Impact of Environmental Regulation on Small Scale Industries - Cost-Benefit Approach for Secondary Lead Smelting Units. Abstract

Transcription

1 Impac of Environmenal Regulaion on Small Scale Indusries - Cos-Benefi Approach for Secondary Lead Smeling Unis Snigdha Chakrabari Economic Research Uni Indian Saisical Insiue Calcua, India Nia Mira Deparmen of Economics Calcua Universiy Calcua, India Absrac For proecing he global environmen, he adopion of abaemen echnology and improved producion process is almos mandaory now in he indusrial secor. As a consequence, one finds various environmenal regulaions being implemened. However, he small scale indusry componens of he indusrial secors, which conribues significanly o oal polluion, are ye o adop such abaemen echnology on a wide scale. A major cause for such a siuaion may be he difficulies ha he small unis encouner in being able o calculae correcly he ne benefis of invesing in abaemen relaed. An empirical exercise on esimaion of socio-economic and environmenal impac of environmenal regulaion implemened in Secondary Lead Smeling indusry suggess ha he Cos-benefi Analysis may be he mos appropriae mehod for comparaive assessmen of he decisions of he invesors regarding addiional invesmen in his respec. I also helps o idenify he exac facor(s) influencing heir decision making. Key words: Cos-Benefi Analysis, Environmenal Regulaion, Small-scale indusry, Abaemen Technology and Secondary lead smeling unis. Address for communicaion Snigdha Chakrabari Economic Research Uni Indian Saisical Insiue 23 B. T. Road Calcua 7 35, India snigdha@isical.ac.in

2 1 Impac of Environmenal Regulaion on Small Scale Indusry -Cos-Benefi Approach Applied in he Secondary Lead Smeling Unis 1 1.Inroducion: To conrol he emission from producion process, air qualiy regulaion lays downs sringen equipmen specificaion ha require o be implemened by he polluing indusries. The adopion of producion and abaemen echnology is mandaory now wih respec o global environmenal problem. However while relevan echnology and conrol equipmen may be developed and available for use, he imporan quesion is wheher hey may be adoped or by-passed by he firm. Obviously, he decision o adop is largely deermined by a proper assessmen or comparison of cos and benefis of such devices. Thus from he regulaory auhoriy s poin of view he improvemen of air qualiy is very imporan. While such improvemen would be beneficial o he environmen and o he overall socieies welfare, from he polluing firm s poin of view invesmen in equipmen /echnology ha enhance air qualiy, would be worhwhile when he effecive rae of reurn from such invesmen may exceed he cos of adopion. In oher words, he wo alernaive course of acion before he firm, namely, he decision o produce by regulaing emissions or o op for closure of operaions is influenced by an assessmen of he comparaive cos and benefis of hese alernaive opions. One hus realizes ha he objecive funcion of he regulaor and regulaed, so far as air polluion abaemen is concerned, may no necessarily converge. While social planner are more concerned wih he overall social welfare, he privae invesors decision regarding he addiional invesmen for he adopion of he conrolling echnology may be guided by heir own profi maximizaion moives. This paper is an aemp in exploring he way in which opimal decisions relaing o air polluion conrol echnology are reached in a paricular indusry belonging o he small-scale secor. Now he small-scale secor in India which conribues o more han 4per cen of he value added in manufacuring and more han 35per cen of he expors (boh direc and indirec) 2, occupies an imporan place in India s indusrial srucure. Wih his secor s desirable feaures in erms of labour inensiy, disribuional implicaions, flexibiliy, decenralizaion poenial and enrepreneurship developmen 3, he overall growh of his secor has been quie impressive. The figures pu he growh rae achieved a 8.33per cen over he previous year, which is a higher rae han he 6.4per cen growh of he overall indusrial secor. Under he presen liberalized regime and he ransiion of he indusrial secor owards greaer marke orienaion, he fuure growh prospecs of his secor (SSI) appears o be brigh. Wih subconracing emerging o be an imporan sraegy of large mulinaionals under he economic reforms 4, producive aciviies are expeced o graviae owards he small and he unorganized 1 This is a par of a research projec. We are exremely hankful o Wes Bengal Polluion Conrol Board(WBPCB) for providing funds and Nodal Research Cenre(NRC) o carry ou he sudy smoohly. We are graeful o Professor D.K.Bose who ook keen ineres in every sage of he sudy. We would like o hank Shri Somnah Narayan, Environmenal Engineer and Ms. Sharmisha Kundu, Assisan Environmenal Enginner, WBPCB, for exending heir help in conducing he survey and giving access o he secondary informaions available wih he Board. We would like o hank Professor Robin Mukherjee and Professor Dipankar Coondoo of Indian Saisical Insiue, Calcua for heir suggesions and commens regarding he sudy. 2 Approach o he Ninh Five Year Plan (1999-2) 3 Hussain (1997) 4 Janardhan (1997); Ramaswamy (1999)

3 2 secor. Wih he considerable employmen poenial of he small enerprises, invesmen and echnology upgradaion is of much imporance under he presen scenario. However, in he lieraure on developmen and environmen, one finds emphasis on wo conroversial characerisics of small-scale enerprises. On he one hand, from he poin of view of susainable developmen, small indusries are valued in developing counries 5, on he oher hand, from he environmen poin of view, since hey add o he polluion problem, are considered o be relaively hazardous. One hus encouners a dilemma in his respec. I is here ha he search of he policy makers is owards he developmen of appropriae polluion conrol echnology specific o he ype of indusry, such ha he paradoxical siuaion may no persis. The developmen and availabiliy of such echnology is now a realiy. While a few unis in he small secor have been able o adop such abaemen devices, mos ohers have failed o insall hem. Operaing wih unskilled labour, under highly compeiive unregulaed marke, he willingness and abiliy o conrol he level of polluion effecively, have generally been found o be missing. Also he acual knowledge abou he economic, social and environmenal feasibiliy of such abaemen echnology may be difficul o acquire or calculae on he par of such small producers. Thus i becomes clear ha polluion abaemen in small-scale enerprises requires wo pre-condiions. Firs is he developmen of clean echnology and second is he calculaion of economic, social and environmenal significance of such echnology in clear erms of acual benefis ha may be accrued. In his regard now he widely used and popular analysis ha is generally adoped in economics for such comparaive assessmen of decisions is he Cos-Benefi Analysis. This paper deals wih an exercise on he Cos Benefi approach for calculaing he impac of environmenal regulaion applying o he Secondary Lead Smeling unis of he small-scale enerprise, ha are locaed in and around Calcua meropolian area. This sudy also helps o idenify he relevan facors ha may be crucial in explaining he flexibiliy and viabiliy of echnology adopion. On he basis of a case sudy of he few firm which have been able o insall he abaemen device, i will be objecive o undersand he consrains ha may operae wih respec o he oher firms ha are ye o insall he echnology for air polluion abaemen The repor has been organized as follows. In he nex secion, a review of he secondary lead smeling unis wihin our sudy area, deails regarding heir aciviies and role in polluion conrol have been discussed in brief. The producion process, developed abaemen echnology and is use in hese unis has been described here. The nex secion is devoed o a deailed discussion abou he daa se and mehodology ha has been used in he sudy. The analysis of he daa is repored in secion four. Conclusions have been presened in he final secion. 2. Secondary Lead Smeling Unis and Air Polluion: A Review In Calcua over he las 4 o 5 years, a number of secondary lead smeling facories have been coninuing producion. As evidence shows almos all he owners of such unis came from he adjoining sae of Bihar and Uar Pradesh. The reason for he locaion of such unis in he sae of Wes Bengal may perhaps be raced o he weaher of he sae, which along wih oher facors was conducive o he producion of baery (we), for which he major inpu is lead. The baery indusry is boh he 5 Schumacher (1989)

4 3 major consumer of lead as also he generaor of hazardous indusrial wase conaining lead. Quie a subsanial amoun of lead is being recovered from lead sheahings, wase lead, acid baeries and so on ogeher making up for abou 5 per cen of he oal supply of lead used in various indusrial applicaions. This share may be expeced o increase furher in he coming years. While Secondary Lead smeling unis play significan role in recycling of hazardous wases, a he same ime, on accoun of heir emission of flue gas and dus, hey are a source of air polluion. I is largely on accoun of he inensiy of heir conribuion o air polluion, ha such unis have been classified by he auhoriies as belonging o he red caegory of indusry. In recen years, hese unis, being locaed wihin or in close proximiy o residenial areas, have been subjeced o much communiy pressure for improved environmenal program. Such pressures are in addiion o he sringen regulaions ha have been inroduced by he Polluion Conrol Board. The regulaor has also involved he services of, scieniss, engineers and echnologiss o evolve appropriae echnology, he adopion of, which may be boh feasible and viable o he firms. In hese unis he producion process is simple where smeling operaion is carried ou in an oven, called vai, where charcoal is used as fuel and wase lead as inpu. Liquid meled lead along wih slag comes ou afer a period of ime. The slag is firs separaed ou from he liquid lead and hen final oupu, called lead ingo, is made by pouring he liquid ino moulds. Two or hree charges are required o exrac maximum amoun of lead from he lead wase, and afer ha he slag conaining abou 2 per cen lead is finally disposed of. The enire producion process is carried ou by hree labourers. A he ime of operaion a flue gas and lead dus are generaed which are hazardous in naure and have o be cleaned. The purpose of he conrol device is o clean and de-dus he flue gas conaining chemical componens and lead dus paricles ha are generaed in he process of smeling operaion, before i is released o he amosphere. A diagram of he producion process and conrolling sysem has been shown in Appendix 1. The flue gas and dus are rapped in he conrol device wih he help of ID fan(induced draugh fan) and pass hrough (i) a cyclone/impac separaor, (ii) bag filer and (iii) a scrubber. While cyclone / impac separaors are designed for he collecion of bigger sized paricles, bag filers in he bag house arres almos all he dus from he dus and allow only cleaned gas o pass hrough. 3. Daa and mehodology: 3.1 Mehodology The use of air polluion conrol echnology is one such measure, which obviously has wo sides, i creaes values and i imposes coss. To a producer in a smeling uni he invesmen for he insallaion of any abaemen echnology along wih is operaion and mainenance cos is an addiional one over and above he cos of producion which is relaively lower. On he oher hand, benefi may be obained from he use of device in wo ways, by preserving hea for he use of improved vai (producion process) required for operaing he device which saves he consumpion of fuel and by reusing he dus colleced wih he help of conrol device. A profi maximizing producer or privae invesor akes he invesmen decision regarding conrol echnology by aking ino accoun he ne profi a he margin. From his poin of view, i is he involved cos and he generaed profi ha are crucial variables in deermining he choice of conrol echnology.

5 4 Le K = invesmen cos for insalling an air polluion conrol device (inclusive of relaed consrucion work) in he curren year. c m = mainenance cos in h year. c o = operaion cos in h year consising of cos of elecriciy and cos of bags used in Bag house for filering of green house gases coming ou a he ime of operaion of he device. e bf i.e., c = p. E + p bf (1) where, E = consumpion of elecriciy unis a ime, bf = number of bags replaced a ime and p = price of j h inpu a ime j Then, c = i * K + c m + co (2) where c = oal running cos, i = rae of ineres on he capial invesmen. On he benefi side, addiional faciliies obained from he inroducion of conrolling sysem include he following: (i) saving of coal, an imporan inpu, due o he preservaion of hea and (ii) collecion of dus on accoun of he device, which may again be used as inpu, leading o cos economy. Lesser quaniy of inpus needs o be purchased, for some lead can be recovered from he wase dus ha accumulaes. p b = Benefi obained direcly from producion a ime for he use of he device by reducing he consumpion of charcoal and reusing he dus colleced hrough bag house. p f d i.e., b = p. f + p. d..(3) where f = Consumpion of charcoal a ime, d = Amoun of dus a ime, and p = Price of j h inpu a ime. j In conras, a social planner or policy maker is ineresed more wih social cos and benefis of any acion i.e. he cos a sociey bears and he benefis accruing from he relevan aciviy. The ulimae objecive should be o maximize he social welfare associaed wih any acion. As i is relaed o he social welfare problem, he adopion of any abaemen echnology may no be successful unless i is accepable o he polluers and sufferers. The use of conrolling device, insead, may help he sociey by offering a clean environmen. As a resul, he produciviy of human being may increase hrough reducion in loss of mandays due o he conainmen of healh hazards ha unclean echnology creaes. The benefi of his increased produciviy of human being would be enjoyed also by he producers. In addiion, he producion of he conrolling device and is relaed accessories may generae more employmen. The environ menal and social benefi may hen be wrien as b ev = benefi for reducion in loss of mandays due o adverse environmenal impac on human healh; and

6 5 s b = benefi from generaing income from new economic aciviies. Therefore, he oal benefi obained is p ev s b = b + b + b The Cos-benefi approach is inended o compare he ne presen value of he presen and fuure flow of coss and benefis. Hence, he ne presen value oal coss is C L 1 c = K (4) + and oal benefi is B = (1 r) = + L 1 b (1+ r) = Where r = rae of discoun, L= life of he device. (5) The posiive ne benefi, i.e, (B/C) > 1 indicaes he jusificaion of any invesmen. For his indusry a he presen year price level he corresponding ne presen value of cos and benefi would be L 1 c K + (1 r) = + L 1 b (1+ r) = C =.(6) and B =.(7) = = = = L = = = = L as c c1 c2... c 1 and b b1 b2... b 1. The break-even period T is ha ime poin where NPV of cos and benefi would be equal, i.e., K + T 1 c (1+ r) = = T 1 b (1+ r) =..(8) If he price of inpus changes, i.e., inflaion is allowed a (say) π rae per uni of ime hese relaion would become hen K + T 1 = (1+ π ). c (1+ r) = T 1 (1+ π ). b = (1+ r) (9). The payback period l, which is ha period of ime when cumulaive expendiure incurred for he insallaion of he device will be equal o he cumulaive benefi earned from his. l l i.e., k + c = b i = 1 i = 1... (1) 3.2 Daa

7 6 The evaluaion of coss incurred by and benefi obained from he adopion of conrolling measure wih respec o engineering and echnological specificaion is simple because he goods are markeed goods. Bu he evaluaion of social and environmenal coss and benefi canno be done easily due o he fac ha mos of hem are non- markeed goods. Various indirec mehods are used for esimaion of such benefis. Our aemped cos - benefi analysis of such decision making o evaluae he efficiency of he adoped echnology was based on primary and secondary informaion ha were colleced from many sources namely from he owners hemselves, he workers of such unis, WBPCB and he producer of he device. The primary daa were colleced hrough field enquiry. As has been menioned earlier, due o he very small size of he secondary lead smeling unis, which belong o he unorganized informal secor, well mainained and compiled daa se were difficul o come by. Records regarding he producion sysem, oupu produced, inpu used, he cos and price figures, from all he producers were no available o he exen desirable 6. For such informaion he sudy had o depend on secondary sources also. The required informaion regarding producion level, inpu used, emission levels ec, for he respecive unis could herefore be obained from he repors submied o he WBPCB. However, in order o enrich he daa se, since no single source of daa was considered sufficien for he analysis, furher informaion colleced from echnologiss, scieniss, engineers, local people, docors as also from oher records, repors and books, were supplemened. 4.Resuls: Measuremen of Coss and Benefis. 4.1 Financial Aspec As menioned earlier, due o non-availabiliy of informaion abou he level of expendiure, revenue earned and oher such daa i is he addiional benefi derived as a resul of addiional expendiure incurred on accoun of he insallaion of conrol device, ha has been sough o be compared, insead of comparing he benefis obained before and afer he insallaion of abaemen device. For he acual esimaion purpose, he informaion colleced from boh secondary sources and primary sources have been used. As a complee series of informaion is no available, boh cos and benefi have been sough o be esimaed by aking a number of alernaive values. Table 1 depics he range of values for each of cos and price variables ha have been colleced from differen sources. In addiion, following assumpions have been made on he basis of primary and secondary sources of informaion. (i) I may be menioned ha he oldes device has been operaing for he pas six years since 1994, wihou any major shorcoming. Excep for some unnaural causes, i may be expeced o run anoher few years in is presen condiion. The expeced life of he device may be assumed o be a leas 1 years. 6 Though he quesionnaire was prepared o enquire abou all such informaion, ulimaely ha quesionnaire could no be followed sricly. Insead, based on ha quesionnaire he informaion have been colleced hrough discussion.

8 7 (ii)the coss of elecriciy, bags ec. are direcly relaed o he volume of producion and he oal hours of operaion. Though he consumpion of elecriciy increases wih he hours of operaion, he cos of replacemen of bags increases a decreasing rae wih he number of shifs operaed. For he esimaion of oal cos, i is assumed ha if he uni runs only one shif, he replacemen of bags become sufficien for once a year only. However, if he uni runs eiher wo or hree shifs, he bags require o be replaced wice a year 7. (iii) As no addiional labour is required for operaing he device, addiional expendiure on labour use is assumed o be zero here. (iv) The quaniy of dus colleced also varies due o he difference in he qualiy of inpus. For he inpus purchased from he marke, he average amoun of dus is 4 kg / on of lead wase ranging from 35 o 45 kg / on (see Table 2). Bu his amoun is lower, abou 23 kg. / on of lead wase from generaor of said wases. Again experimens on he colleced bag house dus, conduced a differen imes, show ha a leas 3 per cen of lead may be recovered by using he device 8. (v) According o he informaion supplied by he echnologis from he experimen, he gas ha comes ou from he vai a he enrance poin of he device conains SPM on an average 19 mg / nm 3 where he amoun of lead is 7 mg / nm 3 i.e., he proporion of lead in dus is abou 37 per cen. Bu quaniy of SPM and lead is very low, far below he permissible level, a he releasing poin or a he end poin of he chimney 9. This is furher suppored by he informaion obained from he record of he WBPCB colleced from one uni in 1996 before he imposiion of he regulaory measure o sop polluion, where i was shown ha a he vai op he air conained SPM of abou 12 mg / nm 3 SPM of which lead was mg / nm 3. These figures indicae ha he proporion of lead comprised abou 5 per cen of he oal dus iniially, which has now become possible o be colleced hrough he device - a par of which comes ou a he end of he bag house and remaining par becomes deposied in he sedimenaion ank used for he cleaning of gas from where i may again be re-used as inpu. This sudy has used 3 per cen dus recovery rae in general, which may underesimae he benefi. (vi) As regards charcoal i was found ha is price, as repored in he primary daa colleced from he differen unis under consideraion, varies from Rs. 4 / kg. o Rs. 6 / kg. depending on is qualiy. In order o be able o esimae he value of he charcoal saved, on accoun of he inroducion of he device, wo alernaive average values of charcoal, Rs. 4.5 / kg. and Rs. 5. / kg., were assumed. (vii) If he inpu conains 6-7 per cen of lead, he price of inpu may vary from Rs. 16 o Rs. 2. Bu in case of he 25 3 per cen recovery rae, he price comes down o Rs. 8 / kg.. The price of dus which is no a markeed produc, may be considered a Rs. 8 / kg. when i conains lead around 3 per cen of he oal dus, which may be reused in he producion process. 7 The price of elecriciy for indusrial unis is considered as Rs.3 per uni, which is charged by he supplying auhoriy. The number of bags is aken as 28, which is he sandard number in such a uni. 8 Chaerjee e al (1998). 9 The level of SPM, released in he air, is beween 3 13 µg/nm 3 of which amoun of lead is maximum µg/nm 3. These are far below he permissible ranges, which are 5µg for SPM and 1µg for lead per nm 3.

9 8 The esimaion of addiional cos and benefi realised by a firm of a given size has been done for differen alernaive values of fixed coss, mainenance cos, number of shifs operaed, rae of ineres and rae of recovery of dus. The social rae of discouning, which is a naional parameer generally adoped by he policy makers in India 1, has been aken as 12 per cen for he esimaion of he presen value of coss and benefi. Alernaively a 1 per cen rae of discoun, based on he marke rae of ineres, has also been ried. Bu, he resuls have been presened finally for a se of alernaive values, given in Table 2, of invesmen, mainenance cos, amoun of dus generaed for he differen qualiy of inpus used, price of charcoal and for he number of shifs operaed for a given level of price of elecriciy, raw maerial and bag in ables 4 o 6. All he coss and benefis have been esimaed a he 1999 price level. I had been menioned earlier ha previously he secondary lead smeling unis were allowed o run a nigh. Bu he insallaion of he device now enables hem o operae also during he day ime. However, he resuls show ha afer he inroducion of he device he running of he unis in only one shif, i.e., for 6 o 7 hours per day using only 1 MT of lead wase for 3 days per year does no appear o be economically viable, as expeced, if sufficien amoun of dus is no being recovered. (see Table 3). On he oher hand, he increase in he amoun of dus makes, hough marginally, he ne benefi posiive irrespecive of he rae of ineres, level of invesmen. Bu i is evidenced ha he operaion of he unis only for wo shifs per day (around 6-7 hours wih 1 MT of lead wase per shif) and on an average of a oal of 3 days per year generaes quie a significan amoun of addiional benefi over he addiional expendiure for he device as resul of collecion of more dus. The inernal rae of reurn is also significanly high. The pay back period could be achieved wihin wo o five years jus afer he insallaion of he machine (see Table 4). Hence, amoun of dus colleced hrough he conrol device, which would save he purchase of raw maerial, is a crucial facor in achieving he ne benefi from his addiional invesmen. I is menioned earlier ha he dus colleced from he bag house is a porion of he oal dus generaed. Therefore, he use of oal amoun of dus generaed may help o obain posiive benefi even by running one shif per day. In general he recycling indusry is consrained by he lack of guaraneed demand and lack of assured supply of wase. Bu as he demand for lead is significanly high for is various uses and more han abou 5 per cen of oal lead supplied in he marke comes from he secondary lead smeling unis, operaion of wo shifs, which is possible under such he siuaion, should be aken. However, belonging o he informal secor and being small in size heir conrol in he inpu marke may no be smooh. Under such circumsances expeced benefi may no be realised. Provided here exiss assured supply of lead wase, he resuls hen show ha he inroducion of he device, which involves expendiure, is financially gainful from he producer s poin of view if i is properly mainained and operaed. Tables 5 depics he values of break-even poin, on which he firms invesmen decision depends, for differen alernaive values of invesmen cos, price of charcoal, rae of ineres, recovery rae, and for he number of shifs operaed for a given level of operaion and mainenance coss and benefis. I is observed from he ables ha a a given level of benefis and coss he firm may achieve he break-even poin earlier by operaing more number of shifs per day. Bu no change is observed as such in he achievemen of break- 1 Murhy e al (1998).

10 9 even poin even if he inflaion is allowed up o 1 per cen in he esimaion of benefi or cos or boh excep in few cases. 4.2 Environmenal Aspec I is well known ha he secondary lead smeling indusries conribue o environmenal degradaion. There is no reason o deny ha air polluion due o he emission from hese unis conaining considerable amoun of lead in he suspended pariculae maer (SPM) and some gaseous componens have serious negaive impacs on human healh and various economic goods and services boh in and ouside he producion place. The exernal effecs lead o he reducion of produciviy of human resources and also of naural resources and imposes imporan economic and social coss on he sociey. The siuaion, herefore, makes i imperaive ha he measures have o be aken o reduce he negaive environmenal impac for he sake of indusry and sociey. Hence along wih comparison of financial benefis and coss achieved due o he inroducion of such measures, he evaluaion of healh impac associaed wih i, is also essenial for seing prioriy of acion in his respec. The esimaion of ne environmenal benefis quaniaively (if no possible, hen qualiaively) helps he sociey o make more raional decision for allocaing scarce financial resources. The numerical esimaion of environmenal impacs, hough hese are non-markeed goods, is no impossible if proper informaion is available. In one mehod, valuaion is done before he insallaion o assess he feasibiliy of echnology in his conex by esimaing he willingness o pay o avoid he degradaion of he environmen and o be able o live in a pure environmen. Bu difficuly may arise due o he exising populaion disribuion. The willingness o pay may be much higher in case of rich people compared o ha of poor, as being wealhier, hey urn heir aenion increasingly o he qualiy of heir living environmen. Hence he esimaion may become biased. Alernaively, he esimaion of change in he healh effec due o he change in componens of polluans in he air, eiher qualiaively or quaniaively, may give an idea abou he impac of air polluion on human healh and environmen. In he secondary lead smeling indusry he mos imporan polluan is lead coming ou wih SPM. Lead poisoning may cause a grea variey of diseases: a specific syndrome does no exis 11. I has boh shor and long erm effecs on human healh. Mos imporan shor- erm effec of lead on human healh is he abdominal pain, loss off appeie, meallic ase in he mouh ec. The long-erm effecs are renal problems affecing kidney funcion, hyperension, effecs on bone, faigue, join pain, anemia ec. The deposiion of lead on he roo, leaf and surface of he plan has he lead oxic effec causing a problem in phoosynhesis, growh and oher parameers 12. The focus may be made on he esimaion of he shor run impacs on human healh boh in and ouside of he facory premises and environmen, compared o ha of he long run. This is because i is difficul o isolae he impacs of paricular ype of effluen in he 11 Sue e al (1983) 12 WHO (1989)

11 1 long run. I has o be menioned ha he measuremen of he impac on environmen due o he change in he level of polluion is possible only if he required informaion is available. In he presen case of secondary lead smeling unis, no informaion on he componens of air polluion prior o he inroducion of conrol device were recorded properly eiher by he WBPCB or by he facory owners. The only available informaion from he survey of he unis is he amoun of dus colleced hrough he device, which were previously being released in he air. I is, however, possible o reconsruc he level of polluion ha would prevail in he absence of conrol device in he facories from he curren informaion on he emission of polluans recorded by WBPCB officers and he survey daa on he dus colleced hrough he device. The wo ogeher would indicae he poenial for polluion of he facory concerned. The lead dus is absorbed ino human healh by inhalaion and ingesion hrough food. The change in he human healh and in he surroundings wihin he facory premises due o he insallaion of he device were recorded from he survey by inerviewing he older workers, if any, who were found o be working since he no-device period. According o hese workers, he abdominal pain, loss of appeie, meallic ases in he mouh - all he immediae effecs of lead absorpion, which were he regular healh feaures experienced by hem previously, were repored o be oally absen a presen. One possible mehod of esimaion of he damage o healh in moneary erms of his lead - relaed healh hazards would be o esimae he oal expendiure made by he affeced persons owards curing such diseases. However, due o he very naure of he employmen paern observed in hese small-scale indusries such esimaion could no be aemped. The labourers employed in such unis were mosly emporary workers, who migraed from neighboring places. I has been repored ha hey were used o working for shor spans in hese jobs in he pre - device period. However, in he pos - device period he qui - rae or he frequency of leaving jobs had declined significanly. Due o he beer work environmens in he presen conex he workers are willing o coninue wih heir jobs in hese unis. Alernaively an aemp may be made o esimae he loss of labour hours due o absenism in he job, as a resul of ill healh, as a proxy of healh impac. For example, if i is assumed ha a labour may loose minimum wo years from his oal service period of hiry wo years 13, he loss of earning hen may be esimaed as abou Rs. 937 per year a he rae of Rs. 5 per day for 3 days in a year for a labour wihin he enure of his working age. Then for he inroducion of device in an uni employing hree labours per shif, i may be possible o earn a leas Rs more per year from operaing wo shifs by saving he loss of working period as a resul of improved environmen. The ne presen value of his flow of benefi a 1 per cen rae of discoun is abou Rs. 28. during he life years of he device. I would also be considered as he addiional income generaed in he sociey and should be added o he social benefi obained from he inroducion of he device. The growh of fruis and flowers, he absence of any race of lead dus on he leaves of rees, in he pond or waer bodies inside he facory premises may also be aken as an indicaor of cleaner environmen experienced in he pos device period. The benefis from he change in he air qualiy may be realized in erms of (i) increasing produciviy of he labour on accoun of improvemen in he qualiy of healh and (ii) increased efficiency on accoun of being able o remain in he same occupaion and uni for a greaer lengh of his working life. 13 The working age of a hard working labour is assumed as 18 o 5 years.

12 11 These benefis aken ogeher lead o he (a) savings of inpu for opimum and efficien use and (b) saving of money resources in erms of paying same wage rae o he mos efficien workers. These benefis are obained by he producers, which may be deduced from heir acual cos of producion. The growh of fruis and flowers, he absence of any race of lead dus on he leaves of rees, in he pond or waer bodies inside he facory premises may also be aken as an indicaor of cleaner environmen experienced in he pos device period. The measuremen of impac of conrolling air polluion on he neighboring localiy would also be possible hrough a survey similar o he presen sudy. Bu i was beyond he scope of he presen sudy. Observaion from a secondary source is insrucive in his respec, however 14. From such source i is known ha all he shor-erm effecs of lead poisoning, commonly experienced in he pre - insallaion period, were found o have been removed in he pos - device period. Similarly he posiive changes and growh, observed in he naural environmen now, were no observed previously. The value of he benefis enjoyed by he previously sufferers on accoun of he improvemen in he environmen can similarly be esimaed in erms of he expendiure esimaed for caring he relaed diseases and he value of producion obained from naural environmen. Thus he esimaed obained in and ouside he producion uni ogeher, by cleaning he adjoining environmen, is significanly high and have o be adjused wih he cos of producion. 4.3 Social Aspec In esimaing he social cos wih respec o any aciviy, he invesmen of capial made should be assigned some premium as a resul of sub - opimal level of saving and invesmen paerns. The price in his case is ermed as shadow price, which is defined as he presen value of consumpion, which an addiional uni of invesmen feches o he economy. Bu wih respec o his paricular projec like insallaion of conrol device, he bes alernaive use of capial would be he invesmen made in his projec for carrying ou he producion as agains he complee closure of i for non - compliance wih polluion conrol. The social benefis obained from his projec in paricular, are manifold. The clean environmen due o he reducion of dus, which was iniially released in he air, has increased he produciviy of human beings as well as of naure. Anoher significan social benefi of he inroducion of polluion conrol measure is he creaion of new aciviy in he form of he indigenously developed polluion conrol devices. This new aciviy is obviously providing job opporuniies o he sociey, no only in hese producing unis, bu also in he producion of componens such as bags and oher spare pars and as also in mainenance relaed aciviies by locally rained people. In a developing counry wih high level of unemploymen, he opporuniy cos of labour may be aken o be zero. Then, he income earned hrough employmen, in such new aciviies, is obviously an addiion o he naional income. For example from a single uni operaing wo shifs per day, sociey may earn Rs.312. per year or discouned oal 14 A sudy Dushan Niyanraner Prayas, a Bengali aricle based on a survey conduced in he nearby localiy o sudy he effecs of conrol device by WBPCB in 1996.

13 12 income abou Rs. 2. lakhs over 1 years period in he firs round only by rendering mainenance services and producing bags 15. Therefore, addiion of he value of benefis obained from cleaning environmen, creaing new job opporuniies wih he ne physical benefi pus overall ne benefi of he inroducion of conrolling device o a much higher level. As a resul, operaion of one shif may be viewed as viable from he poin of view of sociey and environmen. The aggregae, herefore, indicaes he significance of he abaemen echnology a he social, environmenal and commercial levels. 5. Summary and conclusion A he beginning of his decade he sole regulaory measure ha was adoped by he polluion conrol auhoriy of Wes Bengal was o sop he producion of lead by he secondary lead smeling unis as his producion enailed he disposal of hazardous subsance which pollued he environmen. However, he policy makers realized ha he recycling of hazardous wases which hese Secondary Lead Smeling unis underook and consequen recovery of lead on heir par, which was an imporan inermediae inpu for various producive aciviies, could no be ignored. Hence, he WBPCB, wih he help of local scieniss developed an air polluion conrol device, which migh be insalled by hese unis. Hence, as agains closure opion, here was now before he firms, anoher alernaive, namely, he adopion of such conrol device. However, wha was puzzling was ha, despie his available alernaive, here appeared o be few akers. In oher words, while many firms chose he closure opion, only a few oped for he conrol device ha had been developed. Why were here such a few akers? A possible explanaion may eiher be ha here was no much awareness relaing o he uiliy or disuiliy of adoping such device as because i is difficul o esimae he accrued benefis from adoping he conrol device, or he high insallaion cos, or boh. This sudy was an aemp in esimaing he ne benefis ha was achieved by he unis and sociey a large, from he adopion of conrol device, even hough i involves addiional insallaion coss. The necessary informaion o carryou such a sudy have been colleced from differen secondary sources along wih he primary source by survey of he exising unis wihin Calcua ha adoped he echnology. A cos-benefi mehod was applied o he daa colleced and supposed o be he mos appropriae mehod for he comparison of coss incurred for and he benefis obained from he insallaion of he conrol device from economic, social and environmenal poins of view o sudy he appropriaeness of he invesmen in his regard. I has been observed from he cos benefi analyses ha as agains confining he producion only o he nigh shif as was he pracice earlier, he use of he device enabled he secondary lead smeling unis o operae he facories hroughou he day or o uilize heir full producive capaciy o mee he exising demand for heir producs. The lack of assured supply of inpus would be he only consrain in his respec. The resuls show ha he amoun of dus colleced is a crucial facor o deermine he level of ne benefi obained from he insallaion of he device. I is furher observed ha if dus is colleced properly, hen for all combinaion of coss and prices, each of he unis may be operaed 15 I is he sum of earnings of Rs.2. per year by providing mainenance services and Rs.112. (28x2x2) for he sale of bags.

14 13 profiably even if i runs one shif only. However, i will be highly profiable if he unis run wo shifs per day using one MT of raw maerials per shif for 3 days per year. These findings may be crucial from he poin of view of oher unis in inroducing similar invesmen decisions regarding he adopion of he developed echnology. Apar from he financial profiabiliy consideraions he sysem developed by he WBPCB and he scieniss involves also considerable social and environmenal significance for he workers and he immediae neighborhood surrounding hese unis. Therefore, effors o increase he awareness of he owners of he respecive unis regarding he financial viabiliy of echnology and he judiciousness of heir invesmen decisions relaing o i are of crucial imporance. For he benefi of indusry from he socio-economic and environmenal poins of view financial assisance could also be considered. The deailed analysis of he produciviy of he device indicaes ha i is no only beneficial from he poin of view of he privae producers, bu i also benefis he environmen and he sociey a large. As agains he closure opion, from he sociey poin of view, i is meaningful o coninue he producive aciviy, which is possible by adoping his echnology. Hence, since he iniial invesmen coss which he firms are required o bear is quie significan, i may be capured if financial assisance by way of loans for insallaion of device could be provided o hese small unis. Lasly, i is also o be menioned ha a proper mainenance of he device hrough regular checking of he polluion level by he regulaory auhoriy is an imporan componen o ensure he expeced air polluion abaemen resuls. Table 1: Financial and Oher Informaion of he Secondary Lead Smeling Unis Iem of Informaion Values Maximum Minimum Average (1) (2) (3) (4)

15 14 Cos of Air Polluion Conrol Device Cos of civil consrucion works Cos of mainenance(yearly) (Rs. Lakh in 1996) Number of Filer Bags used ,6.2 Price of Raw Maerials(Rs. / kg.) (i) Baery scrap (ii) Slag (iii) Slag conaining 25-3per cen lead 8 8 Price of coal(rs. / kg) Price of Bag (Rs. / bag) Price of lead ingo (Rs. / kg) Collecion of dus from bag house(kg./kg of raw maerial) (i) Oupu/Inpu Raio-25per cen (ii) Oupu/Inpu Raio-3per cen Source: Repors from WBPCB, Survey daa Table 2: Alernaive values of Iems Used in he Esimaion of Cos and Benefi Iems Alernaive Values (1) (2) Price of device including consrucion cos (Rs. Lakh) Average mainenance cos / year(rs. Lakh) Per uni price of elecriciy (Rs.) 3. Price of bag / piece (Rs.) 2. Price of charcoal / kg (Rs.) Price of dus / kg (Rs.) 8. Life of he device(years) 1 Rae of ineres (per cen) 12 Rae of discoun (per cen) 12 1 Proporion of lead in dus(per 3 cen) No. of bag used 28 Working day per year 3 Source: See Table 1 Table 3: Esimaed Physical Benefi-Cos Raio (B/C raio), Inernal Rae of Reurn (IRR), and Pay Back Period (a 1999 price level) for a Given Level of Invesmen and Rae of Recovery of Dus in a Uni Operaing One Shif. A Level of invesmen Rs.4. lakhs and rae of recovery of dus.23 kg per kg of inpu.

16 15 Invesmen (Rs. Lakh) Recovery rae of dus/kg of inpu(kg) Rae of ineres (per cen) Mainenan ce cos Rs. 4.5 per kg /year (Rs. Lakh) B/C raio IRR Pay back period (years) Price of charcoal Rs. 5. per kg. B/C raio IRR Pay back period (years) (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) Rae of discoun = 1 percen B : Level of invesmen Rs. 4. lakh and rae of recovery of dus.4 kg /on of inpu. Rae of discoun = 1 per cen C : Level of invesmen Rs.4.5 lakh and rae of recovery.23kg/kg of inpu Rae of discoun = 1 percen D : Level of invesmen Rs. 4.5 lakh and rae of recovery.4 kg per kg of inpu. Rae of discoun = 1 per cen Source : Esimaion Table4 :Esimaed Physical Benefi-Cos Raio (B/C raio), Inernal Rae of Reurn (IRR), and Pay Back Period (a 1999 price level) for a Given Level of Invesmen and Rae of Recovery of Dus in a Uni Operaing Two Shifs.

17 16 Invesmen (Rs. Lakh) A: Level of invesmen Rs.4. lakhs and rae of recovery of dus.23 kg per kg of inpu. Recovery rae of dus/kg of inpu(kg) Rae of ineres (per cen) Mainenan ce cos Rs. 4.5 per kg /year (Rs. Lakh) B/C raio IRR Pay back period (years) Price of charcoal Rs. 5. per kg. B/C raio IRR Pay back period (years) (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) Rae of discoun = 1 percen B: Level of invesmen Rs.4. and rae of recovery of dus.4 kg per kg of inpu. Rae of discoun = 1 percen C : Level of invesmen Rs.4.5 and rae of recovery of dus.23 kg per kg of inpu. Rae of discoun = 1 per cen D: Level of invesmen Rs.4.5 and rae of recovery of dus.4 Rae of discoun = 1 per cen Source : Esimaion Table 5 : Esimaed Break-even Poin Achieved by he firm Operaing Two Shifs A : Rae of recovery of dus.23 kg per kg of raw maerial

18 17 Inves men (Rs. Lakh) Rae of change of price (per cen) Rs.4.5 per kg Rae of ineres per year Price of charcoal Rs.5. per kg Rae of ineres per year O & Bene 12 per cen 13 per cen 15 per cen 12 per cen 13 per cen 15 per cen M cos fi obai Discoun rae (per cen) Discoun rae (per cen) Discoun rae (per cen) Discoun rae (per cen) Discoun rae (per cen) Discoun rae (per cen) ned (1) (2) (3) (4) (5) (6) (7) (8) (9) (1) (11) (12) (13) (14) (15) B : Rae of recovery of dus.4 kg per kg of raw maerial Source : Esimaion References

19 18 1. Chaerjee J, S. Roy, M. Sarkar and V.Vijayan : Trace of Heavy Elemens in Indusrial Wases In Wes Bengal, Saha Insiue Of Nuclear Physics (pre prin) 2. Cropper, M.L., N.B. Simon, A. Alberini and P.K. Sharma ( ) : The Healh Effecs of Air Polluion In Delhi, India, World Bank Working Paper No Dasgupa A.K and D.W. Pearce (1972) : Cos - Benefi Analysis - Theory and Pracice; Macmillan. 4. Dasgupa S, R.E.B. Lucas and D. Wheeler (1998) : Small Plans,Polluion and Provery : New Evidence From Brazil and Mexico; DECRG; Infrasrucure Environmen Group, World Bank. 5. Dixon J.A ( ) : The Economic Valuaion of Healh Inpus; Working Paper, World Bank 6. HeHige M, M. Huq, S. Pargal and D. Wheeler (1996) : Deerminans of Polluion Abaemen In Developing Counries: Evidence From Souh and Souh Wesern Asia, World Developmen, December. 7. Hussain, Abid (1997) : Exper Commiee on Small Enerprises. 8. Janardhan, V, (1997) : The Search for Flexibiliy in Indian Manufacuring : New Evidence Ousourcing Aciviies; Economic and Poliical Weekly, Augus 3 Sepember 5, pp L2 L Lile, I.M.D. and J. Mirless (1968 ) : Manual of Indusrial Projec Analysis In Developing Counries, Vol II, O.E.C.D. 1. Mishan E.J. (1972) : Cos - Benefi Analysis, Allen and Reah. 11. Pargal, S and D. Wheeler (1996) : In formal Regulaion of Indusrial Polluion In Developing Counries: Evidence from Indonesia; Journal of Poliical Economy, December. 12. Planning Commission (1996) : Approach o he Ninh Five-Year Plan, , Governmen of India, Planning Commission. 13. Ramaswamy, K. V. (1999) : Globalizaion of Capial, Mulinaional Corporaions and Labour : Towards a Perspecive; Economic And Poliical Weekly, February Schumacher, E.F (1989) : Small Is Beauiful : Economics As If People Maered; N.Y. Harper Collins. 15. Singh, R (1994) : Social Cos Benefi Analysis of Invesmen In Irrigaion; Economic and Poliical Weekly, May Sues, M. J., K. Green, D.W. Reinisde (1983): Ambien Air Polluans from Indus rial Sources: On Behalf of W.H.O., Elsevier. 17. UNIDO ( 1972 ) : Guidelines for Projec Evaluaion

20 Wes Bengal Polluion Conrol Board (1996): Dushan Niyanraner Prayas A Bengali Aricle. 19. Wes Bengal Polluion Conrol Board(1997) : Air Polluion Conrol Technology For Secondary Lead Smeling Unis. 2. World Healh Organizaion (1989) : Environmenal Healh crieria 85- Lead - Environmen Aspec, U.N.Em.Prog. I.L.O. APPENDIX 1 Diagram of he producion process and conrol device

21 2 A. B.