15, November, 2013

Economic Instruments for Water Pollution Management in Latin America

What are the success factors behind Latin America’s use of economic instruments to improve water quality and generate new revenue for abatement?

Economic instruments can contribute to sustainable development goals by improving water pollution management practices. This Brief looks at three types of economic instrument implemented in Latin America: water taxes to finance pollution remediation in Colombia; sewage tariffs for pollution abatement in Brazil; and the establishment of a framework to charge for pollution in Mexico. All three measures have increased economic efficiency by reducing pollution costs and, as such, policymakers in countries across Sub-Saharan Africa and South Asia facing similar challenges may benefit from learning about these Latin American experiences. The Brief analyses the implementation of these tools and the enabling conditions relevant to refining water management through market mechanisms in developing country contexts. 

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Key Lessons:

  • Strong relationships between governmental agencies, polluters and local communities can result in actionable policies and achievable targets.
  • Accurate, transparent and agreed rates reinforce polluter commitment.
  • Adequate monitoring is essential for redressing pollution and enforcing payments.
  • Strong national legislation is paramount, yet requires a reliable system to measure, evaluate and report changes.

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