On the Steering Effect of Wastewater Levies Part 2: Income Effects, Enforcement and Financing

In the meantime we can look back on more than 30 years of experience with wastewater levies as pioneering economic tools in water pollution control. Since their introduction, a sanction that depends on the harmfulness of the effluents is imposed on direct discharges of wastewater, which in conjunction with regulatory requirements is intended to provide economic incentives in the interest of water pollution control. At the centre of the economic justification for this highly controversial levy are its steering effects. The present paper first gives a theoretical overview of the manifold steering effects that such a levy can have, and then asks to what extent such effects actually occurred and were empirically verified. Even if an empirical verification of the steering function poses considerable methodological problems, the study provides a lot of evidence for the effectiveness of the wastewater levy, and at the same time, it allows conclusions regarding different approaches to reforms and future developments of the Wastewater Charges Act against the background of the price policy mandate enshrined in Art. 9 of the Water Framework Directive.