Impact
 Evaluation
CDIE
United States Agency for International Development
CONTENTS
Background..........................2
Program Elements..............3
Impact.....................................7
Program Performance.....10
Lessons Learned..............15
REDUCING URBAN AND INDUSTRIAL POLLUTION
IN CHILE
The Chile Environmental Pollution Prevention Project demonstrated
that industrial firms can save money while reducing pollution. But the
effort had mixed results: it lacked an institutional base to sustain and
replicate benefits, and missing was sufficient regulatory muscle (fines
and penalties) to encourage pollution prevention.
SUMMARY
n Chile’s capital of Santiago, the summer sun rises over a hazy, smog-filled sky. The sky
darkens as the day progresses and often turns a light brown. In winter, air quality is even
worse, and visibility drops sharply. A ring of mountains and thermal inversions trap pollution in
a choking cloud over the city. But the mountains and air currents are not the whole problem.
Twenty years ago the air was relatively clean. That was before economic growth accelerated
sharply. A rapid increase in industrial production and a major increase in truck, bus, and auto￾mobile traffic are all pumping pollutants into the air. The result is a high level of respiratory
problems, sickness, and premature death.
Air pollution is a clearly visible health problem. An unseen and possibly greater problem exists
with water pollution. Industry sends its wastes into rivers and municipal sewage systems. These
often contain hazardous chemicals and metals (lead, chrome,
nickel, copper) that cause neurological damage and cancer.
Although municipal sewage systems exist in all major Chil￾ean cities, only 5 to 15 percent of sewage is actually treated.
The rest is pumped raw into rivers or the ocean. Solid indus￾trial waste, often containing hazardous chemicals, is sent to
landfills, where it may percolate into the aquifer and drink￾ing water. High bacterial levels in drinking water cause diar￾rheal diseases. Waterborne chemicals and heavy metals are
creating longer term health problems, which will be seen in
PN–ACG–619
I
December 2000
2
increased morbidity and mortality in the near
future.
In 1991 USAID launched the Environmental Pol￾lution Prevention Project. EP3 was designed to
reduce pollution at its source by introducing
cleaner industrial production processes, and re￾ducing and reclaiming industrial waste. The
improved processes were designed to reduce
pollution while saving money for industrial
firms.
In April 2000, a three-man team from USAID’s
Center for Development Information and
Evaluation (CDIE) completed an assessment of
EP3. It found a number of achievements.
For example, nearly 2,500 people received train￾ing in industrial-pollution prevention, and a
cadre of private sector pollution engineering
consultants had been created. EP3 completed 26
Pollution Prevention Diagnostic Assessments at
individual factories. The PPDAs showed it was
possible to save money while reducing pollu￾tion. The assessment recommendations required
a one-time investment of $1.4 million by the in￾dustrial firms—but that investment generated
annual savings of $1.9 million. Savings contin￾ued every year for many of the companies. Pol￾lution was reduced by 32 percent.
Although the project reduced pollution and gen￾erated high rates of return, the CDIE evaluation
found several problems. The project failed to in￾stitutionalize the effort, so once USAID funding
ended, both sustainability and replication
lapsed. The effort also faltered because Chile
lacked effective environmental regulations.
Without the pressure of environmental fines,
many companies were reluctant to invest in
pollution prevention.
BACKGROUND
A civilian government took over from the mili￾tary regime of Gen. Augusto Pinochet in March
1990, ending years of political oppression. Po￾litical change and the emergence of democracy
were dramatic. There was also a major change
on the environmental front. During the years of
military rule, the government had little interest
in the environment. Environmental regulations
and controls were almost nonexistent. Industrial
investment and production were encouraged,
with hardly a thought given to the impact of
rapidly rising pollution.
With the return of democracy, things changed.
Just as before, the people can see the bad air and
taste the bad water. But now they realize the
government can do something about it. They
have pressured the government, and it has re￾sponded. The National Congress passed an ini￾tial environmental law in 1993, and other laws
and regulations were put in place in later years.
Even with new environmental regulations, en￾vironmental quality did not improve because
of rapid economic growth. Real gross domestic
product (GDP) growth averaged a remarkable 7
percent a year from 1991 through 1997. With
strong growth in output, pollution increased at
an even faster pace.
Benefits, Drawbacks
To Test-Case Project
The Environmental Pollution Prevention Project
(EP3) in Chile was USAID’s first foray in a nine￾country program to abate pollution. As the first
undertaking, the Chile project identified prob￾lems and alternative solutions. But being the test
case does have drawbacks. Mistakes and prob￾lems provide lessons for other country pro￾grams, but the Chile project bears the learning
costs. In addition, it had a short project life—
only three years. It started in September 1993,
slowly geared up, moved into rapid implemen￾Team Leader: Joseph M. Lieberson
Team Members: Gene M. Owens,
Mark G. Hodges
3
tation, and then closed down in October 1996,
without any follow-on program. That was be￾cause Chile graduated from USAID assistance in
1996, bringing EP3 to an end.
The project came to Chile when environmental
concerns were just surfacing. The few pollution
controls that existed addressed “end of pipe”
treatment—reducing pollution at the smoke￾stack or drainpipe. A different approach is to
prevent or reduce pollution at its source by
improving the production process. If the
production process is more resource efficient, it
produces less waste. EP3 used this approach,
also referred to as waste minimization or clean
production. Companies that adopted resource￾efficient production processes were able to re￾duce their costs while reducing environmental
damage and improving public health.
EP3 was designed to reduce pollution at its
source by changing industrial production pro￾cesses and reducing and reclaiming industrial
waste. In the latter method, water, dyes, and
chemicals are recovered and recycled back into
the production process rather than being
flushed down the drain. Electricity, steam, and
raw materials are used more efficiently, and im￾proved process controls reduce waste and
improve product quality.
Importance of the Bottom Line
To prevent pollution at its source, industrial
firms must be convinced that pollution preven￾tion pays—that it is financially beneficial. In￾dustrial firms do not wish to harm the environ￾ment, but they are in business to make a profit.
They want to avoid fines and the prospect of
being shut down for causing excessive pollu￾tion. But they also are motivated by positive
incentives. If low-cost, environmentally sensi￾tive investments will reduce costs and increase
profits, firms may take action. The motivation
is profit, but the environment simultaneously
benefits. That was the EP3 strategy.
When EP3 was being designed in 1992 the Chil￾ean government lacked environmental laws,
regulations, and institutions. In many countries
manufacturers are encouraged to reduce pollu￾tion by a carrot-and-stick approach. The carrot
is cost savings; the stick is the threat of fines or
a plant shutdown. In Chile such punitive mea￾sures did not exist. USAID decided to go the
private sector route and to concentrate on cost
savings for firms, rather than attempting to meet
environmental regulations, which were not yet
in place. In contrast with some other environ￾mental projects, EP3 was not implemented di￾rectly with a Chilean government agency.
PROGRAM ELEMENTS
EP3 Chile concentrated on technical assistance
and training to build knowledge and awareness
of pollution prevention and to encourage indus￾try to adopt appropriate technology. It did little
in policy reform, regulation, or institutional
development.
Education and Awareness
The project faced a difficult task when launched
in 1993. Environmental regulations were virtu￾ally nonexistent; those that did exist were woe￾fully out of date (one of the main laws, the Law
on Liquids, was written in 1916). What few
antipollution measures existed were directed at
end-of-pipe treatments. The project took on the
task of educating industry, government,
academia, local consultants, and nongovern￾mental organizations (NGOs) on a new concept:
the value of pollution prevention. Absent pol￾lution regulations, EP3 could not count on the
threat of fines as a motivational tool. The project
had to convince industry that it would save
money through pollution prevention. It also had
to train local environmental consultants to
implement the project and to carry it on after
USAID assistance ended.
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Training and outreach to transfer industrial
pollution prevention and environmental man￾agement skills was a central part of EP3. Initially,
it concentrated on selected industrial groups to
build interest in pollution prevention and to
identify opportunities for environmental audits.
A second stage was aimed at specific sector
training to develop interest
among a wide range of in￾dustries: textiles, tanning,
mining, printing, chemicals,
hospitals, food processing. A
third stage was based on the￾matic training, outreach, and
awareness building to dis￾seminate lessons learned and
to replicate the experiences
among other industrial
groups, supporting govern￾mental institutions, acade￾mia, and NGOs.
Some 2,500 people were
trained in industrial pollu￾tion prevention concepts, di￾agnostic methods, and the
tools and skills needed by
pollution consultants. There
were 1,061 from industry, 752
from universities, 309 from
government, 252 from NGOs, and 123 from en￾vironmental consulting firms. Training local
trainers helped develop local capacity to extend
the training program. A continuing benefit has
been the emergence of a dynamic and viable
consulting industry. Consultants are generally
well respected by industry and are continuing
to work on issues in pollution prevention engi￾neering. While EP3 increased the supply of pol￾lution engineers, there were problems on the
other side: a lack of demand for these specialists.
Without the threat of fines and penalties, com￾panies are slow to take action to reduce pollu￾tion.
When EP3 was initiated, pollution prevention
was not a well-known concept in Chile. While
it is hard to draw a direct causal linkage between
the project’s knowledge and awareness efforts
and pollution prevention, it is clear that the con￾cept is now fully accepted by industry and gov￾ernment. EP3 helped stimulate the change
through the preventive message it preached and
the people it trained.
Technological Change
And Assistance
To Industry
Pollution Prevention Diag￾nostic Assessments, which
recommended specific pro￾duction process changes,
were completed at indi￾vidual factories. USAID
funded the costs of the au￾dits. The costs of pollution
prevention investments
were the responsibility of
the factory owner.
Recommended technologies
ranged from low-cost and
no-cost housekeeping,
maintenance, and process
changes (such as recycling
rinse water or recovering
waste materials) to major capital investments
(such as new production equipment). Govern￾ment financial incentives such as subsidies, tax
relief, or accelerated depreciation were not
available. The attractiveness of any measure
depended solely on its potential to increase
short-term operating profits.
Acceptance of recommended changes averaged
40 percent, but it varied greatly among firms.
Some accepted nearly all recommendations;
others adopted only a few. The key to accep￾tance was the quality and suitability of the au￾dit recommendations, the size of the investment,
the cost–benefit ratio of the investment, and the
skill and business savvy of the owner and man￾ager. Surprisingly, some factory owners were
“A continuing benefit
has been the
emergence of a
dynamic and viable
environmental
consulting industry.
Consultants are
generally well
respected by industry
and are continuing to
work on issues in
pollution prevention
engineering.”
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reluctant to implement changes even when cost
savings and all other indicators were strongly
positive. This may have been due to an unwill￾ingness to experiment in an already marginal
enterprise, or the firm was unsure about the
course of future environmental regulations.
A typical case of a small, marginal enterprise
was an electroplating factory that faced steadily
declining sales because it had lost a major pro￾duction contract and did not adjust to new mar￾ket demands. It was running down its equip￾ment and slowly going out of business.
Implementation was further slowed because in
many instances it is less expensive to pay dis￾posal fees to the sewage utility or landfills than
to install clean production technologies. That is
changing, though, with increased fees for land￾fill disposal, special processing fees for hazard￾ous or toxic wastes, and increased frequency
and size of fines for noncompliance with sew￾age discharge standards.
EP3 did not consider end-of pipe measures or
the effects of upstream production changes. This
is unfortunate since end-of-pipe technologies
may be adversely affected or need to be modi￾fied as a result of changes in the waste stream
caused by pollution prevention measures. Fur￾ther, in most processes (regardless of how clean
or efficient) there will still be wastes to recycle,
reclaim, treat, or dispose of.
Regarding end-of-pipe measures, many indus￾tries in Chile have invested in pollution-control
equipment such as flares, filters, baghouses,
venturi scrubbers, and effluent neutralization
systems. These systems must be considered and
optimized as part of an integrated approach to
reducing pollution. Cross-media effects must
also be considered. Solving a water-quality
problem may create air-quality or solid-waste￾disposal problems. For example, collecting or￾ganic vapors from the smokestack by a wet
scrubber produces a liquid waste that must be
reintroduced to the pollution reduction process
or disposed of. Thus, one problem may simply
be traded for another—but not identified in a
project such as EP3 if its intent is exclusively to
prevent pollution.
What is needed is life-cycle analysis, an inte￾grated approach that considers the industrial
process from start to finish as well as product
end use. The approach considers process inputs,
cost-effective pollution prevention measures,
the sometimes necessary end-of-pipe applica￾tions, and disposal or recycling of the product
after it is no longer useful. The desired result is
a cost-effective net reduction in pollutants.
Economic Policies
Key Chilean government policy managers were
trained at the University of Chicago, noted for
economist Milton Friedman and his free￾market approach to economic development. The
Chicago-trained economists turned Chile into
a free-market model. Chile relies almost com￾pletely on private enterprise and free markets
to drive its economy. Government price and
market controls, incentives, and subsidies are
almost nonexistent.
World market prices prevail for virtually all in￾dustrial inputs. The economy is nearly free of
price distortions or subsidies that would encour￾age environmentally harmful activities. While
almost all other countries subsidize pollution
control, in Chile pollution prevention subsidies,
concessional loans, or investment credits do not
exist. Indeed, they are dismissed by both gov￾ernment and industry as bad policy.
For industrial wastewater there is a pollution
prevention incentive. The Santiago water and
sewage utility (a private company) imposes
water charges based on the volume and con￾centration of wastes in the industrial effluent.
There are also upper limits on major pollutants.
Companies pay the utility for the cost of receiv￾ing their waste—a strong incentive to reduce
water pollution.
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The CDIE assessment team visited 18 compa￾nies, 10 that had received EP3 assistance and,
for comparison, 8 that had not. Basically, the
economic foundations of EP3 were sound; the
market provided the financial incentives nec￾essary for pollution prevention to succeed. The
project showed that many companies were
motivated to undertake preventive actions to
save money from recycling and from increases
in efficiency, reduced waste, reduced input
costs, and improved product quality. They were
also motivated by the prospect of avoiding the
costs associated with excess waste disposal. Sev￾eral factors influenced pollution prevention in￾vestments:
1. Companies that were successful at prevent￾ing pollution had physical plants that were clean
and well organized. Management was aware of
production costs, was developing new products,
was interested in innovations, and was aware
of what the competition was doing. In contrast,
dirty firms had a chaotic factory layout and were
not on top of costs or new product develop￾ments. Willingness to adopt clean production
measures is correlated with a history of good
management practices. The skillful owners and
managers are most likely to have a better and
more productive operation and clean produc￾tion, and pollution prevention is a natural part
of an efficient operation.
2. Managers who expected the cost of waste dis￾posal to increase were making pollution pre￾vention investments as a means to avoid future
problems. Anticipated cost increases are due
to stricter government regulation of air pollu￾tion or expected increases in the cost of waste￾water treatment or landfill disposal.
3. The adoption of pollution prevention tech￾nologies appears to be accepted whenbusiness￾men believe that costs of noncompliance will be
equitably imposed on others in the same busi￾ness. In other words, action is conditional on
there being no environmental “free riders” who
might gain a competitive advantage. That sup￾ports an industrywide approach to the intro￾duction of pollution prevention technologies
and transparent environmental regulations.
4. Most businesses that participated in EP3 were
owner-managed small or medium-size firms.
Being frugal, managers were reluctant to make
long-term investments and generally went with
low- or no-cost pollution prevention measures.
These were all internally financed. Of the EP3
participants interviewed by the evaluation
team, none cited lack of finance as a barrier to
adopting pollution prevention measures.
Government Regulations
And Standards
In 1994 the General Environmental Guidelines
Law created a legal framework for environmen￾tal management. It formally created the Na￾tional Commission on the Environment
(Conama, the Chilean environmental protection
agency), which was charged with coordinating
the environmental units of all ministries. Zon￾ing is another way to regulate pollution. Indus￾try wants to be in metro Santiago to have access
to labor, inputs, and markets. The government
wants the most polluting industries to locate
elsewhere and has established penalties to en￾courage them to move. Several of the small and
medium-size factories that participated in EP3
are in residential areas. Governmental zoning
regulations restrict new investments by such
firms. They can stay where they are but cannot
expand production. In the case of a tannery, it
had to use cleaner technologies and a less pol￾luting process. It also had to move the dirtiest
part of production outside Santiago.
EP3 was by design an industry-oriented pro￾gram with little emphasis on governmental
policy or regulatory development. EP3 worked
on the supply side: helping create the technol￾ogy and skilled manpower and demonstrating
the financial savings that firms could realize
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while reducing pollution. But the availability
of environmental audits, cost-saving technol￾ogy, and trained environmental engineers was
not enough. As EP3 progressed, it became ap￾parent that even though the cost–benefit ratio
for pollution prevention measures was strong,
and environmental engineers were trained and
ready to help firms, the demand side was weak.
Regulations were needed to spur industry in￾terest. Without the threat of fines and penalties,
industrial demand for pollution control mea￾sures was limited.
Chile’s environmental regulations were under
development and lagging behind EP3. Little of
the information developed under EP3 was used
by the government as it developed its regula￾tory framework. The need to develop policies
and regulations, to involve government, and to
broadly disseminate results should have been
recognized early in the EP3/Chile program.
Failure to take those actions reduced program
effectiveness.
Institution Building
Conama became fully effective after EP3 ended
in 1996. During implementation, EP3 concen￾trated almost entirely on the private sector. It
did little to institutionalize EP3 lessons in the
emerging Chilean environmental agencies. This
is not to say that the concepts of pollution pre￾vention, waste minimization, or clean produc￾tion were not well known inside government
circles. They were. What is important is that few
current government officials were aware of EP3.
The assessment team found almost no linkage
between EP3 and current environmental poli￾cies and institutional structures.
Now there are several dozen government, NGO,
and private sector organizations dealing with
the environment. During the time of EP3, only
a few were in place. In one sense EP3 was ahead
of its time, and the institutions were not ready
to take on pollution problems. Some might ar￾gue, on the one hand, that the inchoate nature
of environmental institutions in Chile during
EP3 made it difficult to identify which institu￾tions would develop and become effective.
Efforts to identify institutions might have dis￾sipated EP3 technical efforts that were raising
awareness of pollution prevention in the private
sector. Others might argue, on the other hand,
that new institutions can often provide new op￾portunities to exercise a positive influence. A
more proactive effort to engage government
policymakers might have reaped benefits.
IMPACT
The real test of any aid project is its impact—
what the benefits were and how they were
achieved. The cost of achieving impact is also
important. For pollution prevention activities,
this includes financial costs and benefits to in￾dustrial firms and environmental and health
benefits to the general population.
Economic and Financial Impact
The concept underlying pollution prevention is
to generate less waste at the end of the pipe. Any
in-plant practice that reduces or eliminates the
amount or toxicity of pollutants before they en￾ter the waste stream will generate environmen￾tal benefits and improve the health and safety
of employees. Just as important, the pollution
prevention process imparts financial benefits
to the factory.
Financial returns are generated in three ways:
1) by lowering operating or input costs (through
recovery of raw materials or increased efficiency
in the use of energy, water, or steam); 2) by
using a cleaner production process (reducing
fees and penalties for contaminants discharged);
and 3) through improved process efficiency (ei￾ther through increased output or by recycling
or recovering what was formerly waste). In ad￾dition, there are financial benefits if the pro-
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cesses result in increases in product quality,
fewer rejects, greater productivity of workers,
less downtime from equipment repair, or less
downtime from safer operations.
Twenty-six Pollution Prevention Diagnostic
Assessments were completed covering 7 indus￾trial sectors: tannery (3), textile (3), printing (4),
food processing (4), hospital (2), mining (4), and
chemical (6). Approximately 40 percent of the
EP3 recommendations were implemented.
Those recommendations resulted in estimated
total annual savings of $1.9 million against
total one-time investments by industries of $1.4
million. The pollution prevention investment
costs were recovered in just nine months. Pol￾lution was reduced by 32 percent, and annual
water savings were 1.4 million cubic meters. The
average annual saving per facility was $72,000,
with an average one-time investment of $53,000.
While the savings were important to all the fac￾tories, there were some big winners. Mining and
food processing generated 91 percent of the in￾vestments and 91 percent of the savings.
Site visits by the evaluation team to one third of
EP3 participating firms found that they were
interested in no- or low-cost investment, rather
than higher cost investments, even when the
higher cost investments had much higher rates
of return. This was because of their 1) small
budgets, 2) short planning and accounting ho￾rizons, 3) unwillingness to move away from
time-tested patterns of production or lack of
knowledge about new production technologies,
4) lack of management resources to supervise
new procedures, and 5) high risk aversion.
The greatest financial returns accrued to larger
companies. Those firms were willing to under￾take higher cost investments. Many had link￾ages to or were owned by foreign firms that
encouraged pollution prevention. Other
successful participants, such as a tannery and a
textile factory, have moved into production for
export.
What distinguishes those companies is not that
they readily implemented most of the EP3 rec￾ommendations but that they had the financial
capacity to shift their production either into a
more diverse product line or invest in newer,
more productive technologies. A weak market
and increased local and international competi￾tion led to some of the smaller firms’ abandon￾ing pollution prevention measures previously
adopted or limiting production so severely that
recommended pollution prevention measures
were no longer relevant.
Table 1 summarizes costs and benefits. Typical
savings resulted from reductions in chemical or
energy use, improvements in raw-material
recovery, improved product quality, and pro￾ductive use of waste materials.
Average annual financial returns were conser￾vatively estimated at 5 to 20 percent by owners
and plant managers of the one third of the par￾ticipating companies examined by the evalua￾tion team. Masked in these averages, though,
are some postproject cost savings resulting from
waste management early in the industrial pro￾cess and not at the end of pipe. Decisions to in￾troduce new methods of waste recovery at the
dairy resulted in avoided costs of about $1 mil￾lion by eliminating the need for construction of
a new primary sewage treatment facility.
As an example of cumulative financial savings,
one of the tanneries reported that it reduced
water use by 40 percent, for a saving of $4,000 a
year; reducing fuel use saved $2,000 a year, and
the tannery saved an additional $30,000 a year
by decreasing losses of chrome in wastewater
to 4 percent from 40 percent. Not included in
the EP3 recommendations was an enzyme pro￾cess for biological treatment of hides in lieu of
increased use of chemical washing. Savings
were $3,000 a year with significant decreases in
biochemical oxygen demand in the waste
stream. Moreover, clean production improved
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Table 1. Costs and Benefits From Recommended
Pollution Prevention Measures
Sector
Chemical
Food
Hospitals
Mining
Printing
Tannery
Textiles
Total
Average
No. of
Firms
6
4
2
4
4
3
3
26
Percent of
Options
Imple￾mented
57
44
37
26
18
48
50
40
Percent of
Pollution
Reduction
35
22
40
23
16
49
22
32
Annual
Water
Savings
(m3
)
168,140
295,035
0
757,440
0
107,500
91,440
1,419,555
Total
20,650
313,585
n.a.
950,000
3,275
87,200
3,563
1,378,273
Average
per Facility
3,441
78,396
n.a.
237,500
818
29,066
1,187
53,010
Investment Size (US$)
Average
per Facility
6,856
127,740
n.a.
300,445
1,987
32,050
7,044
72,273
Total
41,136
510,960
n.a.
1,201,780
7,950
96,150
21,132
1,879,108
the quality of leather, allowing a higher grad￾ing that commands an 8 percent higher price.
Given the small number of companies partici￾pating in the project, and limited replication, one
cannot generalize from these data to assess the
financial impact of EP3 on Chile as a whole.
Moreover, economic events (a major recession,
changes in market demand, etc.) appear to have
had even greater effects on profitability than
pollution prevention measures.
Environmental and Health Effects
EP3 managers estimated that their recommen￾dations would reduce pollution on average by
32 percent at the 26 factories. The problem is a
lack of before-and-after measurements. There
were no baseline or postproject measurements
of air and water pollution emissions. Although
actual net air and water quality improvements
attributable to EP3 measures are not known, the
32 percent estimate at these companies seems
reasonable—a conclusion based on the sample
survey conducted for this assessment.
Air pollutants were not a significant factor in
most factories participating in EP3. Volatile
organic compounds were emitted by some. A
more important pollution source was the fuel
used in the production process—wood, coal, or
oil. A number of companies have switched to
natural gas (which is much cleaner) and are also
burning volatile organic compounds in the
exhaust stack. The switch was driven mainly by
the lower price of gas and (to a much lesser ex￾tent) to regulatory pressure. It has resulted in
lower amounts of particulate matter and of sul￾fur dioxide emissions.
Going by 1998 data, the most notable improve￾ment has been the reduction of ambient sulfur
dioxide. During 1998, emissions met all
Chilean federal standards, which are compa￾rable to U.S. Environmental Protection Agency
(EPA) standards and the more stringent Califor￾nia state standards. This is due almost solely to
industrial conversion to natural gas and the use
of natural gas for local power generation.
Particulate matter in the air comes from the fine
dust of partially burned fuel and chemicals in
exhaust smoke and from industrial metal grind￾ing. When a person breathes these particles, they
are trapped in the nose, throat, and upper res￾piratory tract. Small particles are the most dan￾gerous, since they can be trapped deep in the
lungs, causing long-term health problems.
Annual Saving
10
Heavy air pollution harms human health, es￾pecially in the young and old and those with
respiratory or cardiovascular problems. In par￾ticular, young children in Santiago have a much
higher rate of acute respiratory illness than
those outside the metro area.
No baseline effluent or water-quality data were
available for this study; such data probably do
not exist. It is estimated that 95 percent of all
drinking water in the metropolitan area is
treated. The real problem is sewage. There is
little treatment of municipal effluent (stated to
be 5 to 15 percent nationwide), as is evidenced
by the open drainage canals running through
Santiago. As a result, coliform levels down￾stream of discharge points are high. That is
serious, as coliform is a major cause of diarrheal
disease (particularly dangerous to children).
A second problem is industrial wastewater,
which is typically mixed and discharged along
with municipal wastewater. Industrial waste￾water contains a wide range of pollutants,
including organics and heavy metals such as
cadmium, chrome, lead, mercury. This is an im￾portant factor in higher morbidity and mortal￾ity rates, as heavy metals are known to cause a
wide range of cancers and neurological disor￾ders.
Air and water quality standards are set prima￾rily to protect human health. EP3 helped firms
reduce their pollution discharges, meet dis￾charge standards, and thereby improve human
health. Proper disposal of industrial waste,
including hazardous and toxic compounds, has
reduced people’s exposure to air pollution and
runoff to surface waters, groundwater, and
aquifers. Worker health and safety has also
improved.
Examples of pollutants resulting from industrial
operations audited by EP3, known health ef￾fects, and measures taken to reduce emissions
and exposures are shown in table 2.
From the assessment team’s onsite visits, it is
clear that most firms are reducing air and wa￾ter pollution emissions. Unfortunately, baseline
and post-EP3 air and water quality data (and
baseline emissions and effluent data) necessary
to estimate or quantify impacts are not avail￾able. It is therefore not possible to quantify spe￾cific benefits for those factories or to estimate
the overall health impact of pollution preven￾tion measures.
PROGRAM PERFORMANCE
To be judged effective, a program and its pollu￾tion prevention concepts should gain sustained
support from government and industrial
groups. Benefits should be sustained and repli￾cated after USAID funding ends. Finally, effec￾tive use of USAID assistance should generate a
measurable impact on environmental quality.
Effectiveness
Effectiveness assesses how appropriate the in￾tervention was in meeting program objectives.
Was the program directed to the right group?
Were the tools adopted relevant to the context
in which they were implemented? Was imple￾mentation consistent in its approach, and was
the approach the best way to use USAID re￾sources to get the job done?
The institution first chosen to implement EP3
was the American–Chilean Chamber of Com￾merce (AmCham). As often is the case, the choice
of AmCham was based on individuals at the
chamber who were interested in pollution pre￾vention. When they left, the program suffered.
Those who took over lacked the same enthusi￾asm, and the project stalled.
In the second year, implementation was shifted
from AmCham to a local environmental consult￾ing firm, Qualitek, associated with Environmen￾tal Resource Management, a U.S.–based firm.
11
Both implementing institutions—AmCham
and Qualitek—were careful to dissociate their
technical pollution prevention activities from
debates under way about how to establish and
organize governmental institutions to develop
and enforce environmental standards and regu￾lations. The failure to engage Chilean authori￾ties in a policy dialog during EP3’s early years
is noted by some people as one of its most sig￾nificant weaknesses.
The quality of technical assistance was gener￾ally highly regarded. In addition, the technical
approach of having one or two international
experts working closely with Chilean environ￾mental engineers on pollution audit teams was
effective in identifying appropriate solutions for
factories and providing a transfer of technology
to local environmental firms. The weakness in
the approach was that only a relatively small
number of industrial companies were reached.
Of 17,000 small and medium-size enterprises in
the Santiago area, just 26 were chosen for envi￾ronmental audits.
The difficulty in measuring program effective￾ness lies in linking the economic gains to the
EP3 approach. Enterprises that appear to have
benefited most, such as the mining companies,
the tannery, the dairy, and a textile factory, are
PM=particulate matter VOC=volatile organic compounds
BOD=biological oxygen demand (in wastewater)
Table 2. Air and Water Pollutant Effects and Measures Taken Under EP3
Industry
Tannery
Printing press
Hospital
Electroplating
Fish products
Dairy and
cheese
Slaughterhouse
Textiles
Pollutants
l PM
l VOCs
l Chromium
l PM
l VOCs
l Pathogenic
particles from
incomplete waste
incineration
l PM from grinding
l VOCs
l Chromium, nickel
and zinc
l PM, ammonia,
odors
l Organic matter
l Ammonia
l Organic matter
l Organic matter
l PM, organic fibers
l Dyes
Health Effects
l Respiratory
l Respiratory
cancers
l Cancers
l Respiratory
l Respiratory
cancers
l Spread of
disease
l Respiratory
l Respiratory
cancers
l Cancers
l Respiratory
l Increased BOD
l Increased BOD
l Increased BOD,
odors
l Respiratory
l Cancers
Measures
l Baghouses
l Evaporation barriers, water￾based dispersants
l Metal recovery
l Change to natural gas firing
l Reduced use of oil-based
inks
l Offsite incineration and
disposal
l Cyclones and baghouses
l Evaporation barriers, water￾based dispersants, recovery
l Metal recovery
l Venturi scrubbers and
cyclones
l Recovery of solids
l Reduced water use, sale of
whey
l Wet scrubbers, use of landfill
l Reduced water use
l Baghouses and change to
natural gas for boilers
l Nontoxic dyes, reduced use
12
those that were dynamic and capable of modi￾fying their industrial processes to take advan￾tage of changing local and global markets. It can
be argued that those firms would have adopted
(possibly several years later) many of the pol￾lution prevention processes. In fact, most intro￾duced new technologies and clean production
practices beyond those recommended by EP3.
Other small, less dynamic firms did not fare as
well. Owing to a downturn in the local economy
during 1998–99, many held back on carrying out
clean production recommendations. This find￾ing flies in the face of the potential financial re￾turns. It is possible that smaller firms have dif￾ferent priorities and less capital and are unsure
of the financial merits of pollution prevention,
or that technologies may not have generated as
large savings as expected by EP3.
In general, successful pollution prevention was
associated with good plant management. Good
managers are those who understand costs, prod￾uct development, and marketing. They did well
with pollution prevention. By contrast, indus￾tries and firms with severe pollution problems
often had financial problems because of weak
management. They were producing the wrong
product mix with inefficient machinery.
Good managers saw pollution prevention as an
integral part of efficient production. They
adopted pollution reduction and waste minimi￾zation as a way to save money and improve
product quality. There is a tendency for pollu￾tion prevention programs to zero in on compa￾nies with the worst pollution. That may be the
way to clean up the greatest amount of pollu￾tion, but it is probably not the best approach if
the goal is to achieve a broader impact. Pollu￾tion prevention efforts stand a better chance of
success if they identify and work with the more
progressive and better managed firms.
In sum, EP3’s approach was technically sound
but weak in both the scope of coverage and its
follow-up. Technology transfer might have been
improved by a more thorough investigation of
the industries before initiation of technical au￾dits. That would have enabled establishment of
an industrial baseline so that improvements,
both environmental and financial, could be
quantified and valued.
It might, moreover, have been useful to target a
group of companies in a single industrial sec￾tor, such as food processing or metal finishing.
That would allow the project to demonstrate the
merits of clean production and make sure it was
adopted by a large number of companies pro￾ducing similar products in one industry. The
wholesale rather than retail approach would
have enhanced replication. It might also have
been more effective to start with companies that
had greater potential for success or with own￾ers who were more influential within their trade
associations.
There were, to be sure, external factors that lim￾ited effectiveness. Terminating USAID’s presence
in Chile at the same time as the completion of
EP3 meant there was little residual institutional
support beyond the life of the project. By mid￾1995, pollution prevention was picked up and
given financial support by several international
and bilateral donors—though most of the cur￾rent representatives were unaware of EP3.
Sustainability
Sustainability of benefits is a key measure of
success for a pilot project such as EP3.
Sustainability can be assessed in part by
whether people can recall after several years the
program and its objectives. The evaluation team
was often surprised at how few environmental
professionals, other than those directly involved
in the project, knew about EP3, its objectives, or
its impact. Lack of follow-up with industry, the
absence of policy dialog or establishment of
strong relationships with government agencies,
and failure to link lessons learned to dissemi-
13
nation and training efforts means that the pro￾gram had little long-term effect.
EP3 had an important role in helping establish
a viable local consulting services industry. The
typical EP3 pollution prevention audit consisted
of an American industry expert, a Chilean pol￾lution prevention expert, and two or three Chil￾ean consultants who received on-the-job train￾ing in the assessment process. Local consultants
were given additional training at the Environ￾mental Research and Training Center (Cipma).
Complementing this was a training-the-train￾ers approach. It included short-term U.S.–based
training for three persons and industrial engi￾neering expertise from EPA experts brought to
Chile for training sessions.
In part through EP3’s training efforts, Chile now
has a cadre of trained industrial environmental
engineers working principally in the private
sector and in universities. Many have pro￾gressed professionally to become managers and
heads of environmental agencies that have im￾portant roles in pollution prevention. Several
have established their own environmental con￾sulting firms. The environmental services busi￾ness started off with a burst in the mid-1990s
but has slowed during the past few years
owing to the downturn in the economy.
Early in the program, Cipma’s training func￾tions proved successful and useful. As a result,
Cipma was selected by EP3 to serve as a clear￾inghouse for technical information. It was also
to serve as a vehicle for postproject training and
dissemination of information intended to sus￾tain the project’s work following termination.
But the effort to institutionalize EP3 activities
through Cipma failed. The reasons are many,
but they centered on Cipma’s status as a mere
think tank, giving the group little credibility
with government or industry.
The philosophy of pollution prevention has
been incorporated within the regulatory frame￾work and environmental standards adopted by
Conama, Chile’s EPA. The future of pollution
prevention and clean production looks bright.
Chile’s Ministry of Economy has adopted a
wide-ranging pollution prevention program
with an initiative called the Public–Private Part￾nership for Clean Production. The aims of EP3
have been institutionalized, and commitments
have been made to ensure that pollution￾prevention concepts are sustained.
Can these positive results be attributed to EP3?
Again, the importance of people who partici￾pated in the project was cited as being influen￾tial in persuading the Ministry of Economy to
adopt its clean-production program. Chilean
environmental engineers who took part in EP3
were also influential in promoting the expan￾sion of a government-initiated clean-production
program. But pollution prevention is a univer￾sal concept. It can hardly be said to be “owned”
by a project or program. Many other interna￾tional and bilateral donors provided pollution
prevention services to Chile in the interim. They
would also surely claim credit for sustaining a
program of clean production.
Project planners and USAID can be given much
credit for recognizing an important develop￾mental need in Chile and responding early in
an effective way. More attention to follow-up
and to formulation of a plan for sustaining the
project after its termination might have resulted
in greater sustainability of EP3 benefits. EP3
planted the seed for pollution prevention pro￾grams but was not around to see the accomplish￾ments wrought by its efforts.
Replication
Replicability refers to the difficult process of
extending project benefits beyond the original
participating companies to other companies.
EP3’s program management recognized that to
be effective, industrial audits had to be custom-
14
ized to the needs of participating firms. To over￾come the reluctance of firms to divulge indus￾trial secrets, agreements were made with each
participating firm to protect proprietary infor￾mation about that firm’s industrial process.
Information and outreach about the pollution
prevention processes adopted by firms faced
two barriers: 1) the audits themselves were con￾sidered proprietary information and could not
be shared, and 2) owners and plant managers
were reluctant to share information about op￾erational changes that resulted in cost savings.
They wanted to protect their competitive posi￾tions.
The evaluation team found, however, that the
more influential the person
involved in the Pollution
Prevention Diagnostic As￾sessment, and also to some
extent the more prosperous
and established the com￾pany, the more likely the
broad, nonspecific benefits
were disseminated to others
in the industry. For example,
the president of the Chilean
Tanneries Association took
part in an EP3 audit. He con￾tinued to praise the results
of EP3’s technical assistance
to other members of the as￾sociation and pushed the
lessons learned at industry
meetings. Similarly, a pros￾perous and well-established textile manufac￾turer who participated in an EP3 audit became
a strong advocate of pollution prevention
audits within his industry. He did so without
divulging specific competitive benefits his com￾pany received. In these instances the reputation
of participants enhanced replication of the
project’s benefits.
An example of significant replication was the
Valparaíso Hospital. As a public hospital, medi￾cal staff had little concern about the profitabil￾ity of pollution prevention measures. They
were concerned, though, about the effect of such
measures on the health of patients and staff, and
the maintenance of environmental health and
safety in the workplace. The audit led to greater
management coordination of medical services
in general. As a result, medical staff used EP3’s
audit procedures to develop a training and out￾reach program for other medical services at the
hospital and for workshops in university set￾tings. The outreach had two purposes: first, to
highlight improved measures to handle medi￾cal and toxic wastes, and second, to share sys￾tematic measures to assess and improve hos￾pital administrative procedures for greater co￾ordination of services
among medical staff.
The reasons are many why
replication and outreach
were limited. Addressing
specific problems of indi￾vidual companies meant
that an environmental audit
of one firm was not easily
transferred to others. Many
recommendations were ge￾neric. Except in the case of
no-cost or low-cost in-house
process improvements, the
recommendations lacked
specifics of how, where, and
when to acquire the recom￾mended technologies. Rep￾lication could have been enhanced if compa￾nies knew not only what technologies to use
but also how and where to install them, where
to buy the equipment, and possible sources of
financing. Promoting American goods and ser￾vices was an explicit objective of EP3, but few
sales were generated.
A more integrated approach would have exam￾ined the total waste stream, from before the time
it reaches the plant through the production pro-
“The more influential
the person involved in
the Pollution
Prevention Diagnostic
Assessments, the
more likely that
benefits were
disseminated to others
in the industry.”
15
cess to end-of-pipe waste-treatment alterna￾tives. This approach might have targeted firms
within an industrial sector or within a geo￾graphic area. Such an approach might have led
to greater outreach and more expansive cover￾age for industrial sectors and integrated solu￾tions to waste management.
LESSONS LEARNED
The Chile Environmental Pollution Prevention
Project successfully introduced the concepts of
pollution prevention and clean production to
Chile’s industrial sector. Compared with end￾of-pipe pollution treatment, companies found
that with EP3 pollution prevention they could
save money while also reducing environmen￾tal pollution. Pollution prevention is now fully
accepted throughout Chile’s industrial sector.
While EP3 was successful at selling the pollu￾tion prevention message and having 26 factory
demonstration efforts, there were some missed
opportunities. The lessons that emerge from this
assessment are summarized below.
1. Institutionalization. A pilot effort is an excel￾lent way to experiment and test ideas and methods,
but it should include a plan to scale up, disseminate,
and sustain successful approaches.
EP3 assumed that pollution prevention tech￾niques, once adopted, would generate substan￾tial benefits and that companies would recog￾nize the value of the EP3 approach. It would
then be adopted throughout the economy. EP3
succeeded in creating a cadre of pollution en￾gineers and working with the private sector. But
it did not extend its message throughout the
industrial sector and failed to develop close ties
with the government or NGOs. There was no
effective institutional arrangement to carry on
the effort after USAID assistance ended. Design￾ers and implementers of pilot programs need
to develop a sustainability plan to ensure that
benefits continue once the program ends. That
usually requires an institutional structure with
adequate funding and skills to maintain pro￾gram benefits.
2. Replication. EP3 helped companies reduce pol￾lution, increase profits, and improve their competi￾tive position. But participating firms were reluctant
to share the newly learned techniques with competi￾tors.
EP3 recognized that Pollution Prevention Diag￾nostic Assessments had to be customized to the
unique production process of participating com￾panies. But each company closely guards its
production techniques, not wanting to help
competitors. Agreements were made to protect
this proprietary information. As a result, there
was only limited dissemination to other firms
in the same industry. Exceptions took place
when the audit was done at a plant where the
owner was an influential leader in the industry
trade association. Replication will not take
place if it reveals trade secrets. A program
needs to develop ways to replicate generic
pollution prevention approaches.
3. Targeting. Good factory managers are those who
understand costs, product development, and market￾ing. They also do well with pollution prevention.
In Chile, firms with severe pollution problems
often had financial problems, owing to weak
management. They were producing the wrong
product mix with inefficient machinery. They
were the “losers.” In contrast, good managers
saw pollution prevention as an integral part of
efficient production. They adopted pollution
reduction and waste minimization as a way to
save money and improve product quality. There
is a tendency for pollution prevention programs
to concentrate on firms with the worst pollu￾tion problems. That may not be the best ap￾proach to achieve sustained impact. Pollution
prevention efforts stand a better chance of suc￾cess if they identify and work with the more
progressive and better managed firms.
U.S. Agency for International Development Washington
To order paper copies of this report, PN–ACG–619, please contact USAID’s Development Experience
Clearinghouse, 1611 North Kent Street, Arlington, VA 22209. Or you can phone (703) 351–4006, or fax
(703) 351–4039, or e-mail: docorder@dec.gov. A Working Paper No. 313, “Urban and Industrial Pollution
Programs: Chile Case Study,” provides additional information and can be called up on the Internet. To
access this Impact Evaluation or the Working Paper from the Internet, go to www.dec.org/usaid_eval.
Editorial and production services provided by Conwal Incorporated.
16
pollution, EP3 had difficulty persuading a large
number of firms to adopt clean production mea￾sures. Many companies viewed pollution pre￾vention as a cost that might not generate any
return on investment. Several years later, firms
became interested in clean production and pol￾lution prevention when they faced the threat of
fines, government sanctions, and penalties
charged by the wastewater authority. While
both the carrot and stick (cost savings and
regulations, respectively) are important in mo￾tivating companies to take action, regulations
and fines clearly command the attention of fac￾tory managers and create demand for pollu￾tion prevention measures.
6. Wholesale versus retail. A program cannot hope
to reach all firms directly but needs an intermediary
to spread the message.
There are 17,000 small and medium-size indus￾trial firms in the Santiago metro area. EP3 tried
to work with industry groups and trade asso￾ciations, but the efforts had only limited suc￾cess. Instead, EP3 used a retail approach, pro￾viding general public training sessions and
working with one factory at a time. It did not
succeed in reaching many firms. A demonstra￾tion project cannot hope to succeed with a re￾tail approach of dealing with one firm at a
time. Impact will be greatest when an institu￾tional structure (such as an industrial trade
association or a clean-production center)
exists to disseminate pollution prevention
findings throughout an industry.
4. Timing. It is important to be ahead of the wave,
but if a pollution prevention program is too far ahead
of a country’s environmental consciousness, benefits
will be limited.
When EP3 was launched, environmental aware￾ness and interest by the government and indus￾try had just begun to grow. Chile had almost no
environmental regulations in place. The law
requiring environmental impact assessments,
the start of enforcement of pollution regulations,
and establishment of the government environ￾mental agency (Conama) all took place as the
project was coming to an end. Without regula￾tions, or enforcement, EP3 set about selling pol￾lution prevention directly to industry as a cost￾saving measure. That proved to be a difficult
task. If pollution laws are not in place, a pol￾lution prevention program may need to work
with a country to develop its environmental
policies and regulations before it undertakes
to persuade industry to adopt pollution pre￾vention measures.
5. Regulation. Cost savings alone may be insuffi￾cient to induce companies to adopt waste minimiza￾tion and pollution prevention programs.
Until the early 1990s, pollution laws were few
and enforcement was rare. Moreover, Chile had
a history of a strong central government with
the military in control until 1990. Business lead￾ers and the government still had an ingrained
command-and-control mentality. With an ab￾sence of regulations and little concern about