The industrial pollution control regime in India is based on the standards and ... Public interest litigation cases against tanneries culminated in court orders ...
COMMON EFFLUENT TREATMENT PLANTS: AN INSTITUTIONAL ARRANGEMENT FOR POLLUTION CONTROL IN SMALL SCALE TANNERIES IN INDIA U. Sankar* Madras School of Economics 1. Introduction The industrial pollution control regime in India is based on the standards and regulation approach. Source-specific concentration-based standards have been laid down for polluting units and the penalties for non-compliance with the standards are fine, imprisonment
of
officials
responsible
for
non-compliance,
disconnection
of
electricity/water supply and closure of the units. The standards are the same for large and medium units as well as for small units. While most of the large and medium polluting units have been able to erect and operate effluent treatment plants (ETPs), this option does not appear to be viable for many small units because of their small size, and technical, financial and managerial constraints. Common effluent treatment plants (CETPs) are being suggested as a cost-effective option for compliance with the standards for small polluting units in industrial clusters. Tanneries are classified under the category “Red-most polluting industries”. Of the more than 1200 tanneries in India in 1998, about 90 percent came under the small scale sector. Tanneries form an intermediate segment of the leather industry. They get hides and skins from the animal husbandry sector and sell tanned leather to downstream units for manufacture of footwear and leather products. The Government of India reserved many tanning operations and production of certain leather products to small scale sector in order to achieve the goals of employment generation and decentralized pattern of development.
Realizing the export potential of the leather industry, the
Government of India initiated since 1974 a number of policy measures to boost the export of value added leather products. These policies led to the rapid growth of the industry. *
This paper is based on the project report, economic analysis of environmental problems in tanneries and textile bleaching and dyeing units and suggestions for policy action, funded by UNDP. Research support under the World Bank-Ministry of Environment and Forests, Government of India, Capacity-building programme in environmental economics enabled the author to prepare this paper. He acknowledges the research assistance provided by V. Kannan and V. Anuradha.
By 1990 there was growing awareness about environmental damages resulting from the discharge of untreated effluents by tanneries into streams and rivers. Public interest litigation cases against tanneries culminated in court orders directing relocation or closure of tanneries which have not either erected ETPs or connected to CETPs. On the external front, the industry faces two challenges. First, environmental considerations are being brought into the world trade agenda. There is a growing concern that unless the industry meets the prescribed environmental standards, ban or imposition of countervailing duty may affect its exports to developed countries. Second, Indian exporters of leather goods face keen competition form China and south-east and southAsian countries. Therefore, the impact of environmental regulations on production, costs, export competitiveness and development of the industry needs to be assessed. The plan of the paper is as follows. Section 2 describes briefly the evolution of industrial and environmental policies in the leather industry, the trade-off between development and environment, and the options open to the society for sustainable development of the industry. Section 3 deals with the economics of CETPs. This analysis is based on the establishment and working of 5 CETPs in North Arcot district of Tamilnadu. It considers the rationale, institutional arrangement for cooperative management, design, capital and operating costs, cost sharing mechanism, and extent of compliance with the standards. Section 4 examines additional investment requirements and the add-on costs of meeting regulations regarding totally dissolved solids and sludge treatment. Section 5 explores the feasibility of using CETP as a dynamic and cost effective self organization for prevention and control of pollution. The last section contains some concluding remarks.
2.Leather Industry: Development vs Environment Evolution of Industrial and Trade Policies Until 1845 the Indian leather industry remained a rural cottage industry. The village artisans utilized locally available hides and skins to produce leather products to meet primarily local demand. The first modern tanning unit was established in Madras (Chennai) in 1845. The development of railway network provided access to hides and
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skins from the hinterland for tanning units and the existence of port facility at Madras made exports of hides and skins to Great Britain possible. The 1857 uprising necessitated the establishment of Government Harness and Saddlery Factory at Kanpur in 1867 to undertake tanning of leather to make harness and saddlery for the British army in India. Until India’s independence in 1947 leather production was mainly for local markets and only hides and skins and semi-tanned hides and skins were exported. During the fifties and sixties, industrial policies of the government such as reservation of products, exemptions from various proceedural requirements and tax exemptions encouraged the growth of the leather industry in the small scale sector. In the early seventies, both external and internal factors favoured the expansion of the leather industry. In USA,UK and Germany rising real wages in manufacturing as well as public awareness about environmental damages from the tanneries resulted in a gradual shift of the industry to relatively low wage and less pollution conscious countries such as Spain, Portugal, Italy and Turkey. In India, the chrome tanning process was introduced. Basic chemicals (salt, sodium compounds, sulphuric acid), synthetic agents, fat liquors, dyeing and tanning auxiliaries and leather finishing materials were available in India1. During the mid-seventies the government announced a policy package consisting of a ban on export of raw hides and skins, quota restriction on export of semi-finished leather, increase in manufacturing capacity, and many tax concessions to encourage value added leather exports. The compound annual rate of growth of total leather exports increased from 5.5 percent in the two decades, 1951-52–1971-72, to 15.0 percent during 1971-72–1981-82, and further to 19.0 percent during 1981-82–1991-92. The composition of leather exports also changed during the period. The share of leather products in total leather exports which remained below 1 percent in 1971-72 increased to 36.9 percent in 1981-82, to 76.4 percent in 1991-92 and to 80.8 percent in 1996-97. Leather processing upto wet blue (semi-finished) stage is reserved for small-scale industry. Production of footwear and components are also reserved for small enterprises. The investment ceiling on plant and equipment for qualifying for classification under
1
See Sinha and Sinha (1992)
3
small scale enterprises which was Rs. 6.5 million until recently, is now raised to Rs.10 million. Under the new economic policy licenses are issued to large units provided they undertake to export 75 percent of their production. Approval of foreign holding upto 51 percent is given on a case by case. Many fiscal concessions are available to exporters.
Environmental Problems Tanneries belong to the intermediate stage in leather production. They get hides and skins for tanning from cattle, buffaloes, goats and sheep. According to FAO(1992), India’s shares in world livestock were 15.5 percent for cattle, 59.3 percent for buffaloes, 18.8 percent for goats and 3.8 percent for sheep. Despite its large share of 20 percent in bovine (cattle and buffaloe), its share in the world production of hide is only 13.3 percent. Compared with the off-take rate of 35.7 percent for bovine animals in USA, the off-take rates in 1987 for cattles and buffaloes were only 10.8 percent and 20.7 percent respectively (CLRI(1987)). The low off-take rate for cattle, particularly for cows, in India is due to ban on cow slaughter in some states and low collection rates in other states because of the absence of well-organized slaughter houses in many areas. It is estimated that about 600,000 persons, most of them belonging to weaker sections, are engaged in collection, flaying and curing of hides and skins. Environmental problems arise at the pretanning stage in slaughtering the animals, collecting the carcasses, curing and transporting the hides and skins, and also in leaving the carcasses on land. But as these damages are dispersed and are within the assimilative capacities of the regions, they do not yet receive public attention. Most of the tanneries are located in clusters in river basins, for example in the Gangetic basin in Uttar Pradesh and West Bengal, and Palar river basin in North Arcot, and Cauvery river basin in Erode and Thiruchirapalli districts of Tamilnadu. Until the early eighties the pollution problem from tanneries didn’t receive much public attention perhaps because the pollution loads were well below the assimilative capacities of the regions. With the rapid growth of tanneries since the mid-seventies, the adoption of chrome tanning process by most tanners and the continued discharge of untreated effluents into land and water bodies the pollution loads increased at rapid rates. At the same time, the assimilative capacities of the rivers were weakened because of the reduced
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water flows in some months and no water flows in many months of year (because of increasing demands for river water for irrigation, household and industrial uses). Process-wise information about consumption of water and chemicals and wastes generated at different stages of tanning are given in Sankar(1998/2000) . The tanning process from raw to finish stage requires 35 to 40 litres of water per kilogram of hide/skin processed and applications of various chemicals. Particulars regarding concentration ranges for a few selected pollution parameters along with the permissible norms are given in Table 1. It is obvious that the concentration ranges for parameters such as suspended solids (SS), totally dissolved solids (TDS), biochemical oxygen demand (BOD) and chemical oxygen demand (COD) and sulphides are relatively higher for vegetable tanning than for chrome tanning; the concentration ranges for TDS and chromium are higher for chrome tanning than for vegetable tanning. In terms of volumes, about 68-80 percent of the hides and skins processed and more than 90 percent of the water used become “wastes”. The cumulative impact of tannery effluents on water quality, human health and soil use in the affected areas of North Arcot are summarized in Sankar (1998/2000). The Water (prevention and control of pollution) Act was passed in 1974 which paved the way for the establishment of central and state pollution control boards. The Tamilnadu Government adopted the Act in August 1981 and constituted the Tamilnadu Pollution Control Board (TNPCB) in February 1982. In 1984, TNPCB notified the tolerance limits for various pollutants present in the effluents depending on the mode of disposal of effluents into inland surface water, public sewers, marine coastal areas or land. The Directorate General of Technical Development Constituted a committee under the Development Council for Leather and Leather Goods in 1986 to prepare a Fiscal Plan for setting up CETPs for Indian tanning industry. The Committee found the feasibility of establishing 70 CETPs in 14 states with an indicative aggregate capital cost of Rs.530 million (excluding land cost at 1985-86 prices). Despite the legislation in 1981, the establishment of TNPCB, and the notification of the standards in 1984, the regulations were not enforced; nor was any serious effort made to establish CETPs. It was only after the Vellore Citizens Welfare Forum filed a
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public interest writ petition (C) No.914 under Article 32 of the Constitution of India before the Supreme Court in 1991, the tanners, regulators and other interested parties awakened2. In a judgement dated 1, May 1995, the Supreme Court ordered the closure of units with no ETPs or not connected to CETPs. In a landmark judgement dated August 28,1996, the Supreme Court directed the Central Government to constitute an authority under Section 3(3) of the Environment (Protection) Act 1986 to implement the "precautionary principle" and the "polluter pays principle" and to compute the compensation for reversing the ecology and for payment to the affected individuals. It also ordered the tanneries in the five districts to set up CETPs or individual pollution control devices on or before November 30, 1996.
The Trade-off On the external front, two factors affect the export prospects of the industry. Between 1988 and 1994, export of leather and leather products from China increased at an annual compound rate of 32.6 percent, from Hong Kong at the rate of 27.9 percent and from Thailand at the rate of 21.3 percent; the corresponding rate for India was only 7.4 percent. In 1995-96, India's share in world exports of leather and leather products was only 4 percent . The second factor is that USA and European Union may either restrict import of leather product from India or impose countervailing duties on these imports because their environmental standards are tougher than the standards in India. Thus the trade-off between development and environment in the leather sector is obvious. Tannery pollution is a local 'public pad' as it has adverse environmental impact in tannery towns and nearby areas. Compliance with the environmental standards may solve the local environmental problems and enable the industry to retain its access to foreign markets. But what are the costs of compliance with the standards? There is a genuine fear that the compliance costs may be high because most tanners are small in size, their technologies are obsolete and they lack technical and managerial skills for pollution prevention and control.
2
In 1991, the Supreme Court interpreted the fundamental right to life and personal liberty to include the right to enjoy pollution free air and water.
6
Four options are available to tanners for pollution control in tanneries: (a) closure, (b) relocation, (c) ETP, and (d) membership in a CETP. Of these options, (a) closure option, except perhaps in case of few isolated tanneries, is not a socially desirable option. It will have adverse backward and forward linkage effects. Relocation may involve heavy social and economic costs to the people affected and to society at large. Further, most persons adversely affected by closure or relocation belong to weaker sections or minorities. ETP is feasible for larger units, it may also be a low cost option for some isolated units compared with closure or relocation. CETPs appear to be a cost effective option for most tanneries in industrial clusters. The interesting questions are: What is the economic rationale of a CETP? What are the hurdles in establishing and managing CETPs? How are they designed? What are their capital and operating costs? How are the costs being shared? Whether or not they comply with the standards? If not, what are the technical options for full compliance? What are the add-on- costs? Is there any scope for making CETP a dynamic and cost effective social and economic institution so that the industry can develop while meeting the environmental standards? We try to seek answers to the above questions.
3. Economics of CETPs Rationale The major reason for establishing a CETP is economies of scale in wastewater treatment. The Fiscal Plan suggested the feasibility of establishing 70 CETPs in 14 states with an indicative aggregate capital cost of Rs.530 million., excluding the cost of land. Establishing a CETP in tannery cluster involves physical connections between tanneries and the CETP. Utilizing the data available for 65 clusters on capital cost (C), estimated volumes of waste water (F), and number of tanneries (N) in each cluster, we estimated the following regression equation by ordinary least squares method:
Ln C= - 0.8690 + 0.7879 ln F + 0.0547 ln N (0.0315) (0.0050) (0.0099) R2 = 0.9976
Degrees of Freedom = 62.
(Figures in brackets are standard errors of the regression coefficients).
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The elasticity of capital cost with respect to the volume of waste water is less than one at the 5 percent level of significance. The elasticity of capital cost with respect ot the number of tanneries, as expected, is positive and above zero at the 5 percent level of significance. Based on the project cost data for 28 CETPs planned in Tamilnadu in 1995-96, the following capital cost function was estimated by the least squares method3: Ln C = 0.9923 + 0.5100 ln F + 0.2528 ln N (0.3831) (0.0835) (0.0912) R = 0.9073
Degrees of Freedom = 25
Thus there is significant economies of scale in waste water treatment. Mehta, Mundle and Sankar (1993/1997) report that the elasticity of operating cost with respect to the volume of waste water in ETPs set up by large and medium paper and pulp units is also less than one. Apart form the economies of scale, there are other factors which favour CETPs. They are eligible for subsidy on project costs from the central and state governments. The subsidy amount by central government is 25 percent of the project cost subject to a maximum amount of Rs. 5 million; the state government also provides subsidy subject to the above condition. The tanners are required to provide 20 percent of the project cost by way of share capital. They can get the balance amount of the project cost by way of loan from financial institutions. CETP, as a cooperative venture for collective action, confers many benefits to its members and to society. Each tannery is small in size , its information base about clean technologies and wastes minimization is poor and its managerial capabilities are limited. A CETP can seek technical help
from technical institutions, government and
international agencies such as UNIDO, UNDP, UNEP and World Bank. It can hire technical persons for management. The society can achieve cost saving if the monitoring task by Pollution Control Boards can be shifted from individual tanneries to CETPs. The
3
The data are given in Sankar (1998/2000)
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society can also benefit from improvement in environmental quality if the CETPs can meet the standards. Hurdles Even though the rationale for CETPs is obvious, there are many hurdles in establishing and operating CETPs. First, the end of pipe treatment involves capital cost in the form of contribution to equity shares and recurring cost to meet interest and repayment of loan, and operating costs. As these abatement costs would affect their unit production costs and hence their international competitiveness, the tanners adopt “wait and see” attitude. Second, preparation of a technical and cost effective plan for a CETP requires good information base on spatial distribution of tanneries and volume of and concentrations of pollution in the effluents from each source, and technical expertise for location of a site for CETP, design of conveyance system for bringing the effluents from tanneries to CETP, design of CETP, treatment processes to be followed, and estimation of costs and allocation of costs among members. The third problem is getting approval of the technical plan by authorized technical experts, approval of technical and financial plan by funding agencies, and finally getting the approval of government agencies for the site, conveyance system and mode of discharge of treated effluents and solid wastes. All theses actions involve delays and transaction costs.
Operational CETPs: Design, Costs and Performance The Supreme Court case brought together the All India Skin and Hide Tannery and Merchants Association, Tamilnadu Leather Development Corporation, Central Leather Research Institute, National Environmental Engineering Institute, TNPSC and the affected parties in speeding up the establishment of CETPs. At the time of our field study, 5 CETPs were in operation in the tannery clusters of Ranipet and Vaniyambadi in North Arcot district of Tamilnadu . Our analysis is based on the data collected from the 5 CETPs and other sources as given in Sankar (1998/2000) Particulars regarding number
of
beneficiaries, process capacity, volume of
effluents and length of sewer are given in Table 2. All 5 CETPs are registered under Section 25 of the Companies Act. The size of CETP, in terms of number of members, varies from 10 to 110, amd in terms of volume of effluent from 200 to 4000 m3 or kilo
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litres per day (KLD). The length of the sewer varies form 1.5 km to 8.00 km. Of the 5 CETPs, SIDCO Phase I CETP consists of member tanneries who process hides and skins from semi finished stage to finished stage. The technical design features of CETPs are given in Table 3. The economic costs, both capital and operating and maintenance costs, are furnished in Table 4. These costs are computed at 1995-96 prices. The procedure for computation of capital cost per KLD of wastewater is as follows. First, all capital costs are converted to 1995-96 prices. Second, the annualised capital costs are computed using the assumptions of 20 years of plant life and cost of capital at 15 percent per annum. Third, the capital cost per KLD is based on the assumption of full utilization of capacity for 365 days in a year. The capital cost per KLD varies from Rs. 9.30 for the CETP with maximum designed capacity to Rs.23.58 for the CETP with lowest designed capacity. The actual share of government subsidy in capital cost varies from Rs.7.00 to Rs.20.00. These estimates provide further evidence for economies of scale in wastewater treatment. Details of the cost sharing schemes for member units in the 5 CETPs are furnished in Table 5. It may be observed that the basis for equity contribution as well as monthly contribution varies among the CETPs – installed capacity in terms of kg of hides and skins processed or number of pieces of hide/skin processed or volume of effluent or a flat rate4. The monthly contribution for operation and maintenance and improvement is based not on the volume of effluent or concentrations of pollutants. The only justification for use of such of measures appears to be that they are readily observable and measurable. For the purpose of comparison, all the costs are expressed in terms of cost per kilogram of hides and skin processed. It should be noted the actual costs differ from the economic costs given above because (a) economic costing excludes government subsidy, (b) the actual interest rates on loans differ from the assumed interest rate, and (c) the periods for repayment of loans differ from the assumed life of the CETPs.
4
The concept of installed capacity in terms of kilograms of hides and skins processed is a crude measure, as the value weights for different hides and skins differ. Even the measure of number of pieces makes some sense if it refers to a particular hide or skin, but even here there is considerable variation in quality in each group.
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The pollution parameters before treatment (at inlets) and after treatment (at outlets) are given in Table 6. In order to assess the CETPs extent of compliance with the standards, the parameter values at the outlets should be compared with the norms of the TNPSC. All the CETPs comply with the standards for pH, sulphide and total chromium. The CETP at SIDCO phase I violates the standards for 4 parameters – BOD, COD, SS and TDS. Melvisharam violates the standards for SS and TDS. For all the 5 CETPs, the TDS values at the outlets are far above the norm of 2100 mg/l. Discussions with the designers of the CETPs reveal that CETPS were not designed to solve the TDS problem.
4. Add-on costs for TDS Reduction and Sludge Treatment Add-on costs Compared with various technical options for TDS reduction, two options – membrane separation (reverse osmosis (RO) process) and high rate transpiration system (HRTS) are under experimentation. An attempt is made to estimate the tentative costs of TDS removal by both methods. Based on discussions with the equipment suppliers, the cost estimates for adopting the RO process by 4 CETPs are given in Table 75. The annualised capital cost is calculated at 1995-96 prices, assuming 20 year plant life and cost of capital at 15 percent. The rejection rate for RO plant is assumed to be 20 percent. The investment requirement for treatment of the rejected water via solar evaporation plant is estimated at Rs.225/m2 for an evaporation rate of 4.5 mm per m2. The capital cost per KLD effluent treated works out to Rs. 10.93 for all CETPs except Udayendram; for Udayendram the cost is higher, that is, Rs.13.11. The capital cost for solar evaporation plant (SEP) is taken as Rs.5.34 KLD. The market price of water in this area was Rs.30 per KL during the study period and hence at 20 percent rejection rate, the value of water recovered per KL of effluent treated is Rs.24. As the gross operating cost is below the value of water recovered in all CETPs except Udayendram, their net operating costs are negative. The total cost per KLD effluent treated varies from Rs.4.27 to Rs. 22.45. 5
SIDCO Phase I is omitted as members of this CETP process leather from semi-finished stage to final stage, and hence TDS reduction is not a major problem.
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NEERI (1997) recommended the application of HRTS for solving the TDS problem in the effluents discharged by the Ranitec CETP. Based on certain assumptions, Sankar (1998/2000) estimates the tentative capital and maintenance costs per KLD of wastewater treated at Rs. 0.94 and Rs. 0.59 respectively. Sankar also provides estimates of sludge treatment costs. Comparison of RO option with HRTS option shows that HRTS is a low cost option. But there are two problems with the HRTS option. First, the required land may not be available near a CETP. Second, there are many uncertainties regarding the cumulative impact of using the wastewater on soil quality and products from the trees. The RO process is costlier, but it enables recovery of 80 percent of the used water. In a water scarce region like North Arcot district, the social benefit of recovering and reusing the water is high.
Economic Costs of Pollution Abatement Now, we present estimates of pollution abatement costs per KLD of effluent treated. The total pollution abatement economic cost consists of (a) the existing CETP economic cost, (b) add-on cost under RO or HRTS and (c) sludge treatment cost. Based on NEERI’s recommendation for additional investments for better utilization of Ranitec CETP which amounted to Rs. 1.31 per KLD, we adjusted the cost figures for the existing CETPs. These cost details for 4 CETPs are given in Table 8. With the RO option, abatement economic cost per KLD of wastewater treated varies from Rs.20.76 for the largest CETP to Rs.66.18 for the smallest CETP; with the HRTS option the corresponding variation is from Rs.18.02 to Rs. 45.26. The economic costs of pollution abatement per kg of hides and skins processed and as percent of sales are given in Table 9. The abatement cost as percent of sales is less than one percent. The conversion cost of one kg of raw hides and skins into finished leather is in the range Rs.28 to Rs.356. Hence the abatement cost as percent of the conversion cost can range form less than 1 to about 3. Sankar (1998/200) carries out a similar exercise for 7 ETPs in the same region. The economic abatement cost per KL of wastewater treated varies from Rs.74.25 to 6
See Sankar (1998/2000), Chapter 3 for the cost structures, by firm size and process.
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Rs.126.95, and the abatement cost per kg of hides and skins processed varies form Rs.2.12 to Rs.7.93. The abatement cost as percent of sales is lowest (0.56) for an ETP with capacity of 400 KLD and for units with capacities of 60 or below are in the range 1.62 to 2.71. In fact this percentage share for the largest ETP is smaller than the share for the smallest CETP, namely 0.85. Hence we can conclude that for plants with designed capacity of less than 400 KLD, CETP is a cost-effective option for full compliance with the standards. Then what are the reasons for the delayed responses of tanneries to establishing CETPs and their reluctance to invest on the add-on investments for TDS reduction and sludge treatment? Even though theses costs form less than one percent of sales, as percent of the conversion costs they can be a high as 3 percent. Second, even in the case of Ranitec CETP, the largest CETP in our sample, the incremental capital cost for the RO plant is abut 1.6 times the cost of existing CETP. For some tanners, the annualised capital cost and annual operation and maintenance expenses they have to pay are as high as the rental price of capital for their main plant. Third, there are some uncertainties regarding the RO process. As this process is new, its financial viability is yet to be demonstrated. Further, there is no easy technical solution for treating or disposing the rejected water from the RO plant. Experts propose two options ; (a) disposal of the waste water by pipeline to sea, and (b) disposal in a land-fill7. Fourth, as a highly competitive industry, its exports prospects depend as external factors, such as environmental and trade policies of developed countries and world demand for leather. Internally, unless, the environmental standards are enforced by all states and all tanners abide by the regulations, there is an incentive to shirk on the part of each tanners.
5. CETP as a social and economic organization Rawls (1971) lists three desirable attributes of a social organisation, namely, equity, efficiency and stability. If we view the establishment and management of CETP as a voluntary collective action problem, then it must practice democratic proceedures in framing rules and must have incentive and penalty structures for enforcing the rules. 7
These two options were explored in an International Consultation Meeting on Technology and Environmental upgradation in Leather Sector organised by the Central Leather Research Institute and the Council of Scientific and Industrial Research, New Delhi, November 29-30,1999
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As we noted earlier, CETPs were created out of domestic pressures and fear of loss of exports markets. In our study area, CETPs are nonprofit companies registered under the Companies Act.
The members of CETPs are the polluting units and their
power in managing the CETPs are proportional to their shares, which depend on some measure of pollution load. As the decisions are being made at the meetings of the General Body, they can communicate with each other and introduce changes in rules, programmes and policies, as and when circumstance warrant. We envisage ample scope for transforming the CETPs into dynamic and efficient self-organisations to achieve development with improved environmental quality. This is a challenge and an opportunity. This goal can be achieved if the following changes are initiated. An environmental management information system (EMIS) must be set up for each CETP. A necessary prerequisite for establishing the EMIS is installation of meters at the outlets of the member units. The meters should record both the volume of and concentrations of major pollutants in the waste water discharged into the conveyance system. The meters must be tamper proof and be connected to CETPs, if feasible. The advantages of installing metres at the sources are (a) generation of good data base on pollution loads on real time basis, (b) effective monitoring of member tanneries, and (c) scope for introduction of economic instruments for pollution prevention and control. EMIS can be of great help to CETP management in carrying out its operations. The information about pollution loads will also be useful to industry organisations and to the regulators. With a reliable information system, monitoring and enforcement can be at the CETP level instead of at the firm level. This means cost-savings to Pollution Control Boards. Shifting of environmental risk from tanneries to CETPs will permit pooling of risk and sharing of costs of risk. With a EMIS, it will be feasible to introduce a three part tariff. The first part will cover capital-related cost. The second part will be in the form of user charge based on both the volume and concentrations of pollutants in the effluent. The third part will be customer related cost. The tariff revision can be made once a year. If a member can achieve reduction in the volume of or /and concentrations of pollutants in the effluent, the
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member must be given rebates on the charges. If, on the other hand, a member increases the pollution load, he should pay, in addition to the user charges, penalties on the excess loads. The cost sharing agreements should be incentive compatible in the sense that each member’s contribution should be between his incremental cost to the CETP and his stand alone cost. Such a scheme will make CETP a stable institution. There is scope for pollution prevention by tanneries. Ramasami (1999) reports that by adoption of in-plant control measures, net reductions of 30 - 35 percent in the levels of BOD and COD, 50-60 percent in sulphide, 98 - 99 percent in chromium and 20 - 25 percent reduction in dissolved solids are feasible. CETP, as a social organisation, can create incentives for its members to adopt the in-plant control measures. Adoption of such measures will enable the tanners to expand production while containing the aggregate volume of effluent. It is worth experimenting a tradable permit system among members of each CETP. The rationale for introducing the system is its cost effectiveness. Tanners’ abilities in reducing pollution loads via adoption of pollution prevention measures or primary treatment and their marginal costs of reducing/abating pollution differ, because they are heterogeneous in terms of size, vintage, raw material processed, process adopted and management skills. A tradable permit scheme based on the volume of effluent and concentrations of pollutants in the effluent discharged will provide incentive to each tanner to search for least cost options for reduction of pollution loads. When a firm achieves pollution reduction it can use the surplus permit for capacity expansion or sell it to another member.
Hence with the same CETP capacity tannery production can
increase. CETP itself as a large organisation can seek technical assistance from universities, institutions and international agencies on pollution abatement, recovery and reuse of water and chemicals, and safe disposal of wastes.
6. Concluding Remarks Tannery is a highly polluting industry. In the Indian context, there is a need for finding a cost effective and sustainable solution to environmental problems caused by tanneries. About 90 percent of the tanneries in India are in the small scale sector and
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most of them are located in small towns. As an intermediate segment of leather industry, its growth is crucial for the animal husbandry sector and for the downstream leather products sector. Most people engaged in collection and curing of hides and skins are from the weaker sections. Leather industry's contributions to employment and exports are significant. India has a comparative advantage in leather production because of its strong raw material base, rich tradition of leather craftsmanship and availability of cheap labour. This potential is not yet fully tapped. The government can play a catalytic role in solving the environmental problem. In fact past government policies, such as, reservations of products to small scale units, ceilings on investments in plant and equipments, incentives to adopt chrome tanning process and lax enforcement are partly responsible for the present environmental problem. At present the government role is confined to provision of subsidy, subject to a ceiling, on the project cost of CETPs. There appears to be no justification for a ceiling on subsidy for CETPs.
Subsidies for installation of meters to record volume of and
concentration of pollutants in tannery outlets, investments in facilities for recovery and reuse of water and chemicals, and technological upgradation of tanneries are in the public interest. In industrial towns, the necessary infrastructure should be created for combined treatment of household sewage and industrial waste water. Such facility exists in Kanpur.(see Pandey and Deb(1998)). There may be economies of scope in the joint waste water treatment. The government must also take necessary steps to enable the exporters to meet the environmental standards stipulated by some developed countries. We have suggested a number of measures to make the CETPs viable social organizations for pollution prevention and control. The government, industry associations and technical institutions should provide the necessary technical information and managerial expertise to tanners and CETPs. The tanners, CETP management and the industry associations should realise that the polluter pays principle and the precautionary principle have been recognized as principles of environmental policy by the government, the courts and also international agencies. Given the domestic regulatory pressures and external pressures, the tanners must use CETP as an institutional mechanism for solving the environmental problems caused by them.
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TABLE 1 CHARATERISTICS OF WASTEWATER FROM TANNERIES AND THE DISCHARGE NORMS
Parameter
Raw to finish vegetable tanning concentration range (1) (2) pH 8.7-9.5 Suspended solids(SS) (mg/l) 3000-5600 Totally dissolved solids (TDS)(mg/l) 8500-19680 2300-2650 BOD 5d,20°c (mg/l)
Raw to finish chrome tanning concentration range (3) 7.5-8.5 3000-4500 14000-20500 1200-2500
Discharge norms in India Surface (4) 5.5-9.0 100 2100 30
Sewer (5) 5.5-9.0 100 2100 350
5320-7160
3000-6000
250
250
75-90
20-40
2
2
Chromium total (mg/l)
8-22
80-250
2
2
Oil and grease (mg/l)
17-43
28-55
30-100
30-100
COD (mg/l) Sulphides (mg/l)
Source: Figures in columns (2) and (3) are from Sankar (1998/2000) Figures in columns (4) and (5) are based on Tamilnadu Pollution Control Board norms.
TABLE 2 CHARACTERISTICS OF CETPs IN THE STUDY AREA
Name of the company
1. 2. 3. 4.
Ranitec Melvisharam SIDCO Phase I Vanitec (Udayendram) 5. Vanitec (Valayampet)
Year of No. of beneficiaries CETP Operation Existing Proposed 1995 1997 1995 1995 1991
76 22 81 10 110
0 15 6 0 0
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Total Volume of Length process of sewer effluent capacity Design Current (kms) (kgs/day) m3/day m3/day 134000 4000 3000 7.60 82450 3375 1200 1.50 117500 2500 1300 6.86 8000 200 200 2.20 83600 2850 2400 8.00
TABLE 3 WASTEWATER TREATMENT: DESIGN OF CETPs
Name of the Company
Processes in Tanneries
Segregation of soak and pickling waste water from other effluents
Equalisation and flash mixer
CETP design Primary Biological solid treatment separation First Second stage stage
Sludge treatment
1. Ranitec
Mixed
Separation & treatment at the tanneries
E FM
PC
ANL, PAT AT I
2. Melvisharam
Mainly R-F
Separation & treatment at the tanneries
E FM
C
AT I
AT II
SDB
3. SIDCO Phase I SF-F
Not necessary
E FM
C
AT I
AT II
SDB
4. Vanitec (Udayendram)
Two separate Lines to CETP
E FM
C
AT I
AT II
SDB
E FM
PC
ANL
AL
SDB
5. Vanitec (Valayampet)
R-F
Mainly R-F
Two separate Lines to CETP
E: Equalisation FM: Flash Mixer C: Clarifloculator ANL: Anaerobic Lagoon AT: Aeration Tank AL: Aerated Lagoon ST: Sludge Thickener
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PC: Primary Clarifier PAT: Pre-Aeration Tank, SDB: Sludge Drying Bed
SDB ST
TABLE 4 CAPITAL AND OPERATION AND MAINTENANCE COSTS PER KILOLITRE/DAY OF WASTE WATER TREATED (at 1995-96 prices)
Company 1. Ranitec 2. Melvisharam 3. Sidco Phase I 4. Vanitec (Udayendram) 5. Vanitec (Valayampet)
Capacity Utilisation per cent 75 36 52 100 84
Capital Rs. 9.30 17.25 13.25 23.58
Cost O&M Rs. 7.00 15.00 13.18 20.00
Total Rs. 16.30 32.25 26.67 43.58
15.06
8.18
23.24
Government subsidy Rs. 2.08 1.23 1.75 7.65 2.17
TABLE 5 COST SHARING BY MEMBER UNITS
Name of the Company
1. Ranitec
Basis for contribution of equity
Rs.68.66/kg of hide/skin/day 3
Annualised capital cost per kg of hides and skins Rs. 10.95
Basis for monthly contribution For O & M and For Total Improvement servicing the loan
Cost per kg of raw material processed Rs.
Rs.6/kg of hide/skin/day
Rs.10/kg of hide/skin/day
0.44
Rs.11/kg of hide/skin/day
0.47
Rs.9498.80/ Member
0.29
Rs.7/kg of hide/skin/day
Rs.4/kg of hide/skin/ day
2. Melvisharam
Rs.2400/m of effluent/day
9.57
3. SIDCO Phase I
Rs.83908/ member
9.25
Rs.6321.80/ member
4. Vanitec (Udayendram)
Rs.175/piece/ day
22.33
Rs.15/piece/ day
Nil
Rs.15/piece/ Day
0.55
5. Vanitec (Valayampet)
Rs.80.62/ piece/day
10.29
Rs.10/piece/ day
Rs.5/piece /day
Rs.15/piece/ day
0.51
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Rs.4/kg of hide/skin/ day Rs.3178/ member
TABLE 6 PERFORMANCE OF CETPs (Pollution Parameter Values at Inlets and Outlets)
Parameter
Ranitec
Melvisharam
SIDCO Phase I
Vanitec (Udayendram) Outlet Inlet Outlet
Vanitec (Valayampet) Inlet Outlet
Inlet
Outlet
Inlet
Outlet
Inlet
8.0
6.1
7.6
7.1
6.72
8.1
8.23
5.12
6.9
7.0
4460
87
2588
84
920
168
3660
58
3660
58
** 20686
15326
** 16400
16300
*** 2926
3690
* 6056
8006
* 7014
5674
3016
27
1820
20
962
49
1500
22
1500
22
9728
224
3640
292
4400
520
6664
282
2320
244
122
1.5
12
BDL
BDL
BDL
26.2
BDL
48
BDL
17.1
0.653
BDL
BDL
BDL
BDL
127.3
BDL
BDL
BDL
8.6
4.9
42
BDL
6
4
5
2
12.8
9.6
BDL
BDL
BDL
BDL
BDL
BDL
BDL
BDL
BDL
BDL
pH
Suspended Solids, mg/L Total Dissolved Solids, mg/L BOD5, mg/L COD, mg/L Sulphide, mg/L Total Chromium, mg/L Oil & Grease, mg/L Hexavalent Chromium, mg/L
BDL : Below Detection Limit * Soak liquor segregation effective low TDS ** Soak liquor segregation ineffective high TDS *** Soak liquor segregation not necessary SF – F process
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low TDS
TABLE 7 CAPITAL AND OPERATING COSTS OF RO PLANTS
Name of CETP
Effluent volume
Installation cost Cost Total Flow per m3 cost 3 m /hr. (Rs. in (Rs. in lakh) lakh) 150 5.00 750
Cost per KLD effluent treated in Rs Capital cost Operating Total cost cost RO Plant SEP Gross Net 10.93 5.34 12 -12 4.27
Ranitec
3000
Visharam
1200
60
5.00
300
10.93
5.34
16
-8
8.27
Udayendram
200
10
6.00
60
13.11
5.34
28
4
22.45
Valayampet
2400
120
5.00
600
10.93
5.34
12
-12
4.27
TABLE 8 ECONOMIC COSTS OF POLLUTION ABATEMENT: PER KLD OF EFFLUENT TREATED (in Rs.)
Name of CETP (1) Ranitec Visharam Udayendram Valayampet
Existing CETP Cost (2) 16.30 32.25 43.58 23.24
RO (3) 4.27 8.27 22.45 4.27
Add-on Cost Total Cost HRTS Sludge Treatment (2)+(3)+(5) (2)+(4)+(5) (4) (5) 1.53 0.19 20.76 18.02 1.53 0.11 38.63 33.89 1.53 0.15 66.18 45.26 1.53 0.15 27.66 24.92 TABLE 9
ECONOMIC COSTS OF POLLUTION ABATEMENT PER KG OF RAWMATERIAL PROCESSED
(at 1995-96 prices) Name of CETP
Abatement costs (in Rs.) With With HRTS RO
(1) (2) (3) Ranitec 0.57 0.65 Melvisharam 1.04 1.18 Udayendram 1.14 1.66 Valayampet 0.86 0.95 RO : Reverse Osmosis process
Shares of abatement costs in Private cost Sales With With With With RO HRTS RO HRTS (4) (5) (6) (7) 0.41 0.46 0.29 0.33 0.74 0.84 0.53 0.60 0.81 1.19 0.58 0.85 0.61 0.68 0.44 0.48
HRTS: High rate transpiration system
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REFERENCES Central Leather Research Institute (1987), Report of All India Survey on Raw Hides and Skins, prepared for the Ministry of Commerce, Government of India, Chennai. _____ (1990), Report on Capacity Utilisation and Scope for Modernisation of Indian Tanning Industry, prepared for Industrial Development Bank of India and State Bank of India, Chennai. _____ (1986), The Fiscal Plan for Setting up CETPs for Indian Tanning Industry, Chennai. Food and Agricultural Organization (1992), World Statistical Compendium for Raw Hides and Skins, Leather and Leather Footwear, 1972-1990, Rome 1992. Mehta, S, Mundle, S. and Sankar U. (1997): Incentives and Regulation for Pollution Control, Sage, New Delhi. National Environmental Engineering Research Institute (1997): Waste Management in Cluster of Tanneries in Tamil Nadu: TALCO-RANITEC CETP, Ranipet. Pandey, R. and S.Deb (1998): CETPs and Pollution Abatement in SSIs, National Institute of Public Finance and Policy, New Delhi. Ramasami, T. (1999): Upgradation of Technology and Environment in Leather Sector: A Call for Technology Policy Dialogue, Keynote Address at International Consulation meeting on Technology and Environmental Upgradation in Indian Leather Sector, India Habitat Centre, New Delhi, November 29-30, 1999. Rawls, J (1971): A Theory of Justice, Harvard, Cambridge Mass, USA. Sankar, U. (1998/2000): Economic Analysis of Environmental Problems in Tanneries and Textile Bleaching and Dyeing Industries, UNDP Project Report, Chennai: Madras School of Economics, Allied Publishers, New Delhi. __________ (1998): Laws and Institutions Relating to Environmental Protection in India, Presented at the Conference on the "The role of Law and Legal Institutions in Asian Economic Development", held at the Erasmus University, Rotterdam, November 1-4, 1998. MSE Occasional Paper No.2. Sinha, S. and S. Sinha (1992), Indian Leather Industry – The Challenge of Modernisation, Oxford and IBH Publishing Co. Pvt. Ltd. Supreme Court of India (1995, 1996): Judgements on the Public Interest Litigation Writ Petition filed by the Vellore Citizens Welfare Forum, May 1, 1995 and August 28, 1996.
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