Abstract
USAID's Industrial Environmental Management Project (IEMP) in the Philippines (1992-97) worked with the government and private sector to introduce waste minimization and pollution prevention to small and medium-size industrial firms outside Metro Manila. IEMP results and impact are documented in this report. A central feature of IEMP was the pollution management appraisal (PMA), a simple assessment of ways to reduce industrial pollution through low- or no-cost techniques and equipment that could both increase production and reduce waste and emissions. PMAs were done for 143 companies, which invested a combined total of $27 million to implement PMA recommendations. This resulted in annual net benefits of $33 million and an average decrease of 29% in water pollution, confirming that industry-led economic growth can be compatible with environmental protection in the Philippines. However, few firms have sustained IEMP benefits, the PMA process has not been institutionalized, and the PMA process has not been replicated. Lessons learned are as follows: (1) PMAs can effectively reduce pollution at the company level and are likely to have greater credibility with senior personnel if conducted by specialists rather than generalists. It is more cost-efficient to conduct PMAs industry by industry so that industry-specific expertise can be provided all at one time. PMA recommendations, including what can and cannot be achieved, must be explained carefully to company managers. PMAs are not a panacea, nor can they guarantee compliance with environmental standards. (2) Companies are likely to adopt low-cost techniques that have an immediate effect on pollution reduction and cost savings rather than measures requiring a large capital outlay and a long payback period. (3) Companies are also motivated to implement and maintain waste-minimization and pollution-prevention programs by command-and-control measures, such as environmental regulations and pollution standards, provided the measures are strictly enforced and the penalties are severe. Often this is not the case in the Philippines due to insufficient resources in the Department of Environment and Natural Resources; cease-and- desist orders are issued only for the most egregious offenses, and penalties and fines are relatively low. (4) Also effective are market-based instruments, which use economic incentives to influence a company's behavior by encouraging the company to act in its own self-interest. For example, imposing pollution charges on companies that discharge effluents into the environment effectively internalizes the costs of their pollution. IEMP concentrated on market-based instruments. (5) A way must be found to institutionalize the PMA process in order to provide continuity once the project ends, perhaps by working more closely with trade associations, a government agency, or private companies that have a financial in- terest in waste minimization. (6) While a pilot project can demonstrate the benefits of waste minimization, sustainability must be assured. IEMP assumed that waste-minimization tech- niques, once adopted, would generate substantial benefits and that companies would sustain these techniques over time. That was not always the case. Some companies may not have obtained the financial benefits estimated in the PMA; this jeopardized the credibility of the overall process. Others faced shutdown orders for violating environmental standards shortly after participating in IEMP. Additional problems include lack of follow-up to PMAs and, possibly, lack of commitment to waste minimization by senior company management. Sustainability seems to take root most often in large international companies, where corporate image counts and managers reinforce the goal of cleaner production and pollution prevention. Constant support and vigilance from top company management may be the key to sustainability. (7) Replication of pollution-prevention measures is normally not in the best interests of businesses that have already reduced costs by adopting such measures. (8) Data collection is essential to establish a baseline against which to monitor progress and measure results. Data, however, must be collected on appropriate indicators. An important goal of IEMP was to improve human health by reducing water pollution. But the pollutant that was measured, biochemical oxygen demand, does not directly affect human health.