Report of the CPCB In-house Committee on

Methodology for Assessing Environmental

Compensation and Action Plan to Utilize the Fund

CENTRAL POLLUTION CONTROL BOARD

“Parivesh Bhawan”, East Arjun Nagar,
Delhi-110032
 Table of Contents
Chapter-I: Environment Compensation to be levied on Industrial Units .......................................................... 3
1.1 Background ............................................................................................................................................ 3
1.2 Constitution of the Committee .............................................................................................................. 3
1.3 Methodology for Assessing Environmental Compensation .................................................................... 3
1.4 Action Plan for Utilization of Environmental Compensation Fund ......................................................... 6
1.5 Recommendations ................................................................................................................................. 7
Chapter-II: Environmental Compensation to be levied on all violations of Graded Response Action Plan
(GRAP) in Delhi-NCR. ....................................................................................................................................... 9
2.1 Background ............................................................................................................................................ 9
2.2 Action Plan for Utilization of Environmental Compensation Fund ......................................................... 9
Chapter-III: Environmental Compensation to be levied in case of failure of preventing the pollutants being
discharged in water bodies and failure to implement waste management rules ........................................... 10
3.1 Background .......................................................................................................................................... 10
3.2 Ideology of Environmental Compensation Formula ............................................................................. 10
3.3 Environment Compensation for Discharge of Untreated/Partially Treated Sewage by Concerned
Individual/Authority: ................................................................................................................................. 12
3.4 Environment Compensation to be Levied on Concerned Individual/Authority for Improper Solid Waste
Management: ............................................................................................................................................ 14
3.3 Action Plan for Utilization of Environmental Compensation Fund ....................................................... 15
3.4 Recommendations ............................................................................................................................... 15
Chapter-IV: Environmental Compensation in Case of Illegal Extraction of Ground Water .............................. 17
4.1 Background .......................................................................................................................................... 17
4.2 Constitution of the Committee ............................................................................................................ 17
4.3 Methodology for Assessing Environmental Compensation .................................................................. 17
4.4 Ideology of Environmental Compensation w.r.to illegal extraction of ground water ........................... 17
4.5 Formula for Environmental Compensation for illegal extraction of ground water ............................... 18
4.6 Environmental Compensation Rate (ECRGW) for illegal use of Ground Water ....................................... 18
4.7 Relaxation ............................................................................................................................................ 21
4.8 Recommendations ............................................................................................................................... 21
Annexure-I ..................................................................................................................................................... 22
Annexure-II .................................................................................................................................................... 28
Annexure-III ................................................................................................................................................... 31
Annexure-IV................................................................................................................................................... 34
Annexure-V.................................................................................................................................................... 36
Annexure-VI................................................................................................................................................... 40
References ..................................................................................................................................................... 41

1
 Abstract
Environmental compensation is a policy instrument for the protection of the environment
which works on the Polluter Pay Principal. Environmental compensation has already been
implemented in various countries, although limited in scope. Experiences from these
implementations are mixed and tend to stress the importance of certain principles in order
to achieve the overall objective of protection of the environment.
The Hon’ble National Green Tribunal through its various judgments has empowered the
Central Pollution Control Board to lay down the methodology to assess and recover
compensation for damage to the environment and utilize such amount in terms of an action
plan for protection of the environment.
An attempt has been made by the CPCB in-house Committee to develop a methodology for
assessing environmental compensation to be levied on concerned industry, authority,
individual etc. for the protection of environment. Expert institutions/ NGOs like The Energy
and Resources Institute, Centre for Science and Environment-India, Institute of Economic
Growth etc. were also consulted to finalize the report. Overall objective is to develop self-
sense of responsibility towards the environment and to make defaulters realize their mistake
by imposing compensation, which will be utilized for the protection/restoration of the
environment.
Although, this is the first attempt in India towards development of methodology for assessing
environmental compensation, however, efforts have been made to simplifying the process so
that regulatory institutions can easily adopt the methodology for implementation.

2
Chapter-I: Environment Compensation to be levied on Industrial
Units

1.1 Background
The Hon’ble National Green Tribunal (NGT), Principal Bench in the matter of OA No. 593/2017
(WP (CIVIL) No. 375/2012, Paryavaran Suraksha Samiti & Anr. Vs. Union of India & Ors.
directed Central Pollution Control Board (CPCB) that:

“The CPCB may take penal action for failure, if any, against those accountable for
setting up and maintaining STPs, CETPs and ETPs. CPCB may also assess and recover
compensation for damage to the environment and said fund may be kept in a separate
account and utilized in terms of an action plan for protection of the environment. Such
action plan may be prepared by the CPCB within three months” (Annexure-I).

1.2 Constitution of the Committee

In this context, Chairman, CPCB constituted a Committee under the Chairmanship of Shri A.
Sudhakar, I/c WQM-I with Shri A. K. Vidyarthi, I/c WQM-II, Shri P. K. Gupta, I/c IPC-VI, Shri
Nazimuddin I/c IPC-II and Dr. S. K. Paliwal, Scientist ‘D’ as members. The Committee was asked
to deliberate on this issue and come up with a draft formulation before 15.9.2018.

1.3 Methodology for Assessing Environmental Compensation

The Committee discussed the issue on 4.9.2018, 13.9.2018,17.9.2018 and 09.10.2018. A
meeting was also held with Senior Officers of CPCB Head Office and Regional Directorates
through video conferencing on 28.09.2018 to discuss the draft report and to seek
comments/feedbacks. The comments/feedbacks received and deliberations of the
Committee on the same are given in Annexure-II.

As per the Hon’ble NGT suggestion, CPCB has invited comments of 3 expert institution,
namely, Centre for Science and Environment (CSE), Institute of Economic Growth (IEG) and
The Energy Research Institute (TERI). A meeting to incorporate the comments of the expert
institutions and to finalize the report, was held on 27/03/2019. The CPCB in-house committee
on Environmental Compensation has deliberated on the comments and finalized the report
accordingly. The Committee’s deliberations are attached as Annexure-III.

It was deliberated for developing a formula for imposing environmental compensation on

industrial units for violation of directions issued by regulatory bodies and this is the first
attempt made. The committee discussed that environmental compensation should be based
on “Polluter Pay Principle”. The Committee decided to list the instances for taking cognizance
of cases fit for violation and levy environmental compensation.

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Cases considered for levying Environmental Compensation (EC):

a) Discharges in violation of consent conditions, mainly prescribed standards / consent

limits.
b) Not complying with the directions issued, such as direction for closure due to non-
installation of OCEMS, non-adherence to the action plans submitted etc.
c) Intentional avoidance of data submission or data manipulation by tampering the
Online Continuous Emission / Effluent Monitoring systems.
d) Accidental discharges lasting for short durations resulting into damage to the
environment.
e) Intentional discharges to the environment -- land, water and air resulting into acute
injury or damage to the environment.
f) Injection of treated/partially treated/ untreated effluents to ground water.

1.3.1 In the instances as mentioned at a, b and c above, Pollution Index may be used as a basis
to levy the Environmental Compensation. CPCB has published guidelines for categorization of
industries into Red, Orange, Green and White based on concept of Pollution Index (PI). The
Pollution Index is arrived after considering quantity & quality of emissions/ effluents
generated, types of hazardous wastes generated and consumption of resources. Pollution
Index of an industrial sector is a numerical number in the range of 0 to 100 and can be
represented as follows:

PI = f (Water Pollution Score, Air Pollution Score & HW Generation Score)

Pollution Index is a number from 0 to 100 and increasing value of PI denotes the increasing
degree of pollution hazard from the industrial sector.

CPCB has issued directions to all SPCBs/PCCs on 07.03.2016 to adopt the methodology and
follow guidelines prepared by CPCB for categorization of industrial sectors into Red, Orange,
Green and White.

The concept of Pollution Index, which was deliberated widely with all stakeholders and
agreed, shall be used for calculating Environmental Compensation. This may help in
implementation of such provision throughout the country, a successful initiative in vital field
of industrial pollution control.

After considering various factors including the policy implementation issues, Committee has
come up with following formula for levying the Environmental Compensation in instances as
mentioned at a, b and c including non-compliance of the environmental standards / violation
of directions.

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The Environmental Compensation shall be based on the following formula:

EC = PI x N x R x S x LF
Where,
EC is Environmental Compensation in ₹
PI = Pollution Index of industrial sector
N = Number of days of violation took place
R = A factor in Rupees (₹) for EC
S = Factor for scale of operation
LF = Location factor

The formula incorporates the anticipated severity of environmental pollution in terms of

Pollution Index, duration of violation in terms of number of days, scale of operation in terms
of micro & small/medium/large industry and location in terms of proximity to the large
habitations.
Note:
a. The industrial sectors have been categorized into Red, Orange and Green, based
on their Pollution Index in the range of 60 to 100, 41 to 59 and 21 to 40,
respectively. It was suggested that the average pollution index of 80, 50 and 30
may be taken for calculating the Environmental Compensation for Red, Orange
and Green categories of industries, respectively.
b. N, number of days for which violation took place is the period between the day of
violation observed/due date of direction’s compliance and the day of compliance
verified by CPCB/SPCB/PCC.
c. R is a factor in Rupees, which may be a minimum of 100 and maximum of 500. It
is suggested to consider R as 250, as the Environmental Compensation in cases of
violation.
d. S could be based on small/medium/large industry categorization, which may be
0.5 for micro or small, 1.0 for medium and 1.5 for large units.
e. LF, could be based on population of the city/town and location of the industrial
unit. For the industrial unit located within municipal boundary or up to 10 km
distance from the municipal boundary of the city/town, following factors (LF) may
be used:
Table No. 1.1: Location Factor Values

S. No. Population* Location Factor#

(million) (LF)
1 1 to <5 1.25
2 5 to <10 1.5
3 10 and above 2.0
*Population of the city/town as per the latest Census of India
#LF will be 1.0 in case unit is located >10km from municipal boundary
LF is presumed as 1 for city/town having population less than one million.

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 For notified Ecologically Sensitive areas, for beginning, LF may be assumed as 2.0.
However, for critically Polluted Areas, LF may be explored in future.

f. In any case, minimum Environmental Compensation shall be ₹ 5000/day.

g. In order to include deterrent effect for repeated violations, EC may be
increased on exponential basis, i.e. by 2 times on 1st repetition, 4 times on 2nd
repetition and 8 times on further repetitions.
h. If the operations of the industry are inevitable and violator continues its
operations beyond 3 months then for deterrent compensation, EC may be
increased by 2, 4 and 8 times for 2nd, 3rd and 4th quarter, respectively. Even if
the operations are inevitable beyond 12 months, violator will not be allowed
to operate.
i. Besides EC, industry may be prosecuted or closure directions may be issued,
whenever required.

A sample calculation for Environmental Compensation (without deterrent factor) is given at

Table No. 1.2. It can be noticed that for all instances, EC for Red, Orange and Green category
of industries varies from 3,750 to 60,000 ₹/day.

Table No. 1.2: A sample calculation for Environmental Compensation

Industrial Category Red Orange Green

Pollution Index (PI) 60-100 41-59 21-40
Average PI 80 50 30
R-Factor 250
S-Factor 0.5-1.5
L-Factor 1.00-2.00
Environmental
10,000-60,000 6,250-37,500 5,000-22,500
Compensation (₹/day)

1.3.2 In other instances i.e. d, e and f, the environmental compensation may contain two
parts – one requires providing immediate relief and other long-term measures such as
remediation. In all these cases, detailed investigations are required from expert
institutions/organizations based on which environmental compensation will be decided.
CPCB shall list the expert institutions for this purpose.

In such cases, comprehensive plan for remediation of environmental pollution may be

prepared and executed under the supervision of a committee with representatives of SPCB,
CPCB and expert institutions/organizations.

1.4 Action Plan for Utilization of Environmental Compensation Fund

The Committee discussed about the utilization of funds, which will be received by imposing
Environmental Compensation. The following Action Plan is proposed to utilize the fund for
protection of the environment.

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1.4.1. When Environmental Compensation is calculated through the Pollution Index:

The amount received by imposing the Environmental Compensation to the industries

/ organization non-complying with the environmental standards / violating any CPCB’s
directions shall be deposited in a separate bank account. The amount accumulated
will be utilized for Protection of Environment. The following schemes were identified,
which may be considered for utilization of Environmental Compensation Fund:

a. Industrial Inspections for compliance verification

b. Installation of Continuous water quality monitoring stations / Continuous ambient
air quality monitoring stations for strengthening of existing monitoring network
c. Preparation of Comprehensive Industry Documents on Industrial Sectors / clean
technology
d. Investigations of environmental damages, preparation of DPRs
e. Remediation of contaminated sites
f. Infrastructure augmentation of Urban Local Bodies (ULBs) /capacity building of
SPCBs/PCCs

The above proposed list may include other schemes also, depending upon the
requirement.
Considering the availability of accumulated funds, CPCB will finalize the scheme,
keeping in mind the priority, to utilize the funds of Environmental Compensation.

1.4.2. When Environmental Compensation is assessed based on actual damage to the

environment by Expert Organization/ Agency:

The amount of Environmental Compensation under this case will be remediation

costs, measures requiring immediate and short-term actions, compensation towards
loss of ecology, etc., and will be utilized exclusively for the purpose at specific site,
based on the detailed investigations by the Expert Organizations/ agencies.

1.5 Recommendations

The Committee made following recommendations:

1.5.1 To begin with, Environmental Compensation may be levied by CPCB only when
CPCB has issued the directions under the Environment (Protection) Act, 1986.
In case of a, b and c, Environmental Compensation may be calculated based on
the formula “EC = PI x N x R x S x LF”, wherein, PI may be taken as 80, 50 and
30 for red, orange and green category of industries, respectively, and R may be
taken as 250. S and LF may be taken as prescribed in the preceding paragraphs.

7
1.5.2 In case of d, e and f, the Environmental Compensation may be levied based on
the detailed investigations by Expert Institutions/Organizations.
1.5.3 The Hon’ble Supreme Court in its order dated 22.02.2017 in the matter of
Paryavaran Suraksha Samiti and another v/s Union of India and others (Writ
Petition (Civil) No. 375 of 2012), directed that all running industrial units which
require “consent to operate” from concerned State Pollution Control Board,
have a primary effluent treatment plant in place. Therefore, no industry
requiring ETP, shall be allowed to operate without ETP.
1.5.4 EC is not a substitute for taking actions under EP Act, Water Act or Air Act. In
fact, units found polluting should be closed/prosecuted as per the Acts and
Rules.

*****

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Chapter-II: Environmental Compensation to be levied on all violations of
Graded Response Action Plan (GRAP) in NCR.

2.1 Background
The CPCB In-house Committee also discussed that the EC shall also be levied on all violations
of Graded Response Action Plan (GRAP) in NCR. The implementing agencies for each activity
have been identified and the EC will be levied on these agencies. These violations attract
graded amounts of EC depending on the state of ambient air quality, which is given in table
below:

Table No. 2.1: Environmental Compensation to be levied on all violations of Graded Response
Action Plan (GRAP) in Delhi-NCR.

Activity State Of Air Quality Environmental

Compensation ()
Industrial Emissions Severe +/Emergency Rs 1.0 Crore
Severe Rs 50 Lakh
Very Poor Rs 25 Lakh
Moderate to Poor Rs 10 Lakh
Vapour Recovery System (VRS) at Outlets of Oil Companies
i. Not installed Target Date Rs 1.0 Crore
ii. Non-functional Very poor to Severe + Rs 50.0 Lakh
Moderate to Poor Rs 25.0 Lakh
Construction sites Severe +/Emergency Rs 1.0 Crore
(Offending plot more than 20,000 Severe Rs 50 Lakh
Sq.m.) Very Poor Rs 25 Lakh
Moderate to Poor Rs 10 Lakh
Solid waste/ garbage dumping in Very poor to Severe + Rs 25.0 Lakh
Industrial Estates Moderate to Poor Rs 10.0 Lakh
Failure to water sprinkling on unpaved roads
a) Hot-spots Very poor to Severe + Rs 25.0 Lakh
b) Other than Hot-spots Very poor to Severe + Rs 10.0 Lakh

2.2 Action Plan for Utilization of Environmental Compensation Fund

EC levied on all violations of Graded Response Action Plan (GRAP) in Delhi NCR will be
deposited in the same fund and will be utilized in the same manner as mentioned in para 1.4.1
of Chapter-I of this report.

******

9
Chapter-III: Environmental Compensation to be levied in case of failure of
preventing the pollutants being discharged in water bodies and failure to
implement waste management rules

3.1 Background
The Hon’ble Supreme Court in its order dated 22.02.2017 in the matter of Paryavaran Suraksha Samiti
and another v/s Union of India and others (Writ Petition (Civil) No. 375 of 2012), directed State
Governments (including the concerned Union Territories) to set-up Sewage Treatment Plants (STPs),
which are already under implementation, within the time lines already postulated. Further, the STPs,
which are yet to set-up, to be completed within a period of three years, from today, i.e. by 22.02.2020.

The Hon’ble NGT in its order dated 06.12.2018 (Annexure-III) in the matter of Court of its own motion
v/s State of Karnataka (Original Application No. 125/2017 and M.A. No. 1337/2018) has given
following directions:

“Since failure of preventing the pollutants being discharged in water bodies (including lakes)
and failure to implement solid and other waste management rules are too frequent and
widespread, the CPCB must lay down specific guidelines to deal with the same, throughout
India, including the scale of compensation to be recovered from different
individuals/authorities, in addition to or as alternative to prosecution. The scale may have
slabs, depending on extent of pollution caused, economic viability, etc. Deterrent effect for
repeated wrongs may also be provided.”

3.2 Ideology of Environmental Compensation Formula

In compliance of the directions of the Hon’ble Tribunal, the Committee deliberated on the issue of
environmental compensation to be recovered from individuals/authorities in case of failure of
preventing the pollutants being discharged in water bodies and failure to implement solid and other
waste management rules. The Committee has suggested that environmental compensation in these
cases should be comprised of two components i.e.

1. Cost saved/benefits achieved by the concerned individual/authority by not having proper

waste/sewage management system; and
2. Cost to the environment (environmental externality) due to untreated/partially treated
waste/sewage because of insufficient capacity of waste/sewage management/treatment
facility.

Cost saved/benefits achieved by not having proper waste/sewage management system includes the
interest on capital cost of the waste/sewage management facility and daily operation and
maintenance (O&M) cost associated with the facility.

The Committee suggested that annual interest rate as 10% on loan amount, borrowed by concerned
individual/authority for setting-up waste/sewage management facility, may be assumed as Capital
Cost Factor for calculation of environment compensation. Further, as whole O&M cost is saved by
concerned individual/authority for not managing required waste/sewage management system, 100%
of the O&M cost saved may be considered as O&M cost factor.

10
Therefore, generalized formula for Environmental Compensation may be described as:

EC= Capital Cost Factor x Marginal Average Capital Cost for Establishment of Waste or Sewage
Management or Treatment Facility x (Waste or Sewage Management or Treatment Capacity Gap)
+ O&M Cost Factor x Marginal Average O&M Cost x (Waste or Sewage Management or Treatment
Capacity Gap) x No. of Days for which facility was not available + Environmental Externality

Cost to the environment due to untreated/partially treated waste/sewage discharge by concerned

individual/authority may be assumed as recommended by the committee, which is mentioned below:

Table No. 3.1: Environmental externality for untreated/partially treated sewage discharge

Sewage Marginal Cost of Minimum and Maximum value of

Treatment Environmental Externality Environmental Externality recommended
Capacity Gap (Rs. per MLD/day) by the Committee (Lacs Rs. Per Day)
(MLD)
Up to 200 75 Min. 0.05, Max. 0.10
201-500 85 Min. 0.25, Max. 0.35
501 and above 90 Min. 0.60, Max. 0.80

Table No. 3.2: Environmental externality for improper municipal solid waste management

Municipal Solid Waste Marginal Cost of Minimum and Maximum value of

Management Capacity Environmental Environmental Externality recommended
Gap (TPD) Externality (Rs. by the Committee (Lacs Rs. Per Day)
per ton per day)
Up to 200 15 Min. 0.01, Max. 0.05
201-500 30 Min. 0.10, Max. 0.15
501-1000 35 Min. 0.25, Max. 0.35
1001-2000 40 Min. 0.50, Max. 0.60
Above 2000 Max. 0.80

The Committee further decided to fix a cap for minimum and maximum cost for capital and O&M
component for Environmental Compensation, which are given in below tables:

Table No. 3.3: Minimum and Maximum EC to be levied for untreated/partially treated sewage
discharge

Class of the City/Town Mega-City Million-plus Class-I City/Town

City and others
Minimum and Maximum values of EC (Total Min. 2000 Min. 1000 Min. 100
Capital Cost Component) recommended by Max. 20000 Max. 10000 Max. 1000
the Committee (Lacs Rs.)

Minimum and Maximum values of EC (O&M Min. 2 Min. 1 Min. 0.5

Cost Component) recommended by the Max. 20 Max. 10 Max. 5
Committee (Lacs Rs./day)

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 Table No. 3.4: Minimum and Maximum EC to be levied for improper municipal solid waste
management
Class of the City/Town Mega-City Million-plus Class-I City/Town
City and others
Minimum and Maximum values of EC (Capital Min. 1000 Min. 500 Min. 100
Cost Component) recommended by the Max. 10000 Max. 5000 Max. 1000
Committee (Lacs Rs.)

Minimum and Maximum values of EC (O&M Min. 1.0 Min. 0.5 Min. 0.1
Cost Component) recommended by the Max. 10.0 Max. 5.0 Max. 1.0
Committee (Lacs Rs./day)

The application of formula for calculation of EC may be further understood with the example of two
typical cases.

3.3 Environment Compensation for Discharge of Untreated/Partially Treated Sewage

by Concerned Individual/Authority:

BIS IS-1172:1993 suggests that for communities with population above 100,000, minimum of
150 to 200 lpcd of water demand is to be supplied. Further, 85% of return rate (CPHEEO
Manual on Sewerage and Sewage Treatment Systems, 2013), may be considered for
calculation of total sewage generation in a city. CPCB Report on “Performance evaluation of
sewage treatment plants under NRCD, 2013”, describes that the capital cost for 1 MLD STP
ranges from 0.63 Cr. to 3 Cr. and O&M cost is around Rs. 30,000 per month. After detail
deliberations, the Committee suggested to assume capital cost for STPs as Rs. 1.75 Cr/MLD
(marginal average cost). Further, expected cost for conveyance system is assumed as Rs. 5.55
Cr./MLD (marginal average cost) and annual O&M cost as 10% of the combined capital cost.
Population of the city may be taken as per the latest Census of India. Based on these
assumptions, Environmental Compensation to be levied on concerned ULB may be calculated
with the following formula:

EC= Capital Cost Factor x [Marginal Average Capital Cost for Treatment Facility x (Total
Generation-Installed Capacity) + Marginal Average Capital Cost for Conveyance Facility x
(Total Generation -Operational Capacity)] + O&M Cost Factor x Marginal Average O&M Cost
x (Total Generation- Operational Capacity) x No. of Days for which facility was not available
+ Environmental Externality x No. of Days for which facility was not available

Alternatively;

EC (Lacs Rs.) = [17.5(Total Sewage Generation – Installed Treatment Capacity) + 55.5(Total

Sewage Generation-Operational Capacity)] + 0.2(Sewage Generation-Operational Capacity)
x N + Marginal Cost of Environmental Externality x (Total Sewage Generation-Operational
Capacity) x N

Where; N= Number of days from the date of direction of CPCB/SPCB/PCC till the required
capacity systems are provided by the concerned authority

Quantity of Sewage is in MLD

12
 Table No. 3.5: Sample calculation for EC to be levied for discharge of untreated/partial treated
Sewage

City Delhi Agra Gurugram Ambala

Population (2011) 1,63,49,831 17,60,285 8,76,969 5,00,774
Class Mega-City Million-plus City Class-I Town Class-I
Town
Sewage Generation (MLD) (as per 4195 381 486 37
the latest data available with CPCB)
Installed Treatment Capacity (MLD) 2500 220 404 45.5
(as per the latest data available
with CPCB)
Operational Capacity (MLD) (as per 1900 140 300 24.5
the latest data available with CPCB)
Treatment Capacity Gap (MLD) 2295 241 186 12.5
Calculated EC (capital cost 29662.50 2817.50 1435.00 0.00
component for STPs) in Lacs Rs.
Calculated EC (capital cost 127372.50 13375.50 10323.00 693.75
component for Conveyance
System) in Lacs. Rs.
Calculated EC (Total capital cost 157035.00 16193.00 11758.00 693.75
component) in Lacs Rs.
Minimum and Maximum values of Min. 2000 Min. 1000 Min. 100 Min. 100
EC (Total Capital Cost Component) Max. 20000 Max. 10000 Max. 1000 Max. 1000
recommended by the Committee
(Lacs Rs.)
Final EC (Total Capital Cost 20000.00 10000.00 1000.00 693.75
Component) in Lacs Rs.
Calculated EC (O&M Component in 459.00 48.20 37.20 2.50
Lacs Rs./day
Minimum and Maximum values of Min. 2 Min. 1 Min. 0.5 Min. 0.5
EC (O&M Cost Component) Max. 20 Max. 10 Max. 5 Max. 5
recommended by the Committee
(Lacs Rs./day)
Final EC (O&M Component) in Lacs. 20.00 10.00 5.00 2.50
Rs./Day
Calculated Environmental 2.0655 0.2049 0.1395 0.0094
Externality (Lacs Rs .Per Day)
Minimum and Maximum value of Min. 0.60 Min. 0.25 Min. 0.05 Min. 0.05
Environmental Externality Max. 0.80 Max. 0.35 Max. 0.10 Max. 0.10
recommended by the Committee
(Lacs Rs. Per Day)
Final Environmental Externality 0.80 0.25 0.10 0.05
(Lacs Rs. Per day)

13
3.4 Environment Compensation to be Levied on Concerned Individual/Authority for
Improper Solid Waste Management:
It is known that estimated MSW generation is approximately 1.5 lakh MT/Day in India (MoHUA Report-
2016). As per the principles of SWM Rules, 2016 and PWM Rules 2016, as amended in 2018, the total
cost of Municipal Solid Waste management in a city/town includes cost for door to door collection,
cost of segregation at source, cost for transportation in segregated manner, cost for processing of
MSW and disposal through facility like composting, biomethanation, recycling, co-processing in
cement kilns etc.

In view of above, it is estimated that the total cost of processing and treatment of MSW for a city
having population size of 1 lakh and generating approximately 50 tons/day of MSW is Rs.15.5 Crores,
including capital cost (one time) and O & M cost for one year. The expenditure for subsequent years
would be only Rs. 3.5 crores/annum.

CPCB sponsored a survey to ascertain the status of municipal solid waste disposal in 59 cities/towns
of India. The survey was conducted by the Environment Protection Training Research Institute (EPTRI),
Hyderabad. As per the survey, it is estimated that solid waste generated in small, medium and large
cities and towns is about 0.1 kg (Class-III), 0.3-0.4 kg (Class-II) and 0.5 kg (Class-I) per capita per day
respectively. The committee opined that 0.6 kg/day, 0.5 kg/day and 0.4 kg/day per capita waste
generation may be assumed for mega-cities, million-plus UAs/towns and Class-I UA/Towns
respectively for calculation of environmental compensation purposes. Based on these assumptions,
Environmental Compensation to be levied on concerned ULB may be calculated with the following
formula:

EC = Capital Cost Factor x Marginal Average Cost for Waste Management x (Per day waste
generation-Per day waste disposed as per the Rules) + O&M Cost Factor x Marginal Average O&M
Cost x (Per day waste generation-Per day waste disposed as per the Rules) x Number of days
violation took place + Environmental Externality x N

Where;

Waste Quantity in tons per day (TPD)

N= Number of days from the date of direction of CPCB/SPCB/PCC till the required
capacity systems are provided by the concerned authority

Simplifying;

EC (Lacs Rs.) = 2.4(Waste Generation - Waste Disposed as per the Rules) +0.02 (Waste Generation -
Waste Disposed as per the Rules) x N + Marginal Cost of Environmental Externality x (Waste
Generation - Waste Disposed as per the Rules) x N

14
Table No. 3.6: Sample calculation for EC to be levied for improper management of Municipal Solid
Waste

City Delhi Agra Gurugram Ambala

Population (2011) 1,63,49,831 17,60,285 8,76,969 5,00,774
Class Mega-City Million-plus City Class-I Town Class-I
Town
Waste Generation (kg. per person per day) 0.6 0.5 0.4 0.4
Waste Generation (TPD) 9809.90 880.14 350.79 200.31
Waste Disposal as per Rules (TPD) (assumed 2452.47 220.04 87.70 50.08
as 25% of waste generation for sample
calculation)
Waste Management Capacity Gap (TPD) 7357.42 660.11 263.09 150.23
Calculated EC (capital cost component) in 17657.82 1584.26 631.42 360.56
Lacs. Rs.
Minimum and Maximum values of EC Min. 1000 Min. 500 Min. 100 Min. 100
(Capital Cost Component) recommended by Max. 10000 Max. 5000 Max. 1000 Max. 1000
the Committee (Lacs Rs.)
Final EC (capital cost component) in Lacs. Rs. 10000.00 1584.26 631.42 360.56
Calculated EC (O&M Component) in Lacs. 147.15 13.20 5.26 3.00
Rs./Day
Minimum and Maximum values of EC (O&M Min. 1.0 Min. 0.5 Min. 0.1 Min. 0.1
Cost Component) recommended by the Max. 10.0 Max. 5.0 Max. 1.0 Max. 1.0
Committee (Lacs Rs./Day)
Final EC (O&M Component) in Lacs. Rs./Day 10.00 5.00 1.00 1.00
Calculated Environmental Externality (Lacs 2.58 0.18 0.03 0.02
Rs. Per Day)
Minimum and Maximum value of Max. 0.80 Min. 0.25 Min. 0.01 Min. 0.01
Environmental Externality recommended by Max. 0.35 Max. 0.05 Max. 0.05
the Committee (Lacs Rs. per day)
Final Environmental Externality (Lacs Rs. per 0.80 0.25 0.03 0.02
day)

3.3 Action Plan for Utilization of Environmental Compensation Fund

EC levied in case of failure of preventing the pollutants being discharged in water bodies and failure
to implement waste management rules will be deposited in the same fund and will be utilized in the
same manner as mentioned in para 1.4.1 of Chapter-I of this report.

3.4 Recommendations
1. The Committee recommended that to begin with, Environmental Compensation to be
recovered from individuals/authorities in case of failure of preventing the pollutants being
discharged in water bodies and failure to implement solid waste management rules may be
calculated with the methodology described in the report.
2. If mixing of Bio-medical Waste or Hazardous Waste is found in Municipal Solid Waste than
capital cost component of EC may be increased by a multiplication factor of 1.5.

15
3. In order to include deterrent effect for continuous violations, component of O&M and
Environmental Externality in EC formula may be increased on exponential basis by 2, 4, and 8
times after every six-months, beyond the time prescribed by authority for ensuring complete
treatment of sewage/waste of the city/town.

******

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Chapter-IV: Environmental Compensation in Case of Illegal Extraction of
Ground Water

4.1 Background
The Hon’ble National Green Tribunal (NGT), Principal Bench in the matter of Shailesh Singh v/s Central
Ground Water Board & Ors. (Original Application No. 327/2018) vide order dated 03/01/2019
(Annexure-V) directed Central Pollution Control Board (CPCB) that:

“CPCB may constitute a mechanism to deal with individual cases of violation of norms,
as existed prior to Notification of 12/12/2018, to determine the environment
compensation to be recovered or other coercive measures to be taken, including
prosecution, for past illegal extraction of ground water, as per law.”

4.2 Constitution of the Committee

In compliance to Hon’ble NGT dated 03/01/2019, CPCB constituted a committee under the
Chairmanship of Shri A. Sudhakar, DH, WQM-I Division with Shri P. K. Gupta, DH, IPC-VI, Shri Vishal
Gandhi, Sc. D, UPC-I Division and Smt. Suniti Parashar, Scientist B, WQM-I Division as members. The
committee was asked to deliberate on this issue and come up with draft formulation of mechanism to
determine the Environmental Compensation for illegal extraction of ground water.

4.3 Methodology for Assessing Environmental Compensation

The committee discussed the issue on 07/02/2019, 07/03/2019 and 20/3/2019. The committee
deliberated on the issue of Environmental Compensation to be recovered from individuals/industries
such as domestic, packaging drinking water units, mining & infrastructure projects and industrial units
in case of illegal extraction of ground water. The Guidelines/Criteria for evaluation of
proposals/requests for Ground Water Abstraction, 2015 were also discussed and based on this further
formulation to levy Environmental Compensation has been evolved.

4.4 Ideology of Environmental Compensation w.r.to illegal extraction of ground

water
Ground water is becoming an increasingly scarce resource because of its unabated and indiscriminate
over-exploitation. Growth in ground water exploitation, however, has led to a steep fall in water table
in several parts of the country. Use of ground water is becoming unsustainable day by day. The falling
water table is a matter of special concern since it tends to reduce the accessibility of the resource to
small and marginal farmers due to increase in costs of extractions.

Specific conditions applicable in Notified/Non-Notified areas for various users, as mentioned in

Guidelines/Criteria for evaluation of proposals/requests for Ground Water Abstraction, 2015 are given
below:

For Notified Areas:

1. Permission to abstract ground water through any energized means will not be accorded for
any purpose other than drinking water.

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 2. Central Ground Water Authority (CGWA) so far has notified 162 areas, in the country for the
purpose of regulation of ground water development.
3. Regulation of Ground Water development in Notified areas is through District Administrative
Heads assisted by Advisory Committees under the provisions of Section 4 of the Environment
(Protection) Act, 1986.
4. In Notified areas, ground water use in individual houses, infrastructure complexes like group
housing societies, hospitals, schools etc. and drinking water requirements of workers in
industries can be allowed.
5. NOC for ground water withdrawal will be considered only if Water Supplying Department is
not providing adequate water in the area/premises. Proof for this is to be produced from the
concerned authority by the applicant.
6. For individual houses, the maximum diameter of the tube-well should be restricted to 4 inch
only and the capacity of the pump should not exceed 1HP. For infrastructure projects,
maximum diameter of the ground water abstraction structures should be restricted to 150
mm (6 inches) only and capacity of the pump should not exceed 5 HP.
7. Any violation of the above conditions will attract legal action under Section 15 of the
Environment (Protection) Act, 1986.

For Non-Notified Areas:

NOC for ground water withdrawal will be considered for industries/infrastructure/packaging as per
safe, semi critical, critical and over-exploited criteria.

4.5 Formula for Environmental Compensation for illegal extraction of ground water
The committee decided that the formula should be based on water consumption (Pump Yield & Time
duration) and rates for imposing Environmental Compensation for violation of illegal abstraction of
ground water. The committee has proposed following formula for calculation of Environmental
Compensation (ECGW):

ECGW = Water Consumption per Day x No. of Days x Environmental Compensation

Rate for illegal extraction of ground water (ECRGW)

Where water Consumption is in m3/day and ECRGW in Rs./m3

Yield of the pump varies based on the capacity/power of pump, water head etc. For reference
purpose, yield of the pump may be assumed as given in Annexure-VI.

Time duration will be the period from which pump is operated illegally.

In case of illegal extraction of ground water, quantity of discharge as per the meter reading or as
calculated with assumptions of yield and time may be used for calculation of ECGW.

4.6 Environmental Compensation Rate (ECRGW) for illegal use of Ground Water
The committee decided that the Environmental Compensation Rate (ECRGW) for illegal extraction of
ground water should increase with increase in water consumption as well as water scarcity in the area.
Further, ECRGW are kept relaxed for drinking and domestic use as compared to other uses, considering
the basic need of human being.

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As per CGWB, safe, semi-critical, critical and over-exploited areas are categorized from the ground
water resources point of view (CGWB, 2017). List of safe, semi-critical, critical and over-exploited areas
are available on the website of CGWB and can be accessed from- http://cgwa-
noc.gov.in/LandingPage/NotifiedAreas/CategorizationOfAssessmentUnits.pdf#ZOOM=150.

Environmental Compensation Rates (ECRGW) for illegal use of ground water (ECRGW) for various
purposes such as drinking/domestic use, packaging units, mining and industrial sectors as finalized by
the committee are given in tables below:

4.6.1 ECRGW for Drinking and Domestic use:

Drinking and Domestic use means uses of ground water in households, institutional activity, hospitals,
commercial complexes, townships etc.

Water Consumption (m3/day)

Sl. No. Area Category <2 2 to <5 5 to <25 25 & above
Environmental Compensation Rate (ECRGW) in Rs./m3
1 Safe 4 6 8 10
2 Semi Critical 12 14 16 20
3 Critical 22 24 26 30
4 Over-Exploited 32 34 36 40
Minimum ECGW=Rs 10,000/- (for households) and Rs. 50,000 (for institutional activity,
commercial complexes, townships etc.)

4.6.2 ECRGW for Packaged drinking water units:

Water Consumption (m3/day)

Sl. No. Area Category ˂200 200 to ˂1000 1000 to ˂5000 5000 & above
Environmental Compensation Rate (ECRGW) in Rs./m3
1 Safe 12 18 24 30
2 Semi critical 24 36 48 60
3 Critical 36 48 66 90
4 Over-exploited 48 72 96 120
Minimum ECGW=Rs 1,00,000/-

4.6.3 ECRGW for Mining, Infrastructure and Dewatering Projects

Water Consumption (m3/day)

Sl. No. Area Category ˂200 200 to ˂1000 1000 to ˂5000 5000 & above
Environmental Compensation Rate (ECRGW) in Rs./m3
1 Safe 15 21 30 40
2 Semi critical 30 45 60 75
3 Critical 45 60 85 115
4 Over-exploited 60 90 120 150
Minimum ECGW=Rs 1,00,000/-

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4.6.4 ECRGW for Industrial Units:

Water Consumption (m3/day)

Sl. No. Area Category
˂200 200 to ˂1000 1000 to ˂5000 5000 & above
Environmental Compensation Rate (ECRGW) in Rs./m3
1 Safe 20 30 40 50
2 Semi critical 40 60 80 100
3 Critical 60 80 110 150
4 Over-exploited 80 120 160 200
Minimum ECGW=Rs 1,00,000/-

For better understanding of implementation of ECGW policy, some example calculations are given
below:

Example No. 1 (For drinking and domestic Use):

It is observed that a household in safe zone is extracting ground water illegally from past 2 year and
3 months with the help of 1 HP pump, dia 4 inches and head as 25 meter. It is assumed that the
house-owner runs the pump for 0.5 hr/day. What Environmental Compensation (ECGW) will be
charged to the owner?

Solution: Pump Yield (Please refer Annexure-VI) = 3 m3/hr

Daily Consumption = 3 x 0.5 =1.5 m3
ECRGW = 4 Rs./m3 (Please refer para 4.6.1)
EC to be levied = 4 x 1.5 = 6 Rs./day
Total time period = 820 days
Then, ECGW= 6 x 820

Calculated ECGW= 4,920 Rs.

ECGW to be levied = 10,000 Rs. (minimum prescribed ECGW, please refer para 4.6.1)

Example 2 (For Industrial Units):

It is observed that an industry in critical zone is extracting ground water illegally from past 1 year
with the help of 5 HP pump, dia 6 inches and head as 50 meter. It is assumed that the industry runs
the pump for 3 hrs/day. What Environmental Compensation (ECGW) will be charged to the owner?

Solution: Pump Yield (Please refer Annexure-VI) = 12 m3/hr

Daily Consumption = 12 x 3 =36 m3/day
ECRGW = 60 Rs./m3 (Please refer para 4.6.4)
EC to be levied = 60 x 36 = 2,160 Rs./day
Total time period = 365 days
Then, ECGW= 2,160 x 365

ECGW= 7,88,400 Rs.

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4.7 Relaxation
Central Ground Water Authority (CGWA) reserves to right to relax or interpret these mechanisms in
case of any exigency or situation of National strategic importance, as per Guidelines/Criteria for
evaluation of proposals/requests for Ground Water Abstraction, 2015.

4.8 Recommendations
The committee has given following recommendations:

 The minimum Environmental Compensation for illegal extraction of ground water for
domestic purpose will be Rs. 10,000, for institutional/commercial use will be 50,000 and for
other uses will be 1,00,000.
 In case of fixation of liability, it always lies with current owner of the premises where illegal
extraction is taking place.
 Time duration may be assumed to be one year in case where no evidence for period of
installation of bore well could be established.
 For Drinking and Domestic use, where metering is not present but storage tank facility is
available, minimum water consumption per day may be assumed as similar to the storage
capacity of the tank.
 For industrial ground water use, where metering is not available, water consumption may be
assumed as per the consent conditions. Further, where in case industry is operating without
consent, water consumption may be calculated based on the plant capacity (on the
recommendation of SPCB/PCC, if required). SPCB/PCC may bring the issue of illegal extraction
of ground water in industries in to the notice of CGWA for appropriate action by CGWA.
 Authorities assigned for levy EC and taking penal action are listed below:
S. No. Actions Authority
1. To seal the illegal bore-well/tube-well to stop District Collector
extraction of water and further closure of
project
2. To levy ECGW as per prescribed method District Collector, CGWA
3. To levy EC on water pollution, as per the CPCB/SPCB/PCC
method prescribed in report of CPCB- “EC on
industrial pollution”
4. Prosecution of violator CGWA under EP Act
SPCB/PCC under Air and
Water Act

 CGWA may maintain a separate account for collection and utilization of fund, collected
through the prescribed methodology in this report.
********

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 Annexure-I

22
23
24
25
26
27
 Annexure-II

28
29
30
 Annexure-III

31
32
33
 Annexure-IV

34
35
 Annexure-V

36
37
38
39
 Annexure-VI
CRITERIA TO CALCULATE WATER CONSUMPTION

Table 1: Discharge of 4'' Dia and 1 HP Pump

Discharge
Sl. No. Depth (Meter)
LPM m3/hr
1 25 50 3
2 43 40 2.4
3 59 30 1.8
4 69 20 1.2
5 77 10 0.6

Table 2: Discharge of 4'' Dia and 2 HP Pump

Discharge
Sl. No. Depth (Meter)
LPM m3/hr
1 60 50 3
2 98 40 2.4
3 124 30 1.8
4 141 20 1.2
5 165 10 0.6

Table 3: Discharge of 6'' Dia and 3 HP Pump

Discharge
Sl. No. Depth (Meter)
LPM m3/hr
1 17 200 12
2 29 175 10.5
3 41 150 9
4 50 130 7.8
5 62 100 6

Table 4: Discharge of 6'' Dia and 5 HP Pump

Discharge
Sl. No. Depth (Meter)
LPM m3/hr
1 26 225 13.5
2 50 200 12
3 70 175 10.5
4 86 150 9
5 92 140 8.4

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References
1. Bureau of Indian Standards. 1993. IS1172:1993 (Reaffirmed 2002). Code of Basic
Requirements for Water Supply, Drainage and Sanitation (Fourth Revision). New Delhi:
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2. Census of India. 2011. Census of India’s website. [Online]. [Accessed 15 February
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