by

Allen White, with Douglas Southgate, and Lori Lach



1. Introduction


1.01 In Ecuador, as in all rapidly urbanizing countries,
industrial pollution represents a major threat to environmental
quality, one that has to be met through improved management and
technological change.  Designing and implementing effective
policies to diminish emissions from manufacturing plants is
essential if the quality of life is not to deteriorate in the
country's major cities.

1.02 It is not by chance, of course, that industrial pollution is
largely an urban phenomenon.  As a rule, manufacturers prefer to
locate where skilled labor, dependable transportation, and
reliable supplies of water and electricity are most readily
available.  Also, being in a large urban market hold obvious
attractions.  So it is that approximately 70 percent of Ecuador's
industrial establishments are in Pichincha and Guayas provinces
(Hoffman Jurado Sandoval, 1992).  Those two provinces account for
83 percent of total value-added in manufacturing outside of
petroleum extraction and refining (INEC, 1992).

1.03 Many of the industrial plants in Quito and Guayaquil rank
high on the scale used by the World Bank to rate toxic intensity:
the Industrial Pollution Projection System, or IPPS (Wheeler "et
al.", 1991), which is similar to the International Uniform
Industrial Classification System used by Ecuador's Instituto
Nacional de Estadisticas y Censos (INEC).  The second and third
leading industries in Guayas province, chemical and plastic
manufacturing and pulp and paper production, fall within the top
dozen IPPS sectors.  Likewise, two of Quito's leading industries,
tanneries and leather-working and textiles, rank among the top
seven of 37 for which IPPS ratings have been developed. 
Industries in the southern part of the national capital are the
source of most of the district's sulfur dioxide and particulate
emissions as well as 30 percent of total discharges into the
Machangara River (I. Municipio de Quito, 1994).

1.04 Other burdens on the urban environment are associated with
intensive energy and water use.  In terms of energy consumption
per dollar of value added (U.S. Department of Energy, 1991; U.S.
Department of Commerce, 1991), food processing (which is
Guayaquil's leading industrial sector by far), textiles, and
chemicals all rank well above the average for manufacturing as a
whole.  Having enjoyed large energy subsidies since the early
1970s, these same industries sometimes respond to higher fuel and
electricity prices with protests and lobbying.  Likewise,
subsectors that use water intensively, including pulp and paper,
textiles, and chemicals (Gleick, 1993), have complained about
diminished water subsidies.  Of late, industry is reacting to
higher prices by trying to conserve energy and water.  For
example, tanning and textile enterprises are much more interested
than they used to be in the recovery and reuse of process waters.
As is discussed later in this report, various policy initiatives
aimed at diminishing industrial emissions are being pursued as
well.  If successful, these initiatives should have a beneficial
impact on human health.



2. Health Impacts of Urban Industrial Pollution


2.01 People are exposed to industrial pollutants in various ways.
Within a factory, workers are put at risk when equipment
maintenance is deficient, obsolete technology is used, or
hazardous materials are handled without proper precautions. 
Surrounding neighborhoods as well as downstream and downwind
populations are affected when pollutants are released into the
air or water or dumped onto land.

2.02 Exposure can be difficult to characterize and quantify. 
Similarly, determining the ultimate effects of chemical exposure
on human health is usually problematical.  This is especially
true when there are multiple causes of morbidity and mortality. 
For example, any estimate of cancer resulting from the release of
a hazardous industrial chemical must take into account the
impacts of smoking, diet, and other variables.

2.03 That being said, it is undeniable that human exposure to
several important pollutants in Quito and Guayaquil can be traced
to industrial sources.  A companion report on air pollution
(Southgate and Lach, 1995) documents that industry is the primary
source of sulfur dioxide emissions in both cities.  Likewise,
concentrations of total suspended particulates (TSP) exceed
international standards in Quito, mainly because of manufacturing
activity.  As a result, the incidence of respiratory disease is
high.  Industry also contributes 49 percent of nitrous oxide
emissions as well as nearly two-fifths of the uncombusted
hydrocarbons suspended in the capital city's airshed.

2.04 Manufacturing enterprises also are an important source of
heavy metal contamination.  Studies carried out in southern Quito
under the auspices of the Programa de Evaluacion de la
Contaminacion Industrial en el Sur (PECIS) revealed that textile
and leather plants accounted for most cobalt, zinc, and nickel
discharges and that most chromium and large amounts of cobalt,
copper, and zinc are emitted by metal-working establishments and
machinery and equipment manufacturers (I. Municipio de Quito,
1994).

2.05 Without a doubt, those industries' employees are most at
risk.  Inhaling chromium causes lung cancer and occupational
exposure to nickel is known to be carcinogenic.  In addition,
large doses of copper can lead to acute oral poisoning, excessive
ingestion can cause gastrointestinal distress, and occupational
exposure to cobalt induces respiratory irritation (Lu, 1991). 
Other people are exposed to dangerous amounts of heavy metals
when there are discharges into streams that are the source of
drinking or irrigation water.  Estimation of this latter sort
exposure tends to be imprecise.

2.06 Organic solvents, commonly used as cleaning and degreasing
agents and as inputs in a wide range of industries, are another
source of health risk, particularly for industrial employees. 
Acetone, benzene, toluene, phenol, and chloroform are among the
solvents used by Ecuadorian leather and textile manufacturers and
the country's chemical industry (Fundacion Natura, 1992). 
Inhalation of these materials can depress the central nervous
system and prolonged exposure can lead to paralysis, convulsion,
and even death.  Several chlorinated hydrocarbons are known to
produce liver tumors and lesions and may also be damaging to
kidneys.  Benzene, a volatile organic hydrocarbon, causes
leukemia as well as decreases in blood cell production and the
number of blood cells in circulation (Lu, 1991).

2.07 Data required to evaluate the sickness and death resulting
from occupational and environmental exposure to hazardous metal
and chemical inputs used in manufacturing and industrial
emissions do not exist in Ecuador.  The two most common forms of
cancer in the country are of the digestive tract and abdominal
cavity and genitourinary tract.  In 1993, 399 urban residents of
Pichincha province and 512 inhabitants of Guayaquil and other
cities in Guayas province died of the former; deaths attributed
to genitourinary cancer amounted to 183 and 328 the same year in
urban Pichincha and urban Guayas, respectively (INEC, 1993). 
While some of this mortality might relate to exposure to
hazardous metals and chemicals, it should be remembered that
stomach cancers also result from stress-related ulcers and a diet
high in recycled cooking oil; cancers of the genitourinary tract
can be caused by poor hygiene and sexual activity.  Obviously,
lung and other sorts of cancer are linked to smoking.

2.08 The air pollution report mentioned above contains an
estimate of the costs incurred in central and southern Quito
because elevated TSP concentrations increase the incidence of
respiratory illness:  US$37.4 million per annum (Southgate and
Lach, 1995).  Since 87 percent of that pollution is contributed
by fixed sources, the annual costs of TSP emissions attributable
to industry amount to US$32.5 million.  Other sorts of pollution
create appreciable costs as well.  In all likelihood, control of
industrial emissions would create tens of millions of dollars in
annual economic benefits for the citizens of Quito, Guayaquil,
and other Ecuadorian cities.



3. Regulating Industrial Pollution


3.01 For more than 20 years, regulation has been the principal
response of national and local governments in Ecuador to air and
water pollution from industrial sources.  Establishment of the
legal and institutional framework for regulation began with
adoption of the Health Code, in 1971.  Article 28 of that law
obliged factories to seek permission for pretreatment prior to
discharge into any sewer system.  In 1972, the Water Law was
passed, which resulted in the creation of the Instituto
Ecuatoriano de Recursos Hidraulicos (INERHI).  In collaboration
with the Ministerio de Salud Publica (MSP), the new agency was
made responsible for enforcement of Article 28.

3.02 The scope of regulation was broadened in 1976.  The Law for
the Prevention and Control of Environmental Contamination went
into effect with the issue of Supreme Decree Number 374.  An
inter-ministerial commission was founded to coordinate policy and
regulatory development, including the preparation of specific
emissions standards.  INERHI retained responsibility for setting
freshwater quality standards and the Direccion General de la
Marina Mercante (DIGMER) was assigned to protect coastal waters
and navigable rivers.  The Instituto Ecuatoriano de Obras
Sanitarias (IEOS) was charged with developing standards for
drinking water, wastewater, air, noise, and solid waste, and with
training the inspectors needed to enforce those standards.

3.03 From industry's perspective, two features of the 1976 law
are particularly noteworthy.  First, an environmental impact
report must be submitted to the MSP for any project that might
result in pollution.  Second, violations of emission standards
are punishable by up to three years of imprisonment and a fine of
up to 50,000 sucres (worth US$2,000 in the middle 1970s, but now
less than US$25), depending upon the severity of the violation. 

3.04 Despite the establishment of an institutional framework and
the assignment of responsibilities for the setting and
enforcement of standards, 13 years were to elapse before specific
standards would be promulgated.  Other than to make possible some
sporadic efforts by various local governments to require
polluters to characterize wastewaters and to report on treatment
(Santana, 1989; Fundacion Natura, 1993), the 1976 law has had
little effect.

3.05 In 1989, a new Regulation for the Prevention and Control of
Pollution of Water Resources was adopted.  A technical
commission, in which IEOS, INERHI, and DIGMER were represented,
was established and standards were set for industrial,
agricultural, and six other water uses.  Treatment standards for
discharges from industry and public systems were to be enforced
by IEOS.

3.06 The 1989 regulation requires each polluter to submit a plan
to IEOS comprising three parts:  (1) characterization of
wastewater, production processes, existing control and treatment,
current and anticipated production levels, and receiving water
bodies as well as development of a plan for meeting standards;
(2) implementation of treatment procedures; and (3) compliance
monitoring.  The MSP grants a provisional discharge permit upon
completion of necessary treatment studies and a final permit once
water quality standards have been met.  The 1989 regulation also
provides for periodic inspections by IEOS, INERHI, and DIGMER as
well as sanctions for noncompliance, including plant closure and
fines consistent with the 1976 Law.  Plants can be relocated if
it is impossible to comply with discharge standards.  In
addition, discharge fees, based on volume, biological oxygen
demand (BOD), toxic content, and other factors, can be assessed.

3.07 After six years, this most recent regulatory initiative at
the national level has had a minimal impact on industrial
discharges.  The Centro de Investigaciones Universitarias de la
Universidad Laica reports that, of the nearly 300 industrial
plants in Guayaquil, only 27 have bothered to apply for
provisional discharge permits and that in no case have standards
actually been met (El Puerto, 1994).  Poor enforcement is
attributed to the limitations of responsible agencies, an unaware
citizenry, and even outright bribery.  Industry representatives
have complained that regulators are biased against certain
sectors, like food processing, and in favor of others, like
government-owned facilities (Fundacion Natura, 1993).

3.08 Though their impacts have been minimal, water pollution
regulations have been more effective than regulatory controls on
air pollution.  Guayaquil's experience with La Cemento Nacional,
Ecuador's leading concrete producer, is a case in point.  For
half a century, that enterprise has been a major source of TSP in
the city.  However, the most that has been done to date has been
a call by the Mayor to carry out an environmental audit (Hoy,
1994).

3.09 With national regulatory initiatives having failed to yield
major improvements in environmental quality, a few local
governments have decided to act on their own, as the national Law
of Municipalities allows.  Cuenca, a medium-sized city in
southern Ecuador, is doing so with financial assistance from the
Inter-American Development Bank (IDB).  In 1992, Quito's
municipal government assumed responsibility for water and air
pollution within its jurisdiction by passing Ordinance 2910
("Prevention and Control of Water and Air Pollution").

3.10 Although it parallels the 1989 regulation, the local
ordinance is distinctive in several important ways.  First, air
quality standards are written directly into the latter, with
limits established for seven pollutants from fixed and mobile
sources:  settled particulates (expressed in mg/cm2), TSP, sulfur
dioxide, carbon monoxide, ozone, nitrous oxide, and lead. 
Second, the local ordinance spells out a procedure for
registering facilities and submitting compliance plans.  [In
practice, the maximum time period allowed to bring any given
facility into compliance -- one year -- has proven to be too
short and is currently under revision.]  Third, a literal reading
of the ordinance suggests that sanctions for noncompliance are
strict and aggressive.  For example, a plant can lose its
operating permit if it exceeds discharge standards and can be
relocated if there is insufficient space for treatment
infrastructure.  Monetary penalties are not mentioned, but
presumably those contained in the 1989 regulation remain
applicable.  Three years after enactment of Ordinance 2910,
business and the municipal government have come to agree that the
role of incentives for compliance (including tax allowances and
low-cost financing for pollution control infrastructure) as well
as penalties for noncompliance merit immediate attention (Lozano,
1995).

3.11 It is fair to say that considerable progress has been made
toward establishing the basis for effective regulation of
industrial pollution in Quito.  In a pilot project, in-depth
assessments of 30 enterprises in the city's southern
manufacturing district amount to informal materials balance
studies that allow the municipal government to determine sources,
volumes, and hazards of pollution for the entire zone.  But even
in the national capital, which has the most capable city
government and many of the most advanced manufacturing plants in
Ecuador, implementation of local controls on air and water
pollution has been hampered by limited budgets, shortages of
qualified personnel, and scarce laboratory capacity.  As a
result, compliance with Ordinance 2910 has been less than
complete.  No more than half of the medium-sized industrial
facilities and 70 percent of the small plants that should
register have actually done so; approximately 10 percent of the
city's large factories have failed to register (Gomez, 1995;
CAAM, 1995).  Noncompliance with allowable emissions standards
also is substantial.  Based on a sample of industries in the
southern industrial district of Quito, noncompliance rates are as
follows:  29 percent for metals, 33 percent for sediments, 50
percent for BOD, 92 percent for suspended solids, and 100 percent
for chemical oxygen demand (COD).  Data for combustion units tell
a similar story:  64 percent noncompliance for ovens, 89 percent
for diesel boilers, 94 percent for bunker-fueled boilers, and 100
percent for wood- fired boilers and incinerators (I. Municipio de
Quito, 1994).

3.12 Disappointing as these noncompliance rates might be, they
still compare favorably with what regulators at the national
level have been able to accomplish since the 1970s.  It is
possible that the transfer, in August 1994, of various
responsibilities from IEOS, which has been disbanded, to the new
Ministerio de Desarrollo Urbano y Vivienda (MINDUVI) might lead
to the development and implementation of effective and viable
policies for the control of industrial pollution.  Certainly,
this is desirable, if for no other reason than to prevent a few
local governments from competing for private investment on the
basis of lax environmental standards.



4. Beyond Regulation:  Accelerating the Adoption of Cleaner
Technologies


4.01 Although there is some degree of confusion on the subject,
there seem to be at least 30 national laws governing the
management of water resources (CAAM, 1995).  The number of laws
that potentially apply to air pollution and other environmental
problems also is high.  As has been recognized at the highest
levels in Ecuador (CAAM, 1993) and in other countries (White,
1991), the mere existence and lack of codification of so many
legal arrangements, none of which comes close to being fully
enforced, gives rise to both confusion and, more importantly, a
loss of credibility in government's ability to consistently and
fairly manage Ecuador's industrial pollution.

4.02 There is an alternative to the "command and control"
approach that has become entrenched in the United States and
other countries but has failed to take root so far in Ecuador. 
The alternative consists of working closely with private industry
through voluntary partnerships and programs to identify
cost-effective pollution prevention (P2) measures.  This
approach, which involves assessments of the use of energy and
chemicals to identify waste prevention opportunities, has been
applied successfully by Quito's municipal government in a pilot
program carried out in an industrial district, El Inca.

4.03 What P2 involves is illustrated by the case of an enterprise
in Guayaquil that manufactures non-ferrous metal products and
ceramics.  During the last two years, it has invested
approximately US$1.5 million to upgrade burners, replace pumps,
recover salable byproducts from tile cuttings, and switch to
chemical additives that are environmentally preferable according
to the U.S. vendor.  These innovations, which reduced energy
consumption as well as the volume and toxicity of process
wastewaters, had nothing to do environmental regulations,
subsidies, or tax breaks.  Neither were they motivated primarily
by the environmental consciousness shared by some members of the
professional and managerial staff.  Instead, reengineering and
yield enhancement was undertaken to improve the firm's
competitiveness in a marketplace that is moving, slowly perhaps,
toward free trade.  For this company and many others in Ecuador,
the need to avoid waste of energy, water, chemicals, and other
inputs is blurring the distinction between technological change
aimed at reducing pollution and innovation aimed at containing
costs.

4.04 Identifying P2 measures that are profitable for polluting
firms to adopt is the central thrust of USAID's Environmental
Pollution Prevention Project (EP3).  More than thirty
pre-assessments have been carried out in Ecuador with EP3
support.  Of that number, eight have been selected for more
thorough assessment based on a high likelihood that ways will be
turned up to prevent pollution at a negative cost for the
participating firms.  For example, a complete audit of an Ambato
tannery has uncovered eleven P2 measures that resulted in
significant short term cost savings.

4.05 Hirschorn and Associates (1994) have investigated
opportunities for the adoption of profitable P2 technology in
developing countries where USAID is active.  Many of the
industries where such opportunities were found to be present are
prominent in Quito and Guayaquil.  These include textiles,
leather tanning, metal finishing, paper, and vehicle repair and
maintenance.  One electroplating firm cited in the study realized
annual cost savings of US$20,000 by adopting eighteen P2 measures
that cost approximately US$6,000.  Application of eleven such
measures at a sheep tannery cost US$22,000 and yielded savings of
US$95,000 per annum.

4.06 Adoption of profitable P2 technology is never instantaneous
and automatic.  Right now in Ecuador, high capital costs can be a
hinderance since nominal interest rates, which have approached 60
percent in recent months, exceed annual inflation (25 to 35
percent) by a wide margin.  It is significant that the Guayaquil
company mentioned above was able to self-finance the entire
US$1.5 million investment required for reengineering and yield
enhancement.  This option is not available to many firms with a
potential interest in P2.

4.07 The same company enjoys other advantages that put it in a
position to adopt cost effective measures for preventing
pollution.  Its professional and managerial staff is familiar
with advanced manufacturing technology, in part because of long
term training in the United States.  Furthermore, it has put in
place the accounting systems needed to keep track of costs,
generally, and materials, specifically.  As a result, the firm is
in an excellent position to identify and take advantage of any
and all opportunities to lower costs, through the adoption of P2
measures for example.

4.08 As increased macroeconomic stability is achieved in Ecuador,
nominal and real interest rates should fall, thereby facilitating
the investments required for reengineering and yield enhancement.
Also, demand for skilled engineers and managers ought to increase
as economic liberalization proceeds and growth accelerates.

4.09 Something that USAID can do to promote P2 is to help firms
put in place the systems for materials and cost accounting needed
to make rational choices regarding technological adaptation
(White, 1993; Savage and White, 1995; Todd, 1994).  More often
than not, waste and misallocation of energy, water, and other
inputs occurs because costs are lumped together in general
overhead accounts or because they simply go unrecognized in the
accounting and capital budgeting process.  Waste disposal,
regulatory compliance, licensing and permitting are examples of
the former.  Liability (where applicable), loss of markets owing
to noncompliance with international environmental management
standards, and revenues foregone by failing to capture salable
byproducts are examples of the latter.

4.10 It must be conceded that many P2 measures involve positive,
as opposed to negative, costs for polluting firms.  Where this is
the case, human capital formation, macroeconomic stability, and
technical assistance will not usually suffice to achieve socially
efficient improvements in environmental quality.  Public policy
must be structured in ways that assure that pollution is reduced,
through the application of P2 technology or other means, whenever
public health and other benefits exceed costs.  The policy
instruments that can be employed to achieve efficiency are
examined in the next section of this report.



5. Policy Options


5.01 Regulation's lack of success in Ecuador probably benefits
the country in one sense, which is that a legal and bureaucratic
culture oriented toward controlling pollution at the "end of the
pipe" ("i.e.", after it has been generated) has never been
established.  Where such a culture is in place, controls
frequently accomplish little more than to shift pollution from
one medium to another.  For example, disposal of the solid wastes
that is collected by legally mandated filters and precipitators
may worsen groundwater pollution if those wastes are dumped in
poorly constructed landfills.  To avoid this sort of outcome, the
general thrust of public policy should be to prevent waste
generation in the first place.

5.02 As is indicated in the preceding section, polluting firms
sometimes benefit from adopting P2 measures.  Donor agencies,
public institutions, and nongovernmental organizations have a
role to play in facilitating this sort of technological change,
by providing training and technical assistance.  Where
macroeconomic policy distortions have suppressed efficient
financial intermediation, a revolving fund to finance P2
investment could be set up.  At best, though, this should be
regarded as a stop-gap that is no longer needed once the policy
reforms needed for macroeconomic stability have taken effect.

5.03 One way to promote the adoption of P2 technology that is
costly for the firms involved is to offer financial inducements. 
Income and property tax deductions, tax exemptions, accelerated
depreciation, and subsidized loans can be offered for equipment
and machinery that reduces pollution.  Under Ecuador's Mining
Law, incentives of this sort already exist for the country's
extractive industries.  As has been emphasized already, priority
should be given to investments that prevent pollution, as opposed
to controlling it.  Among such investments are those resulting in
the replacement of hazardous materials with more benign
substitutes, process redesign and optimization, product redesign,
as well as materials recycling.

5.04 Although many firms would express a preference for tax
breaks, low-interest loans, and other positive incentives,
subsidies can be difficult to administer.  Applicants must be
screened efficiently.  In addition, incentives can lead to
excessive entry into a polluting industry if they are not limited
to existing firms.  Almost always, credible charges are levied
that the incentives scheme favors some firms or industries and
places others at a disadvantage.

5.05 One way to reduce pollution while maintaining a "level
playing field"  for all firms and industries is to make
regulations fairer and more effective.  In Ecuador, this involves
improved compliance plans, better management and disclosure of
information, and updating penalties.

- Compliance Plans.  Consistent with existing provisions of the
1989 Regulation, a more detailed protocol should be developed for
(1) defining individual processes within facilities and (2)
performing materials accounting for each process.  The objective
is to disaggregate production into component parts so that inputs
and waste byproducts become more transparent to the firm.  This
allows for more effective targeting and prioritization of
pollution prevention and process optimization initiatives.  At
the same time, protocols should be established so that Total Cost
Assessment (TCA) methods developed by the U.S. Environmental
Protection Agency (USEPA) or substitute techniques aimed at
proper identification and allocation of the true costs of
pollution control can be applied.

- Information Management and Disclosure.  A management
information system needs to be developed to compile, analyze and
publicly report current figures and trends in emission,
effluents, and solid/hazardous wastes.  The purpose is to provide
government, industry, and the public a perspective on pollution
progress.  This can build on the approach used in the PECIS study
while providing a repository for information submitted in the
compliance plans.  For the first three years, data should remain
reported only in aggregated form, leaving open the possibility of
facility-specific information disclosure in the following years. 
Data should allow evaluation of P2 progress at the facility
level.

- Penalties.  The penalty provisions of the 1976 Law and 1989
Regulation need to be reviewed and updated.  This is already
underway in Quito.  Penalties should be commensurate with the
severity of the violation from the standpoint of environmental
damages.  Allowance should be made to reduce or waiver penalties
provided that certain prescribed P2 measures are undertaken by
the noncomplying facility.

5.06 In recent years, the "polluter pays" principle has won wide
acceptance as an instrument of environmental policy in a number
of countries.  For emissions to be reduced to an economically
efficient level, charges paid by polluters should reflect
marginal damages ("i.e.", the disutility associated with disease
and other impacts resulting from the last unit of pollutants
discharged).  In practice, this is difficult to accomplish, given
the difficulties involved in estimating pollution costs. 
However, there is no reason why a public authority cannot set
fees high enough to cause polluters to stop emitting TSP or lead,
for example, in areas where those contaminants have been linked
to high incidence of morbidity and mortality.  Such fees should
be designed to foster pollution reduction and can be a highly
effective tool for reaching any given ambient environmental
standard.

5.07 Although many polluters can be counted on to balk at a
proposal to impose emissions charges, some manufacturers will
probably prefer them to subsidies and regulations.  Charges, it
should be remembered, comprise a clear signal that, with proper
enforcement, apply equally throughout an industry, city, or
country.  By contrast, subsidies and regulations are often not
applied in an even-handed manner.  Support for charges,
particularly among more efficient enterprises, can easily be
enhanced by substituting them partially for income taxes.

5.08 Regardless of the relative emphasis placed on economic
incentives, regulations, and emissions charges, an improved
inspection system will have to be put in place.  It might be
appropriate to form a commission to review and make
recommendations for restructuring the inspection system.  This
group, comprising representatives of government, the private
sector, nongovernmental organizations, and the general public,
should review all aspects of current inspection practices in
Quito and Guayaquil including frequency, quality, results, type
and timing of actions taken after inspections, and compensation
of inspectors.  The commission should also consider the effects
of merging IEOS into MINDUVI and creating the new Consejo
Nacional de Recursos Hidricos.  Options for organizational and
financial changes to upgrade the quality of inspection should
include privatization of the function and incentives-based
approaches to maintain its quality and integrity.  The commission
should complete its work within one year.

5.09 USAID can and should provide technical assistance and
training to support improved regulations, application of the
polluter pays principle, and other environmental policy
initiatives in Ecuador.  Consistent with EP3, it can also help to
strengthen alliances among government, the private sector, and
nongovernmental organizations aimed at preventing pollution.

- Voluntary Programs.  The public and private sectors should be
involved in the design and implementation of a voluntary program
to spur pollution reduction beyond compliance levels.  This may
include listing chemical, energy-efficiency, and water-efficiency
targets.  Facilities would agree to make best efforts to reach
such targets within a prescribed period of time.  Lists of
participating firms would be publicly available, as would
progress evaluations.

- Training and Information Exchange.  Programs of training in
pollution prevention and clean technology should be designed and
implemented for specific industries ("e.g.", wood products,
textiles, "etc.") and for specific cities.  Priority should be
given to assisting firms in complying with national and municipal
laws and regulations.  This should include both the technology
and hardware aspects as well as the management and software side.

The latter should include, for example, orientation to methods of
life-cycle analysis, total cost assessment, total quality
management.  Industry environmental leaders should be recruited
to explain the application of "best practice" guidelines.

- Demonstration Projects.  Government and the private sector
should collaborate to identify innovative technologies with
special promise in Ecuador and also to set up pilot
demonstrations.  This sort of initiative should be aimed at
reducing the risk of major process and material changes that
individual firms would be reluctant to undertake on their own. 
The focus should be on technology adaptation for generic
processes used by multiple industry sectors ("e.g." cleaning,
degreasing, coating, and soldering).  To participate, a facility
must agree to rigorous monitoring and costing protocols, and to
share the results with interested firms within and outside its
sector.  Initial and continuing results of the demonstration
should be disseminated through trade associations.



6. References


Comision Asesora Ambiental (CAAM).  "Plan Operativo de Control de
Manejo de Los Desechos," Presidencia de la Republica, Quito,
1995.

Comision Asesora Ambiental (CAAM).  "Principios Basicos Para La
Gestion Ambiental en el Ecuador," Presidencia de la Republica,
Quito, 1993.

El Puerto.  "Amenaza por Contaminacion Industrial," 12-19
September 1994, p. 7.

Fundacion Natura.  "Gestion Ambiental de la Industria en el
Ecuador," Proyecto Edunat III, Quito, 1993.

Gleick, P. (ed.).   WATER IN CRISIS:  A GUIDE TO THE WORLD'S
FRESH WATER RESOURCES.  New York:  Oxford University Press, 1993.

Gomez, L. (Director Encargado de Medio Ambiente, Distrito
Metropolitano de Quito), personal communication, 9 March 1995.

Hirschorn and Associates.  "Candidate EP3 Industrial Groups and
Best Industrial Practice Pollution Prevention Accomplishment
Targets," Environmental Pollution Project (EP3), U.S. Agency for
International Development, Washington, 1994.

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