Economic theory provides arguments for the use of charges in environmental policy. A more extensive use of charges may contribute to the cost-effectiveness of environmental policy, the development of clean technologies and at the same time raise revenue that allows for a shift in fiscal policy towards so-called ecot axa t ion, favouring the environment and employment. With respect to water quality management these insights plead for the application of user and incentive charges, in addition to the more traditional instruments such as the collective treatment of waste water and a standardbased permit policy. User charge schemes should raise sufficient funds to cover the costs of the collective treatment of waste water. Companies, in addition to having to comply with permits which state limits on pollution, should also be motivated to reduce pollution where this is financially rewarding. It is shown here, however, that the EU Member States are reluctant to introduce extensive charging schemes in water quality management. The user charges that are applied do not fully cover the costs of sewerage and collective treatment works, and charges with a CCC 0961-0405 /96 / 02003347 0 1996 by John Wiley & Sons, Ltd and ERP Environment.
substantial incentive effect are still rare. The existing situation, as compared with a situation that would be more desirable from an economic perspective, may be explained by political factors. For instance, extensive charge schemes have clear-cut and visible effects on prices, incomes and industrial competitiveness. As a consequence, economic benefits relating to cost-effectiveness, technological development and tax burden still remain to be reaped.