Assessment of Negative Externalities in EnvironmentCase of Albania

(Environmental Externalities)

Aida GJIKAFaculty of Economy, University of Tirana, Albania

TEMPUS DEREL seminar in Novi Sad, 03-04 April, 2014

DEREL – Development of Environmental and Resources Engineering Learning

Outline of the presentation:

• Theoretical aspects regarding externalities in environment

• Legal Framework• Assessment of the environmental externalities

in Albania• Evaluation• Conclusion

Externality

• The costs and benefits which arise when the social or economic activities of one group of people have an impact an another, and when the first group fail to fully account for their impact (Mas-Colell et al. 1995; ExterneE, 1995)

• Welfare economists aim to maximize individual and social welfare through optimal resource allocation

• A problem of Market failure (not efficient way of organization)

• Internalize costs

Legal Framework (1/3)

• No clear and well defined legal framework ( the right to be informed about environment)

• Implementation, but only the legal framework regarding taxes and fees has been improved

• the differences that there are may lead to difficult choices with respect to the allocation of scarce resources.

• The legal and institutional gaps at the national and local level

• However, a number of agreements:

Legal Framework (2/3)

– Signed 7 International Conventions for different environmental issues

– Created 7 Developmental Strategies for different aspects of the environment

– 20 laws approving different International Protocols, Agreements and Amendments

– Over 20 amendments of existing laws– Over 80 Council of Ministers decisions related

directly to environment – Over 20 Directives and over 5 Regulations

Legal Framework (1/2)

• Now the Ministry of Environment, Forests and Water Administration (MoEFWA)

• Unfortunately, information about impacts of environmental and its degradation is limited

• No regular data and not updated (2011)• Only 2 international reports on Environment Performance

Review (2002; 2012) and 1 national reports• Monitoring progress, evaluation of data and assessment of

policy efficiency need to be strengthen. • This challenge necessitates an improved institutional

background and the improved operation of responsible institutions.

Main problems:

• linked to its historic legacy of a centrally planned economy. – Water Pollution– Air pollution– Land degradation– Biodiversity losses– Disaster risks– Climate variability and change

Assessment:

• Quality of Air • Emission of CO2 in Albania• Deforestation• Purity of sea (Quality of beaches)

Quality of Air measured by PM10 and LNP

• PM10 – particulate matter concentrations, fine suspended particulates less than 10 microns in diameter

• Mixture of solid and liquid particles• Capable of penetrating deep into the

respiratory tract and causing significant health damage

• Gas released by automobiles

Quality of Air measured by PM10 and LNP

2002 2003 2004 2005 2006 2007 20080

20

40

60

80

100

120

140

160

180

PM10 (μg/m3)

Tirane Shkoder Durres Elbasan Fier Vlorë Korçë EU standard

Source: Environmental, Forest and Water Administration Ministry (2011)

PM10

• Allowed level of these gases are 60 μg/m3/year or about 50% higher than the level allowed by the European Union which has an average of 40 μg/m3.

• 2-7 times higher• Dangerous Area from WHO

Quality of Air-Presence measured by PM10 and LNP

• LNP- floating solid particles • The presence of dust particles in air• Source from construction and poor quality of

roads

2002 2003 2005 2006 2007 20080

50

100

150

200

250

300

350

400

LNP (μg/m3)

Tirane Shkoder Durres Elbasan Fier Vlorë Korçë EU standard

Quality of Air-Presence measured by PM10 and LNP

Source: Environmental, Forest and Water Administration Ministry (2011)

Air Pollution

• Nitrogen dioxide (NO2) and Sulfur Dioxide (SO2) are components of smog and causes of acid rains.

• Very easily human organism and can cause lung diseases, increase the chance of receiving viruses, eye irritation or skin diseases.

• Acid rain

Air Pollution measured by sulfur dioxide

2002 2003 2004 2005 2006 2007 2008 20090

10

20

30

40

50

60

70

SO2

Tirane ShkoderDurresElbasanFierVlorëKorçëMesatarjaNorma ShqiptareNormat EU

Source: Environmental, Forest and Water Administration Ministry (2011)

Air Pollution measured by nitrogen dioxide

2002 2003 2004 2005 2006 2007 2008 20090

10

20

30

40

50

60

70

NO2

Tirane ShkoderDurresElbasanFierVlorëKorçëMesatarjaNorma ShqiptareNormat EU

Source: Environmental, Forest and Water Administration Ministry (2011)

Interpretation and possible reasons

• The current situation does not appear problematic. • Nevertheless, Albania is still at relatively high levels

despite not being an industrialized country • Te data are average of all urban areas, including the

rural which lower the average • The goal should not be an overall average below the

limits of the European Union, but rather a level below 40 μg/m3 for every area

• Focus also in the cities where are located factories in their vicinity such as Kruja

Air Pollution measured by carbon dioxide

19601962

19641966

19681970

19721974

19761978

19801982

19841986

19881990

19921994

19961998

20002002

20042006

0.0

0.5

1.0

1.5

2.0

2.5

3.0

CO2 Emission in Albania (metric tons per capita)

Source: World Bank (2011)

Deforestation (illegal chopping)

2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

10,000

20,000

30,000

40,000

50,000

60,000

Prerjet e paligjshme (ne m3)

Source: Environmental, Forest and Water Administration Ministry (2011)

Quality of beaches

A - Very good B - Good C - Not good D - Bad0%

10%

20%

30%

40%

50%

60%

Kategorizimi i pastertise se plazheve

Public Health Institute (2012)

Taxes and Fees

• Environment policy in Albania underdeveloped, consist of control and regulatory taxes

• Few market instruments• Taxes on used vehicles (fuel tax. Cleaning tax,

environmental fines, forestry and fishery fines)• Share of environmental taxes: 0.41% of GDP• No other pollution emission sources• Deficiency in monitoring infrastructure

Further research: Evaluation

EF = Emission Factor

HR = Heat Rate in Btus/kWh;1

VED = Value of Environmental Damage, in ¢/lb.

Conclusions

• Implementation problem• Not available data, no research• Problem 1: Air pollution • Improvement in other aspects• Need to evaluate for internalizing• Need to address to policies, reforms SHR and

LR

Thank You!