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III. INTEGRATION MEASURES AND THEIR EFFECTIVENESS
[ III-A | III-B | III-C | III-D ]
D. Internalization of environmental costs
At present, the Industrial Enterprises Act, 1992, requires that "permission shall be granted for reduction of up to 50 per cent from the taxable income for the investment of an industry on process or equipment which has the objective of controlling pollution or which may have a minimum effect on the environment". Such remission may be deducted as a lump sum or on an instalment basis within a period of three years. Under the EPA, also, the government can provide additional facilities to those already provided under existing laws, to any industry, occupation, technology or process that has a positive impact on environmental protection.
The government budget for 1995/96 recognized the "polluters pay principle". Accordingly, it took the initial step of imposing a Rs 0.5 per litre charge on petrol and diesel fuel as a "Kathmandu Valley Development Levy" to be deposited in the Kathmandu Valley Development Fund for pollution control, environmental protection, improvement of roads and sewerage, and additional and reliable water supply systems. However, the levy will come into effect only after the Kathmandu Valley Development Programme has been fully worked out and put into operation.
The present Constitution of Nepal and its predecessor recognized individual property rights as one of the fundamental rights of citizens. The State cannot acquire the property of any individual or encroach upon such property in any way except for the purpose of public interest. Even when acquired for public interest, the State is required to pay compensation on the basis of, and in a manner determined by, law. Nepal also has several laws ensuring land ownership, corporate ownership and community ownership. It is very unlikely that the question of ownership would in the way of internalizing environmental costs into prices. Rather, the immediate problems are: (a) the formulation of an appropriate method/methodology which is feasible at the present stage of social and economic development; and (b) an adequate enforcement mechanism within the existing administrative set-up. The concept of internalization of environmental costs into prices is still new and needs wider understanding and appreciat ion at various levels of government and society. Except within narrow sections of the administration, the relative advantages and limitations of various alternative methods of internalization of environmental costs into prices are not as yet being given any serious consideration with a view to making a decision. Careful studies are required on the enforcement of even relatively simple measures such as charges and levies for internalization of environmental costs, including the formulation of methodology, analysis of implications and enforcement mechanism. Such studies are required even for the finalization of standards related to air and water pollution and effluent discharges.
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