SHANGHAI households are in for a surprise as they open their mailboxes this month: the city government will charge them for treating waste water. Companies and work units face a rise of the already existing fee. Pressurised by the World Bank (WB), China has decided to introduce 'the-polluter-pays' principle.

"This is very new for China," says general manager Zheng Man Gu of the Shanghai Municipal Sewerage Company Ltd (SMSC). "Until now companies, work units and households didn't pay anything or only very little for their emissions of waste water. When money was needed, the government had to pay," he said. At present, Shanghai is constructing the biggest sewerage system in China. The project, to be completed in AD 2000, includes a us $250 million loan from the WB.

With 14 million legal residents and about four million migrants, Shanghai is the biggest city of China. Daily, 5.5 million cubic metre of waste water pollute the rivers surrounding Shanghai, of which only 200,000 cubic metre Of domestic and one million cubic metre of industrial waste water gets treated.

The resultant environmental effects are disastrous. A WB report says that there are "significant health risks... restricting economic growth". Fish are dying in the lower Huangpu and its tributaries, and shellfish downstream carry very high pathogen levels, claimed the report.

Every year, 300,000 Shanghainese move to new apartments, and very often, it's for the first time that they have their own flushing toilet and shower. But the average daily use of water per person in some districts, which is as low as 100 litres, is expected to touch an average high of 250 litte and in some areas, even 400 litre per person daily.

The new facility would have an initial capacity of 1.7 million cubic metre per day, but would be able to treat five million cubic metre of water by AD 2020. According to the WB, the project would improve the conditions of the Huangpu river dramatically and curtail freshwater intake for Shanghai in the long run.

The WB admits that making the polluters pay in China is a difficult issue "in the current inflationary environment", but it met with a "positive response to the pricing issue in the water sector". Paying up is still considered a problem for the debt-ridden state-owned companies. But the SMSC-general manager says, "Most companies have no problems."

Levies on the use of water is also envisaged in future, which the Bank intends to employ in other projects that it has planned in the Hubei, Guangxi and Yunnan provinces.