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Effluent charge reform for controlling water pollution in the Malaysian crude palm oil industry

Published online by Cambridge University Press:  06 September 2012

Amir Hossein Montazer Hojat  and
Khalid Abdul Rahim
Amir Hossein Montazer Hojat
Affiliation:
Faculty of Economics and Social Sciences, Department of Economics, Shahid Chamran University (SCU), Ahvaz, Iran. Email: a.mhojat@gmail.com
Khalid Abdul Rahim
Affiliation:
Institute of Agricultural and Food Policy Studies, University Putra Malaysia, Selangor, Malaysia. Email: khalid@econ.upm.edu.my
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Abstract

This study analyzes the costs borne by Malaysian palm oil mills (POMs) in order to reach standard levels. A number of studies have been conducted on Malaysian palm oil mills; however, none has obtained the marginal abatement cost (MAC) through an estimated total cost function. More particularly, as far as inflation is concerned, the effluent-related fee and effluent charge specified have not been revised within the past two decades. In addition, to our knowledge, there has not been any study comparing MAC to the mills of the two different methods of disposal, namely watercourse and on land. Our results show that, to force POMs to meet the standard, the effluent charge must be set higher, equaling the MAC. While the results show the existence of economies of scale in abatement activity, setting the effluent-related fee equal to the MAC may encourage mills to further abate their water pollution.

Type
Research Article
Information
Environment and Development Economics , Volume 17 , Issue 6 , December 2012 , pp. 781 - 794
Copyright
Copyright © Cambridge University Press 2012

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