TED Case Studies


Chile Air Pollution


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          CASE NUMBER:          134 
          CASE MNEMONIC:      CHILEAIR 
          CASE NAME:          Chile Air Pollution



I. IDENTIFICATION 1. The Issue Chile has experienced a period of strong economic growth. As growth has proceeded at a rapid pace, the health and productivity costs of environmental degradation have become apparent. Air pollution in Santiago, the country's capital, is the most obvious environmental problem of the nation. Santiago experiences very high levels of air pollution, often exceeding guidelines suggested by the World Health Organization. Air pollution in Santiago causes significant health damage, including premature death and serious respiratory diseases. Air pollution in Santiago is caused by industrial and vehicle emissions as well as street dust blown from unpaved roads and eroded hillsides. Not only is air pollution aggravated by thermos inversions but also because the city's location is in an enclosed valley with limited wind and little rain. Therefore, those factors limit the dispersion of emissions from traffic and industry from Santiago's Metropole. 2. Description The economic policy under the military government (1973- 1990) emphasized the development of a free-market economy based on non interventionist principles and strong export-orientation (monetarist policy). The government at this time viewed Environmental protection as detrimental to economic growth. Also, the population affected by environmental problems was largely excluded from political decision-making. There was neither a coherent body of environmental regulations nor a central environmental authority in Chile. Environmental rules and regulations were fragmented and without effective enforcement. There was no national legislation requiring the assessment of environmental impacts of investment projects, and new projects were approved and modified monthly. Basic environmental data was either lacking or collected sector by sector and not compiled in a manner useful for environmental management. The transition to a popular elected democratic government in 1990 represented an important political milestone and has resulted in an increasingly open debate about the future of the country. Both the people and the government have become aware that the environmental cost of past growth is being borne by the population at large and the country's natural resources base. Aylwin's government has made protection of the environment and responsible management of Chile's rich natural resources an important part of its program. In his speech to a joint session of Congress on May 21, 1992, President Aylwin outlined the government's strategy for improved environmental management. He cited that environmental management would be a central element of the development strategy for the country. The new government of President Frei, which took office in March 1994, is expected to continue this emphasis on sound environmental management. There is a strong commitment by the government to environment protection, and the environmental sector has been undergoing a process of rapid change and maturation. "The government's strategy is based on the "polluter pays" principle that combines the use of both economic incentives and direct regulations to promote efficient and sustainable development, which explicitly considers environmental factors. Santiago's air pollution represents the most difficult challenges faced by the authorities responsible for reducing the damage caused during the years of environment's negligence. There are two causes that led Santiago to have such a problem. First, "the population of Santiago has grown from 1.4 million in 1960 to an estimated 4.8 million currently, representing 37 percent of the country's population." Second, industrial pollution represents another problem that arises primarily from the mining sector and smelter operations (see COPPER case). Also, thermal power plants are some significant contributors to CO2 emissions, which contribute as greenhouse gases to global warming. Air pollution from thermal power plants is currently not a major concern at the national level, for example when compared to pollution from the mining sector. Therefore, increased population densities and associated levels of economic activity have led to increased pollution. Air pollution in Santiago results from fixed and mobile sources. Moreover, the topographical, climatic, and meteorological conditions in Santiago make air pollution worse. Also, Santiago cities■ location is in an enclosed valley with limited wind and little rain and thermal inversion throughout most of the year, which limits the dispersion of emissions from traffic and industry. By indicators provided by WHO/UNEP in 1992, Santiago's air quality in an international perspective is among the worst (see Table 134-1). Studies have shown significant effects of the air pollution levels found in Santiago on human health, including premature death, respiratory deceases such as chronic bronchitis, pneumonia, and asthma, and other health effects including coughing, snoring and night awakening. "The costs of air pollution include the costs of cleaning, reduced vegetation and agricultural productivity, and vision impairment resulting in lost amenity value and lost revenue from tourism. An additional cost category is productivity loss incurred due to emergency measures imposed during periods of intense air pollution." The emergency measures include the closing of schools, restricting the operation of polluting industries, and limiting the operation of vehicles. Table 134-2 shows the days of pre emergency and emergency measures during the last years, generally occurring between May and August. Table 134-1 City Comparison of Air Pollution CITY Total Suspended Particles Sulphur Dioxide Calcutta 393 54 Beijing 370 115 Tehran 261 165 Mexico City 100-500 80-200 Bangkok 220 34 Santiago 210 38 Manila 120-250 20-50 Athens 178 34 Bombay 140 23 Sao Paulo 50-85 35-62 Los Angeles 46-115 0-10 New York 61 60 Tokyo 51 20 WHO Recommendations 60-90 40-60 Source: WHO/UNEP (1992), World Bank (1992), other World Bank reports. Table 134-2 Emergency Measure Days in Santiago Year Preemergency Days Emergency Days 1990 11 2 1991 9 2 1992 14 2 1993 8 0 Source: CEDRM Public sentiments and policies already reflect willingness to undertake control measures to reduce air pollution in Santiago. Chilean law has long recognized the right to live in an unpolluted environment. The "Lay sobre Bases Generales del Medio ambient" establishes the National Commission for Protection of the Environment (CONAMA), the polluter pays principle, and institutional responsibilities in terms of standards and programs represent this right. In Santiago, the Special Commission for Pollution Prevention and Reduction in the Metropolitan Region (CEDRM), established in 1990, works with ministries when specific courses of actions are recommended. The regulations that establish emission standards are based on health ministry legislation. The ministry's metropolitan environment health service also operates the city's air pollution monitors. Pollution control measures may be justified in a cost- benefit analysis based on health benefits alone. Therefore, the first principle of an environmental strategy is the application of integrated environmental management based on the comparison of costs and benefits. The main strategy for achieving integrated environmental management is to let the prices of all goods reflect their full social costs, including environmental damages. The challenge facing the government is to define the limits of individual property rights where the rights of others to a clean environment are violated and to expand secure property rights to those natural resource and environmental goods where they have no yet been established. Finally, important steps have been taken with the passing of the Basic Law and the strengthening of CONAMA. There is a strong commitment on the government's part to environment protection, and the environmental sector has been undergoing a process of rapid change and maturation. The government has taken many important steps to address the issue and improve the previously fragmented regulatory and institutional framework for environmental policy. At this stage however, the institutional and regulatory framework still requires substantial strengthening. 3. Related Cases JAPANAIR case VENEZ case SULFUR case KORPOLL case Keyword Clusters (1): Trade Product = MANY (2): Bio-Geography = TEMPerate (3): Environmental Problem = Pollution Air [POLA] 4. Draft Author: Marcela Rabi B. LEGAL Clusters 5. Discourse and Status: AGReement and INPROGress The government has taken many important steps to address the issue and to improve the previously fragmented regulatory and institutional framework for environmental policy. The government strategy is based on the "polluter pays" principle. It combines the use of both economic incentives and direct regulations to promote efficient and sustainable development. Emphasizing market-based policies, the government, in theory, favors environmental policies based on market-based instruments. In practice, however, command-and control regulation is still the most common approach. The Chilean constitution in Article 19.8 alludes to the right to live in an environment free from contamination. Also, it assigns to the government the responsibility for enforcing this right and guarding the preservation of nature. Beyond this constitutional right, there was no coherent legislative framework governing environmental management. Instead, there was a proliferation of sectoral ad-hoc regulation affecting the environment. Generally action was only taken to address particularly severe localized problems, regulations were incomplete, overlapping, and in part contradictory. As a result, there are more than 2,000 specific environmental regulations contained in about 700 laws and decrees. There is often uncertainty about the validity of and institutional responsibilities for regulations, and many regulations are not effectively enforced. Formal environmental institutions are relatively new in Chile. As a result, sector authorities followed their sectoral interests and have issued regulations that are in many contradictory cases. The government decided to address environmental issues not through a large centralized agency or separate ministry but through a coordinating body. For example, in 1990, the government created the National Commission for the Environment (CONAMA, Decree 240/June 5, 1990, replaced by Decree 444/October 9, 1991) as a small environmental agency to coordinate and implement national environmental policies, strategies, and action plans. In the same year, the government created a Special Commission for Decontamination of the Metropolitan Region (CEDRM) under the Ministry of the Interior to address the high levels of pollution in Santiago (Decree 349/1990). In 1994, Chile's parliament passed the Basic Law about the Environment (Law 19.300), which went into effect on March 1, 1994. The Basic Law establishes a framework for environmental management in Chile and specifies the details of the constitutional guarantee to an environment free of contamination. Similar, the Basic Law establishes Regional Environmental Commissions (COREMAs). Several initiatives at the sectoral level have been launched including the establishment of emission standards for different fixed and mobile sources (see Table 134-3). Table 134-3 Environmental Sectoral Regulations Particulate Emissions from Fixed Sources Decree 4/1991 Regulation of SO2, Arsenic and Particulate Emissions Decree 185/1991 Automotive Vehicle Emissions Decree 211/1991Source: CONAMA 1994. It appears that the measures taken over the last three years are insufficient to lead to a significant improvement in air quality. However, the decline in air quality has been arrested despite a continuing increase in population and industrial activity. Some measures taken are expected to produced air quality improvements over time. 6. Forum and Scope: CHILE and REGION Chile is a contracting party or signatory of the major international environment conventions including the Climate Change Convention, the Montreal Protocol, the Convention limiting the movement of hazardous wastes, and the UNEP South-East Pacific Convention (see MONTREAL case). Chile is involved in the development of international environmental management standard (ISO 1400). USAID is providing assistance, among others, in the area of biodiversity, and development of environmental quality indicators. UNDP coordinates technical Assistance under the Global Environment Facility (GEF). 7. Decision Breadth: 1 (Chile) 8. Legal Standing: LAW C. GEOGRAPHIC Clusters 9. Geographic Locations a. Geographic Domain : South America [SAMER] b. Geographic Site : ANDES c. Geographic Impact : CHILE 10. Sub-National Factors: YES 11. Type of Habitat: TEMPerate Air pollution gets worse in the winter months, particularly May through August. "In this period, particulate concentrations in Santiago are among the highest in any urban area in the world.■ What happens is that Santiago metropolitan area stays inside a gigantic bubble of smog that is due to the thermos inversions and the limited wind and little rain that limits the dispersion of emissions from traffic and industry. D. TRADE Clusters 12. Type of Measure: Regulatory Standard [REGSTD] 13. Direct vs. Indirect Impacts: INDirect 14. Relation of Measure to Environmental Impact a. Direct Related : YES OILGAS b. Indirectly Related : YES CHEMical c. Not Related : NO d. Process Related : YES Pollution Air [POLA] 15. Trade Product Identification: MANY 16. Economic Data Due to the necessity to reduce Santiago's air pollution by enforcing some laws, the economy of the city has been suffering some adjustment since then. For instance, CEDRM establishes pre- emergency and emergency measures when air pollution measurements exceed certain critical levels. The emergency measures include the closing of schools, restricting the operation of polluting industries, and limiting the operation of vehicles. Therefore, when all those activities have to stop, children and students cannot go to school, industries paralyze their production, and people have to find another mean of transportation to go to work. In addition "Santiago banned 2,600 pre-1972 buses, constituting one-fifth of the bus fleet. Those reforms have helped speed up transit times, reduce congestion and pollution, increase occupancy rates, and bring down fares. Also, the new regime has promoted private investment in two trolley lines in the downtown area." 17. Impact of Trade Restriction: HIGH 18. Industry Sector: MANY The mining sector plays a key role in the Chilean economy, is 55.9 percent of foreign investments, 47.3 percent of exports and 8.2 percent of GDP. The principal mining activity is the extraction of copper. With an extraction of 2.0 million tons per year (1993), Chile is the world's largest copper producer. Annual extraction is expected to increase to 3.7 million tons by the year 2000. The mining sector also extracts coal, iron, gold, silver, molybden, iodine, oil, and saltpeter. The mining process makes polluting materials that were previously bound in solid rock accessible to air and water resulting in the emission of dust at the mining site. The smelters, which concentrate ore, are an important source of air pollution with SO2, arsenic, and particulate matter. 19. Exporter and Importer: MANY and MANY A good way to control air pollution is to introduce vehicle emission standards. Mexico, for instance, has been trying to reduce air pollution by adopting vehicle emission standards. Following Mexico's example, Chile has now started to import vehicle emission standard from Mexico. In the past Chile had been importing cars from the Brazilian industry. The reason for this is that Brazilian cars' production did not offer vehicles with emission standards. V. ENVIRONMENTAL Clusters 20. Environmental Problem Type: Pollution Air [POLA] "The main conventional atmospheric pollutants in Santiago are total suspended particles (TSP), particle matter smaller than 10 microns (PM-10), carbon monoxide (CO), ground-level ozone (O3), nitrogen oxides (NOx) and sulphur oxides (SOx)-which contribute as greenhouse gases to global warming. Air pollution in Santiago results from a combination of transport (diesel fuel) and industrial sources. SO2 Originates primarily from industrial processes. NOx and CO originate primarily from vehicles. TSP pollution is caused in large part by street dust blown from unpaved roads, open lands and eroded hillsides surrounding the city. Diesel buses and industrial sources also contribute significantly to PM-10 emissions. Conventional urban air pollutants are considered the most important problem. In addition, there is atmospheric pollution with toxic substances, such as lead and hydrocarbons. 21. Name, Type, and Diversity of Species Name: Many Type: Many Diversity: 1,269 higher plants per 10,000 km/sq (Chile) 22. Resource Impact and Effect: HIGH and REGULatory 23. Urgency and Lifetime: MEDium and MEDium Santiago experiences very high levels of air pollution, often exceeding guidelines suggested by the World Health Organization. Air pollution in Santiago causes significant health damage, including premature death and serious respiratory diseases. The biggest threat to health comes from fine particulate matter (PM-10, particles less than 10 microns in diameter, sufficiently small to penetrate deep into the lungs) yields health benefits from the reduction of other pollutants. Beyond pollution control measures currently under implementation, additional cost-effective options for PM-10 reductions are available. In the medium term, a focus of air pollution control strategies on PM-10 is justified. 24. Substitute: Alternative Energy [ALTER] Chile is developing large hydropower resources, which will help limit its dependence on imported oil and reduce additional air pollution. Also, additional uncertainty for the PM-10 compensation system is created by the expectation that a natural gas pipelines from Argentina to will be available in Santiago shortly after the last step in the implementation of the emission compensation system in 1997. The use of gas would be a substitute for diesel in the industrial sector of Santiago, thus reducing the air pollution problems. VI. OTHER Factors 25. Culture: YES 26. Trans-Boundary Issues: YES Air pollution in Santiago contributes to global environmental problems, such as global warming and the greenhouse effect, which are expected to lead to global climate changes. 27. Human Rights: NO 28. Relevant Literature Arensberg, Walter, M.L. Higgins, R. Asenjo, F Ortiz, and H. Clark. 1989. "Environment and Natural Resource Strategy in Chile. Mimeo. Washington, D.C. Aranda, Carlos F., Sanches , Jose Miguel, J. Angulo, B. Ostro, G.S. Eskeland. 1994. "Air pollution and health Effects: A study of Lower Respiratory Illness among Children in Santiago Chile". BKH Consulting Engineers and Universidad de Chile. 1992. "Environmental Management Plan for the Metropolitan Region of Santiago". Draft Report to the Government of the Netherlands and Chile. BKH Consulting Engineers. 1992. "Environmental Management Plan for the Metropolitan Region of Santiago". Draft report to the Comision Especial de Descontaminacion region Metropolitana, Santiago. Baumol, William and Wallace Oates. 1988. The Theory of Environmental Policy, 2d ed. Cambridge: Cambridge University Press. Comision Nacional del Medio Ambiente. 1992. "Chile: Informe Nacional a la Conferencia de las Naciones Unidas sobre el medio ambiente y desarollo". mimeo. Eskeland G.S., E. Jimenez and Lili Liu. 1994. "Energy Pricing and Air Pollution: Econometrics Evidence from Manufacturing in Chile and Indonesia", World Bank. Herendeen, Robert. 1994. "Needed: Examples of Applying Ecological Economics". Ecological Economics 9: 99-105 Lutz, Ernest, editor. 1993. Toward Improved Accounting for the Environment. Washington, D.C.: The World Bank Ormazabal, Cesar S. 1993. "The Conservation of Biodiversity in Chile". Revista Chilena de Historia Natural 66: 383- 402. O'Ryan, Raul. 1994. "Sustainable Development and the Environment in Chile: a Review of the Issues". mimeo. O'Rayan, Raul Enrique. 1993. "Cost effective policies to improve air quality in developing countries: case study for Santiago, Chile". Ph.D. Dissertation, Economics, University of Carolina at Berkeley. Ostro, Bart. April 1994. "Estimating Health Effects of Air Pollution: A Methodology with an Application to Jakarta". World Bank Working Paper Series. Ostro, Bart. 1993. "Estimating the Health and Economic Effects of Air Pollution Control Strategies in Santiago", Chile. Ostro, Bart. Jose Miguel Sanchez, Carlos Aranda, and Gunnar S. Eskeland. 1994. " Air Pollution and Mortality: Results from a Study of Santiago", Chile. Pearce, David and Jeremy Warford. 1993. World Without End: Economics, Environment, and Sustainable Development. New York: Oxford University Press. Prendez, Margarita, y Jorge L. Ortiz. 1982. "Estimacion de la fraccion de origen natural en los aerosoles atmosfericos de Santiago de Chile". Bol.Soc.Chil.Quim. 27/1, 283-85. Sanchez, C. Jose Miguel. 1994. "Unit Cost estimates of Health Outcomes Associated with Atmospheric Pollution in Santiago", January. Shafik, Nemat, and Sushenjit Bandyopadhyay. 1992. "Economic Growth and Environmental Quality". Policy Research Working Paper WPS 904. Washington, D.C.: The World Bank. Silva, Marcela, Vera Daher, Marta Adonis and Lionel Gil. 1993. "Dano Cromosomico en el cariotipo humano provocado por agentes cacinogeneticos del aire de Santiago" Revista Chilena Cancerologia, Vol. 2: 31-35. Trucco, Ramiro G. and Gilda Bellolio. 1991. "Environmental Issues in Chile". mimeo. Turner, Sean H., Christopher Weaver and Michel J. Reale. 1993. "Cost Emissions Benefits of Selected Air Pollution Control Measures for Santiago", Chile, December. Ulriksen, Pablo, Marcelo Fernandez y Ricardo Munoz and Gunnar S. Eskeland. 1994. "Simulacion de los efectos de estrategias de control de emissiones sobre las concentraciones de contaminantes atmosfericos en Santigao, mediante un modelo simple de dispercion de contaminantes". United Nations, Commission for Latin America and Caribbean. 1991. "Sustainable Development: Changing Production Patterns, Social Equity and the Environment". Santiago. United Nations Environmeta Program. 1993. Environmental Data Report 1993-94. Blackwell, Oxford. World Bank. 1992. World Development Report 1992: Development and the Environment. Washington, DC. World Resources Institute. 1994. World Resources 1994-95. Washington, DC. WHO/UNEP. 1992. Urban Air Pollution in Megacities of the World. World Health Organization, United Nations Environment program. Blackwell, Oxford. References

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