Regulatory Policies, Standards, Charges and Subsidies

Tough environmental regulations, which are strictly enforced, have been a long-standing feature of livestock production and processing in many developed countries. Increasingly many developing countries are becoming tougher in the implementation and enforcement of environmental regulations and the continued pressure for a cleaner environment are such that the regulations can only get stricter.

Regulatory mechanisms to control pollution can take a variety of forms. Certain types of effluent treatment equipment may be specified; a permit may be given to allow the discharge of a certain volume and concentration of effluent over a period of time; minimum standards of water and air quality may be specified; effluent charges may be imposed, based on the amount of pollutant discharged; limits may be place on the number of livestock per hectare. Where standards are imposed they can be uniform throughout a region or country, or alternatively they may apply to a specific enterprise or sector, or a combination of the two. In terms of enforcement and administrative ease a uniformly applicable regulation is often preferable. However, in terms of economic and environmental efficiencies this may not be the case, since not only do local absorptive and regenerative capacities vary (and hence their pollutant effect) but also the marginal costs of adjustment can vary substantially between enterprises. The response of enterprises to these various pollutant minimising mechanisms will vary depending on their specific circumstances, including the cost characteristics of their operations.

In general, the principal of the "polluter pays" is increasingly being adopted (i.e. those responsible for the environmental damage and thus imposing costs on others are required to pay the costs involved in programmes to prevent and control pollution). However, the adoption of this principle is far from widespread and many polluting enterprises not only escape from meeting the costs of the environmental damage they cause but are provided with subsidies to enable them to adapt their production or processing operations to meet new environmental regulations. Such subsidies are common and are often seen as necessary to ensure that environmental regulations are met. However, they can be distorting and encourage inefficient investment decisions and a negative environmental impact. Thus, subsidies on inorganic fertilisers discourage the use of livestock manure with a resultant negative impact on soil fertility.

Consumer awareness combined with government pressure is leading to more environmentally sound production methods and products. Associated with this has been the development of eco-labelling and recycling labelling as well as a growing emphasis on eco-friendly aspects of livestock product and manufacturing systems. Also the adoption and enforcement of environmental regulations, particularly in relation to livestock processing activities such as tanning, is leading to rationalisation of companies in certain areas, such as blueing. Smaller companies are unable to afford the costs of meeting the regulatory requirements and/or waste treatment and relocation costs.

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