SAO PAULO POLLUT CTL

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The project would be the first concerted effort to reduce air and water pollution in the Greater Sao Paulo area. It would provide financing for existing industries to carry out air pollution control subprojects to reduce particular matter emissions and water pollution control subprojects to pretreat or fully treat their liquid effluents. The project would primarily improve air quality in the Greater Sao Paulo area and reduce the discharge of toxic substances and organic materials into water bodies. The project also includes technical assistance to strengthen the technical and operational capability of the environmental protection agency of the state of Sao Paulo, which would be responsible for technical appraisal and supervision of subprojects. The project would contribute to improving the health and living conditions of the population, particularly of the urban poor. The main risk faced by the project relates to the negative internal financial rates of return of most pollution control investments. Opposition by industrialists to such investments could slow down project execution. The financial incentives included as part of the project and the penalties included in the legislation would reduce this risk to an acceptable level.