The development of the Sha Tin and Tai Po new towns had a major impact on the water quality of the poorly flushed embayment of Tolo Harbour. From the early 1980s onwards as the population rapidly increased, the water quality of Tolo Harbour noticeably deteriorated. The oxygen levels in the water were decreasing and red tides became more frequent.

Action was initiated by the government in 1986 to control and reverse this dramatic change. The Tolo Harbour Action Plan (THAP), consisting of a number of separate actions to reduce and control the polluting inputs, was implemented in 1987. Through these actions, supported by the implementation and enforcement of environmental legislation, the decline in water quality has been halted. As a consequence, the number of red tide incidents has also decreased, from the peak level of 43 recorded in 1988, to eight in 1998.

Tolo Harbour Effluent Export Scheme (Action 7 of the Action Plan) has been put into operation in steps since its commissioning in 1995/96. The treated sewage effluent from both Sha Tin and Tai Po's sewage treatment works is being exported out of the catchment, via a major pipeline, to Victoria Harbour. This scheme was fully operational in 1998. Through this action, and other measures now in place, a gradual improvement in the water quality of Tolo Harbour is envisaged in the coming years.