in sub-basin j with internalized social costs
including any associated abatement costs as shown in Eq. 6.
In the same manner, ∏uj is the system profit of the aggregate
urban communitys activities within sub-basin j. ∏aj is
the system profit from aggregate aquaculture activities within sub-basin j.
∏ij is the system profit from aggregate industrial activities
within sub-basin j.
Sub-basin pollution function: The objective function is subject to sub-basin
is the pollution loading of the aggregate effluent in sub-basin j. is the sum
of pollution loading of aggregate pig farm effluent in sub-basin j. is
the sum of pollution loading of aggregate urban communities effluent in sub-basin
the sum of pollution loading of aggregate aquaculture based effluent in sub-basin
the sum of pollution loading of aggregate industrial effluent in sub-basin j.
Sub-basin pollution constraint: A fundamental requirement for effective
pollution control is assurance that pollution loading throughout the river system
conforms to environmental regulations and is prohibited from exceeding specified
standards. Control points and discharge locations are constraints in the mathematical
model. The typical framework for the water quality constraint is as follows
(Hanley et al., 1997):
The general form for Eq. 3 and 4 are derived
from Hanley et al. (1997) and the transfer coefficients
are explained in further detail in Hass (1970) and Streeter
and Phelps (1958). Other relevant research includes the Brown
and Mar (1968) study on the effect of water quality management on dynamic
economic efficiency, the Upton (1970) study on uncertainty
and the Herzog (1976) study on effluent taxes and information
Aj is the total pollution loading in sub-basin j. Ej is the pollution loading from aggregated effluents in sub-basin j, γ (transfer coefficient) is the residual pollution loading of sub-basin j-1 affected by pollution loading of sub-basin j, Aj-1 is the total pollution loading of aggregated effluents in sub-basin j-1. Aj* is the regulated ambient water standard which classifies the maximum allowable daily pollution loading in sub-basin j.
Production benefit constraint: These constraints determine the profit
potential for each production type. The production process is subject to capital,
variable and abatement costs. Introduction of an appropriately administered
tax scheme is an additional cost burden that should not trigger wide scale business
failures. When production exceeds the break-even point of production, obtaining
a profit is achievable. Thus, the profit constraint of each industry is specified
π is a benefit in this model.
Production function: In general, the net benefit from the production
function is defined by the profit derived from production sales minus the cost
of abatement and tax expense:
where, ∏j is the system profit of each type of
production in sub-basin j. is
the sum of each main point source per unit profit multiplied by the quantity
of production at source k in sub-basin j. (note: The calculated value of P it
is variety on the characteristics of Qjk in each type of main point
source as shown in appendix A ). is the sum of abatement cost of each main point
source in sub-basin j. the
tax levy of each main point source in sub-basin j multiplied by the aggregate
amount of pollution loading from effluent at each main point source in sub-basin
Abatement cost function (Mehta et al., 1997):
where, ABCjk is the abatement cost function of each type of main point source in sub-basin j. e = natural logarithm. Fjk is total volume of wastewater at each type of main point source in sub-basin j. Ijk is the pollution loading of the influent at each type of main point source in sub-basin j. Ejk is the pollution loading of the effluent at each type of main point source in sub-basin j. a, b, c and d are coefficient parameters at that main point source.
Volume of wastewater per production unit:
where, Fjk is the volume of wastewater at each main point source in sub-basin j. α is the volume of wastewater generated per unit production at each main point source.(note: magnitude of α it is variety on the characteristics of Qkj at each type of main point source as shown in appendix A ) Qjk is the quantity of production at each main point source in sub-basin j.
Influent pollution loading:
where, Ijk is the pollution loading in the effluent at each main point source in sub-basin j. β is the amount of pollution released in each production type. (note: magnitude of β it is variety on the characteristics of Qjk as shown in Appendix A ). Qjk is the quantity of production at each main point source in sub-basin j.
where, Ejk represents the pollution loading of the effluent at each
type of main point source in sub-basin j. (note:
it is target of emission reduction by PCD as shown in Table 1)
is the required water classification standard at each type main point source
in sub-basin j or permitted pollution loading at each type main
point source in sub-basin j.
In order to find tax which equivalence to CAC, Eq. 10 have to put in the model for simulate that tax.
In summary, after applying the above stated functions to all main point sources, then the model of each sub-basin can be expressed as shown in Appendix B
Calculated tax rate equivalent to command and control approach (non-uniform
tax): In order to reduce the ambient water quality in each sub-basin meets
the target of emission reduction in Table 1. Tax system is
one of method to simulate this situation. This step is action to find out the
tax rate which equivalence to that target.
E-view is used to perform a regression on Eq. 7 for each main point source along the entire Thachin River. The regression reveals the coefficient set for the abatement cost equation for each type of main point source. The set of coefficients relevant to abatement costs are derived as demonstrated in Eq. 7. These figures are used to estimate the marginal abatement cost function by substituting the coefficients. With an estimate of the marginal abatement cost function, applying a partial derivative reveals the cost of abatement E.
A spreadsheet is constructed in Microsoft Excel that combines the estimated marginal abatement cost function, substituted coefficients and separate F, I and E parameters in Eq. 7 per individual sub-basin for each type of main point sources. A calculation sheet is created in order to find the tax variation of each main activity within each sub-basin by incorporating the data of each parameter into the Eq. 13.
Take log to Eq. 7:
The derivative of abatement cost is equal to the marginal abatement costs as well as equal to the tax rates as shown in the figure above.
Applying Mathematical Decision-making model to two Scenarios: The analysis explores 2 scenarios: (1) first scenario use non-uniform tax for each type of main point source in each sub-basin and (2) second scenario applies a uniform tax to main point sources in across each sub-basin in aggregate.
The scope of the problem for each scenario is as follows. Case 1 Non-Uniform Tax: The government forces the polluter to reduce their effluent by imposing Non-Uniform tax rates at each type of main point source within each sub-basin (Profit maximization). Excel Solver is used to investigate a) Ambient water pollution of each sub-basin b) Profit of each type of production in each sub-basin and c) Abatement costs and tax expenses. Case 2: Uniform Tax: The government set the minimum effluent tax which brings sub-basin emissions inline with total maximum loading and water quality standard of each sub-basin (Profit maximization). Excel Solver is used to investigate (1) Uniform Tax (2) Ambient water pollution in each sub-basin (3) Profit of each type of production in each sub-basin (4) Abatement costs and tax expenses.
Excel solver: Microsofts Excel Solver tool can be applied to solve
optimization problems. Walsh and Diamond (1995) demonstrates
the suitability of using excel solver for the purpose of non-linear curve fitting:
An analysis tool has been evaluated for solving non-linear equations. Test and
experimental data sets have been processed and the results suggest that solver
can be successfully used for modeling data obtained in many analytical situations.
In addition, complete control of the modeling process lies with the user, who
must present the raw data and enter the equation of the model, in contrast to
many commercial packages bundled with instruments which perform these operations
with a black-box approach. The practice of using Excel solver has gained more
acceptability with its use in other studies such as Abdel-Malek
and Areeratchakul (2007), Benli and Kodal (2003),
Berman and Cutler (2004), Brown
(2001, 2006), Cetin and Esen
(2006), Hariga and Al-Fawzan (2005), Kuo
et al. (2003), Paredes et al. (2001),
Ravikumar et al. (2007) and De
Reyck and Degraeve (2006).
In this study, excel solver is used to derive the values of certain cells in the spreadsheet while optimizing specific parameters. Target is set to maximize the value of system profit in each sub-basin. Next, the emission release cells are subject to manipulation by Excel Solver to reveal the effect of tax charges on the volume of pollution emitted by each main point source.
||Evaluation of tax expense between Non-uniform and Uniform
tax in each sub-basin
The results of the target and change-cells are limited by the constraints that
are set in the model.
How the optimization mathematical decision-making model works with excel
solver:Case 1, Non-Uniform Tax: The objective is to maximize net benefits
involving E for abatement costs (Eq. 7) and Tax
Expense (TE). Follow Fig. 7, after reducing E
for one unit, Tax expenses decreases T Baht and abatement cost increases marginally
MAC Baht. Therefore, whenever reducing E and T Baht is greater than MAC Baht,
the model will continue decreasing E until the marginal unit of E
makes value of MAC>T. According to the model, Main Point Sources will stop
reducing E when point T = MAC then profit is maximized.
Case 2, Uniform Tax: The objective is to apply a single tax rate where MAC values in every activity are equal and profits maximized. The same manner with Fig. 7, where, T = MAC. Thus, the Uniform Tax is equal to MAC1 = MAC2 = MAC3 = MAC4 and aggregate waste loading limited to a predetermined level. With these specifications in mind, the analysis will reveal the minimum tax rate to achieve this objective.
RESULTS AND DISCUSSION
The effect of the effluent charge: Figure 8 indicates
that, in the RI, LS, RJ, LU and RL sub-basins, abatement costs associated with
the non-uniform and uniform tax schemes vary greatly. Some firms possess characteristics
such as significantly higher marginal abatement costs at all levels of production
that prohibits engagement in abatements as well as exposes the firms full
production to tax expenses.
|| Evaluation of cost of abatement between non-uniform and uniform
tax in each sub-basin
|| Evaluation of tax expense between non-uniform and uniform
tax in each sub-basin
|| Evaluation of total expense between non-uniform and uniform
tax in each sub-basin
Figure 9 shows that, compliance expenditures in sub-basins
RI, LS, RJ, LU and RL are entirely allocated towards tax levies under the uniform
tax scheme. In sub-basin RI and RJ, aggregate tax expense is significantly lower
under the uniform tax Total expenses are lower with the uniform tax scheme than
with the non-uniform tax scheme in every sub-basin as shown in Fig.
10. The greatest disparities occur in the RI, LS, RJ, LU and RL sub-basins
due to the inherent efficiency of uniform tax schemes. Based on the analysis
of tax expense and cost of abatement, some sub-basins have highly differentiated
net profits under the two schemes.
Total pollution control cost is negligible when compared to revenue figures (Fig. 11). For practical purposes, conforming to environmental regulations under either scheme should not present an undue burden to the present activities in the region.
There is an abundance of literature on the effects of effluent charges which
have been introduced in many countries. Indab et al.
(2003), support our research, studied effluent charges in Sarangani Bay,
Philippines concluding the existing effluent charge scheme is under CAC fails
to adequately reduce water pollution. Their recommendation is to apply a new
effluent charge scheme achieving a 92% greater reduction in pollution accompanied
with a 23% increase in total abatement costs.
|| Evaluation of net profit between non-uniform and uniform
tax in each sub-basin
Present study employs a uniform tax scheme as a management tool for protecting
and maintaining water quality while possessing a total abatement cost to non-uniform
tax schemes. Dasgupta et al. (1996) conducted a
study in China that concluded its current policy provides an economic incentive
to abate by charging a levy on pollution in excess of regulatory standards.
However, the results of the study suggest that changing to a full emissions
charge system would significantly reduce overall abatement costs. Uniform pollution
charges would likely improve environmental quality. If China adopts an emissions
charge policy, it would be appropriate to give local regulators the authority
to adapt levies according to local circumstances. Our study assesses the suitability
of uniform tax policies as a viable charge system. At the same way, their study
concluded that a uniform tax policy is the most suitable effluent charge scheme.
Corrigan (2009) has studied about the Relative Effectiveness
of Emissions Taxes and Tradable Permits. A system of uniform command-and-control
regulation, a tradable emissions permit framework and an emissions tax was set.
The results of its also follows our research as well, it concludes that tax
would yield the highest rate in net benefit and the lowest rate in dead weight
loss among these systems.
However, some researchers have the contradiction of our research. A good example
can be found in Peretto (2008) that illustrates the
effects of effluent taxes on firms allocations of resources to cost and
emissions reductions. In terms of environmental benefits, taxes are able to
induce a positive rate of pollution abatement capable of offsetting the dirty
side of economic growth. A tax set at an endogenous rate and held at a constant
tax burden per unit of output results in an increased cost per unit of output
which decreases firms marginal revenues and/or increases prices the of
their products. . In the study of Stavins (2002) mentioned
about reasons of water effluent charges ineffective: (1) legislated charges
have been significantly eroded by the high inflation that has accompanied economic
transition; (2) charges typically have been set below marginal abatement costs
(Morris et al., 1997; Stepanek,
1997; Ylicz, 1996); (3) pollution limits-the point
above which emissions are charged at a penalty rate-are typically set too high
to influence firm behavior (Brunenieks et al., 1997);
(4) tax rates are often the result of implicit or explicit negotiation between
industries and state or regional governments (Gornaja et
al., 1997; Kozeltsev and Markandya, 1997); (5)
many countries set upper bounds on pollution charge liabilities; (6) unprofitable
enterprises are often exempted (Kozeltsev and Markandya,
1997; Owen et al., 1997) and (7) regulatory
systems are insufficient to support adequate monitoring and enforcement (Bluffstone
and Larson, 1997; Gornaja et al., 1997; Kozeltsev
and Markandya, 1997; Morris et al., 1997)
Evaluation of non-uniform tax and uniform tax:In this model, E consists
of two parts: Tax and Cost of abatement. When effluents (E) decrease 1 unit,
tax expense decreases by t baht and cost of abatement increases MAC baht. Polluters
are induced to reduce effluents for the proportion tax expense t baht exceeds
marginal abatement costs MAC. Emission reductions cease when MAC is equal to
or exceeds t. Non-uniform tax policies use differentiated pricing, where Taxi
= MCi, to reduce emissions resulting in no intra-sub-basin competition.
Uniform tax policies set a per sub-basin, optimized Taxt = MCi.
Under these conditions, polluters are simultaneously induced to adjust emissions
with the initial activities occurring with polluters with the lowest MAC.
According to Table 2, utilizing a uniform rather than a non-uniform
policy results in an estimated 1,344,399.32 Kg-BOD/year of additional effluent
with compliance to environmental regulations. Utilizing a uniform rather than
non-uniform tax policy results in an estimated savings of 3,480,944,681.53 baht
per year in aggregate cost of abatement, an estimated savings of 3,517,515,764.60
baht per year in total expenses and an estimated 3,518,058,488.41 baht per year
in additional aggregate net profits.
|| Differentiation of non-uniform tax and uniform tax to thachin
In conclusion, non-uniform and uniform tax policies are capable of efficiently
reducing wastewater emissions in the Thachin River while complying with environmental
regulations. From an economic perspective, applying a uniform tax policy is
found to be more efficient with an estimated 45.25% savings in total expense
and results in differentiated marginal damage cost for main point sources.
Author is thankful to Asst. Prof. Dr. Charit Tingsabadh and Assoc. Prof. Dr. Nantana Gajaseni for their supervision to this research work.
Characteristics of each type of four point sources: There are four significant
point sources in this study. This section explains how to gather the data relating
to costs and estimating economics.
First, obtain the current BOD results, and compare the total maximum daily loading with the water classification standard. Then the BOD has to be reduced to meet Total maximum daily loading, this reduction of volume is called the emission reduction target.
The emission reduction target will be used with the marginal abatement cost curve in order to find the tax variation in each type of four point sources in each sub-basin.
Pig farm: Data from the PCD report Development and Technology of Wastewater
Management where parameters comprise the cost of abatement in any type of pig
farm, i.e., price of 100 kg of pig unit and variable cost (Table
Urban communities: The Ministry of Natural Resources and Environmental
declaration issued in 2/2546 has stipulates that every household in each community
have to pay a wastewater treatment charge. Thus, treatment charge rates from
the Ministry of Natural Resources and Environment are used in the Table
A-3 to A-5.
The urban community revenue comes from budget per capita. Parameter (P) is
derived from public service budget. Social development is supported by the provincial
government and can be divided by the provincial population. The quantity (Q)
is derived from the population in each sub-district. The revenue of urban community
in each sub-basin is derived from (P) multiply by (Q). (P)and (Q) of each province
are shown in the Table A-6 below.
Aqua culture: Most of the economic data are from the Development of
Effluent Treatment Management for Aquaculture projects, PCD (2005a). The abatement
cost for aquaculture can be divided into 2 groups. All fish farms treatment
methods refer to the use Aerated Lagoons with Constructed wetlands. All prawn
farms treatment methods refer constructed wetlands. The details of expenses
are shown in the Table A-7 to A-9.
Industry: There are 44 types of factory along the Thachin river giving
a total of 8,160 factories. In arriving at the abatement cost, we investigated
the wastewater treatment processing systems of each factory from the Department
of Industry. The expense for each processing referred to the average expense
was obtained from the research of The Standard of Wastewater Treatment Charge.
Revenue section, the net profit per ton of whole industrial type, referred
to table 202 of I/O model (Office of the National Economic and Social Development
Board), divided by the Quantity of National Production (tons) (information comes
from the Ministry of Industry). The profits per production (ton) of each manufacturing
type multiplied by Q (number of manufacturers of each type in each sub-basin).
Finally, the revenue per unit of each type in each sub-basin are shown in the
Table A-10 to A-11.
|| Transaction cost of pig farm waste water treatment in each
|aUpflow Anaerobic Sludge Blanket, bFacultative
Pond, cMaturation Pond. Source: PCD (2003a)
|| Cost and revenue of pig farm production
|Source: PCD (2003a)
|| Evaluated operating cost of stabilization pond in each local
|Source: PCD (2003b). Remark: Other municipals
in each province referred to the regulation of Municipality of Amphoe Mueng
|| Evaluated operating cost of aerated lagoon in each local
|Source: PCD (2003b). Remark: Other municipals
in each province referred to the regulation of Municipality of Amphoe Mueng
||Evaluated operating cost of activated sludge in each local
|Source: PCD (2003b). Remark: Other municipals
in each province referred to the regulation of Municipality of Amphoe Mueng
|| Total provincial budget of public service, social development
and budget per capita, and Current operating abatement cost of each province
|Source: Bureau of the Budget (2006) and PCD
|| Abatement cost of each type of aqua culture
|Source: PCD (2005b)
|| Operation cost of each type of aquaculture
|Source: PCD (2005b)
|| Revenue of each type of aqua culture
|Source: PCD (2005b)
|| Revenue and cost of abatement for each industrial activity
|aRotating Biological Contactor, bUpflow
Anaerobic Sludge Blanket. OIE (2006)
||The necessary parameters of the model
Mathematical Decision-Making model:
Pig farm production:
Urban community production: