Tradable Discharge Permits System for Water Pollution of the Upper Napan River, China

The upper Nanpan river in Qujing city, Yunnan province, China is heavily polluted. Its main stream (122 km long) is designated as water for industrial and agricultural use. However, the instream water quality is unsuitable for any use. Industrial discharges and municipal sources contribute significantly to the river's pollutant loads which are much higher than the total maximum loads allowable (TMLAs). Substantial efforts have been made to correct the situation, but the water pollution is still out of control. At present, it appears that environmental management instruments must be improved, and more capital must be invested in water pollution control. Among several environmental management instruments implemented in the upper Nanpan river catchment area, the current non-tradable permits system for water pollution must be improved first through the development of a tradable discharge permits (TDP) system for water pollution. By providing flexibility to the dischargers, the trading system is assumed to be more cost-effective in attaining specific effluent reduction targets than the non-trading system. This study provides information on and analysis of point/point source effluent trading, an explanation of the theory underlying trading, an examination of international experiences to date, and an evaluation of the lessons learned. It also focuses on evaluating the applicability of a practical TDP system to the upper Nanpan river.