Each year over 50 million cubic meters of industrial effluents and sewage are dumped into the coastal waters of Israel by special permit of the Inter-ministerial Committee for Issuance of Discharge Permits without any discharge fee. This amount does not include municipal sewage from treatment plants. Actual total effluent and sewage discharges are estimated at over 100 million cubic meters.

The Committee is committed by law to issue permits only when companies have applied the Best Available Technology (BAT) economically achievable for effluent treatment. Currently, the Committee lacks the appropriate tools to evaluate whether a permit applicant is actually complying with this BAT requirement.

This report evaluates discharge fees that should have been collected from those requesting permits. It finds that millions of shekels stay in the hands of corporations rather than going towards the application of best available technologies or a governmental fund for protecting the environment. Issuing permits without demanding any discharge fee results in marine pollution and lack of advanced treatment technologies.

Findings

The economic analysis shows that currently there exists a market failure which hurts both the national treasury on one hand and the public’s health on the other. According to a calculation of industrial discharge volumes and a treatment fee of 4 to 16.75 shekels per cubic meter (based on existing land based sewage treatment fees for effluent of various quality), the amount of money which is not collected and stays in the hands of the factories, is over 200 million shekels, and may be as high as 900 million shekels.

From evaluations of official corporate earnings reports it is clear that such discharge fees would represent only a small portion of the annual profits of most companies. The report finds that the discharge fee would represent between 1.3% and 5.4% of the annual profits and less than one percent of annual revenues of the 8 companies evaluated. These results indicate that many companies clearly have an ability to implement advanced effluent treatment, but because of market failures, have no incentive to do so.

Summary and Conclusions

The report’s findings and the implications that arise from them paint a worrying picture in which a market failure is negatively affecting both public health and the environment. Effluent fees, which could serve as a positive economic incentive to invest in reduction of and advanced treatment of industrial effluents, are not collected. In addition, the inability on the part of the Committee for issuing discharge permits to adequately evaluate whether companies have implemented BAT, further limits the possibility of reducing marine pollution.

1. Implementation of a discharge fee would result in a reduction of marine pollution by providing an incentive for reducing effluent volumes and improving effluent treatment

2. The cost to most major industrial factories, if there was a reasonable effluent discharge fee, would represent only a small percentage of their annual profits.

3. Similarly, implementation of a discharge fee would result in a reduction in the amount of freshwater consumed by industry by providing an incentive for adopting advanced technologies

4. Adopting BAT as a condition for discharge permits, as required by Article 1 of the Law for Prevention of Marine Pollution from Land Based Sources, is feasible.

5. The State Treasury can increase its annual revenues by an amount ranging from 200 million shekels – roughly equal to that of the annual budget of the Ministry of Environmental Protection – to up to 900 million shekels.

The recommendations of this State of the Sea Report for 2008 are as follows:

1. Implementation of a discharge fee as is instructed by Article 9A of the Law for Pollution Prevention from Land-Based Resources in order to create negative incentives for polluting factories.

2. Use of the money from the discharge fee to create a fund to protect and improve the coastal environment such as the Fund to Combat Coastal Oil Pollution.

The Permit Committee must demand from those requesting a permit to discharge into the sea to invest a reasonable percentage of their yearly earnings in Best Available Technology (BAT) requirement as part of the condition for permit issuance.