NATIONAL ENVIRONMENTAL STRATEGIES: Learning from …ant), Devanesan Nesiah (Sri Lanka), Ndey-Isatou Ngie (The Gambia), Shekhar Singh (India), and Stanislaw Sitnicki (Regional Environmental

34740ENVIRONMENT DEPARTMENT

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NATIONALENVIRONMENTAL

STRATEGIES:

Learning from Experience

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Environmentally Sustainable Development The World BankESD

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NATIONALENVIRONMENTAL

STRATEGIES:Learning from Experience

March 1995

Printed in the United States of AmericaFirst printing April 1995

This report is a study by World Bank Staff, and the judgements made herein do not

necessarily reflect the views of the Board of Executive Directors or the governments

they represent.

Copies of this report can be requested by writing to:Environment Department, ENVLW Division

The World Bank, Room S5-1431818 H Street, N.W.

Washington, D.C. 20433, USA

CONTENTS

Foreword iv

Acknowledgments vi

Overview vii

1. Identifying Priority Environmental Problems IIntroduction: The Price of Inaction 1Formulating an Environmental Strategy 2Identifying Critical Problems 4

2. Defining Priority Actions 11Identifying the Causes of Environmental Problems 11Setting Objectives and Selecting Instruments 15Examining Costs and Benefits 17Administrative and Financial Feasibility 25Strategic Considerations 25

3. Ensuring Effective Implementation 31Integrating Environmental Objectives with Broader Development

Goals 31Involving Key Stakeholders 35Improving Institutional Performance 39Mobilizing Financial Resources 44Monitoring and Evaluation 47

4. Future Agenda 51Next Steps 51The Future of Environmental Strategies 54Making Development Sustainable 56

Annexes1. National Environmental Strategies and Action Plans Reviewed 572. Environmental Policy Instruments: Illustrative Applications 59

Bibliography 75

iii -

FOREWORD

Realizing that environmental damage threatens human welfare and under-

mines development prospects, many countries have started to incorporate

environmental concems into development policymaking. Over the last

decade, many nations have formulated strategies or plans which identify

priority environmental problems, define policies and concrete actions to

deal with them, and determine investment needs. The cross-sectoral and

evolving nature of environmental problems, however, requires a continu-

ing strategic process that takes changing needs and priorities into account.

Taking stock of many of the efforts to date, this paper distills the essential

elements of a successful environmental strategy exercise, highlights exam-

ples of good practice, and suggests a future agenda for national environ-

mental policy making. In doing so, it focuses on analytical approaches to

preparing environmental strategies-that is, the methods and criteria used

in identifying priority problems and defining priority actions. It differs from

other papers that discuss the use of economic analysis in environmental

management by also emphasizing the critical importance of public partic-

ipation in the strategy preparation process.

The paper's findings are based on an in-depth review of National Envi-

ronmental Action Plans (NEAPs), World Bank country environmental strat-

egy papers, and other relevant literature; discussions with country officials

involved in preparing and implementing environmental strategies; and

interviews with non-govemmental organizations (NGOs) and World Bank

task managers. Because experience in implementing national environmen-

tal strategies and action plans is still limited, the analysis focuses primarily

on the preparation and contents of these documents. However, it also

draws on lessons from other environmental management initiatives.

The paper is presented in four parts. Chapters 1 through 3 detail key steps

in formulating an environmental strategy: identifying priority problems,

defining priority actions, and ensuring effective implementation. Chapter 4

explores next steps for future work in this area and the next generation of

national environmental strategies.

* iv

FOREWORD dThe present document is complemented by two background papers

which are available on request from the World Bank's Environment Depart-ment: "Taking Stock of National Environmental Strategies" and "The UrbanChallenge in National Environmental Strategies."

Andrew SteerDirector

Environment Department

._ "~~~~~~~~V

ACKNOWLEDGMENTS

The principal authors of this paper are Sergio Margulis (task manager) and

Janis Bernstein. Others who made useful contributions include John Red-

wood, John Dixon, Olav Kjorven, Gunnar Eskeland, Kirk Hamilton, John

O'Connor, Nick Anderson, and Kristalina Georgieva, as well as Julian

Lampietti and Uma Subramanian who conducted the initial stocktaking

review of NEAPs. The authors are grateful to the following for their

thoughtful review of various drafts of the text: Andrew Steer, Robert Pic-

ciotto, Francois Falloux, Jan Bojo, K.C. Sivaramakrishnan, Robert

Schneider, David Wheeler, Joan Martin-Brown, Colin Rees, Barbara

Lausche, Lee Travers, Antonio Estache, Dan Biller, Richard Ackermann,

Suddhir Shetty, Gordon Hughes, Ernst Lutz, Violeta Rosenthal, Robert

Kirmse, Lars Vidaeus, and Ross Wallace. The document also benefitted

from external review by Jeremy Carew-Reid (IUCN), Denis Corrales

(Nicaragua), Barry Dalal-Clayton (IIED), Clement Dorm-Adzobu

(NESDA), Allan Gromov (Task Force for the Implementation of the Envi-

ronmental Action Programme for Central and Eastern Europe in Estonia),

R. Kabwaza and Felix Kaluma (Malawi), Bill Mansfield (UNDP consult-

ant), Devanesan Nesiah (Sri Lanka), Ndey-Isatou Ngie (The Gambia),

Shekhar Singh (India), and Stanislaw Sitnicki (Regional Environmental

Center for Central and Eastern Europe). Jane Monahan edited the manu-

script. Tomoko Hirata, Jane Monahan and Jocelyn Mason designed the

cover. Cynthia Stock designed and desktopped the page layout. Charlotte

Maxey handled production of the final document.

* vi

OVERVIEW

Industrialized and developing countries can pay a large price for damagedone to their environment and for a decline in their natural resources. Insome countries it is estimated that the total cost of soil erosion, and urbanpollution and congestion, amounts to more than five percent of nationalincome. The high costs of specific environmental problems can be equallysignificant. In Bangkok, Thailand health costs resulting from air pollutionare estimated at 2.8 percent a year of Gross Domestic Product (GDP). InGhana soil erosion that is a consequence of certain types of crop andlivestock production, costs the equivalent of 1.1 percent of GDP annually.Many countries, concerned about the magnitude of such costs and the needto address environmental problems in a way that is cost-effective, haveprepared strategic environmental plans to guide policy and investmentdecisions.

Since the mid-1980s international donors and NGOs have been helpingcountries prepare national environmental strategies and action plans.Building on earlier experience with National Tropical Forestry Action Plans,National Conservation Strategies and similar documents, these plans tendto be based on environmental profiles and sectoral and economic analysesdone by the countries themselves or with the assistance of international andbilateral organizations. In 1990 donors of the International DevelopmentAssociation (IDA), a World Bank affiliate that provides interest-free loansto the world's poorest countries, urged IDA borrowers to complete NationalEnvironmental Action Plans (NEAPs). By the end of 1994, most IDA bor-rowers and some higher income countries had prepared NEAPs or similardocuments. Many of these plans are now being implemented.

Environmental strategies are living documents that need to change asnew problems arise, and as our understanding of the links between theeconomy and natural ecosystems grows. A review of existing experiencetherefore can provide valuable lessons for efforts in the future. To identifygood practice and draw lessons from the experience to date, the Bankconducted a detailed review of over 30 recently completed national envi-ronmental strategies and action plans (Annex 1). The results form one ofthe bases of this paper, which also draws on broader country, NGO, Bank

vii i

' NATIONAL ENVIRONMENTAL STRATEGIES

and other donor experience in environmental management. Some common

patterns emerged from the review. They include:

* Successful strategies involve three elements: identifying priority prob-

lems, defining priority actions, and ensuring effective implementation.

* For environmental strategies to be implemented with success technical

and economic analysis needs to be sound and skillfully tempered by

the active participation and commitment of key stakeholders.

e Effective environmental management requires strategy objectives to be

realistic and integral to broader political, economic, and social

concems.

Alternative approaches to national environmental strategy making are

summarized in Box 1 below. Key lessons for policymakers are highlighted

in Box 2.

Elements of an Environmental Strategy

The diversity of national environmental problems requires that each coun-

try tailor its environmental strategy to reflect national conditions and

capacities. But the following three crucial elements of a successful strategy

are common. Each of these elements requires a balance between rigorous

quantitative analysis and involvement by key stakeholders (Figure 1).

Step 1: Identifying Priority Problems

Experience has shown that an essential step for effective environmental

management is identifying priority problems. Because resources are scarce,

the range of problems to be addressed needs to be restricted. Consensus

on the most critical environmental problems confronting a country should

be sought among the people affected by environmental degradation, the

major polluters and natural resource users, experts in various environmen-

tal fields, nongovemmental organizations (NGOs), and relevant govern-

ment agencies. Identifying those problems involves: (1) using transparent

selection criteria, especially impacts on human health, economic produc-

tivity, ecological functions and ecosystem integrity, and amenity; (2) giving

* viii

OVERVIEW X

BOX 1 APPROACHES TO NATIONAL ENVIRONMENTAL

STRATEGY MAKING

Govemments have adopted a number of strategic approaches to national environ-mental management. Some focus narrowly on environmental issues and others arebroader, dealing with the integration of environmental, development and socialconcerns. These approaches fall into several categories:

Comprehensive National Strategies

NATIONAL CONSERVATION STRATEGIES (NCSs). Promoted by the WorldConservation Union (IUCN), NCSs are intended to provide a comprehensive,cross-sectoral analysis of conservation and resource management issues to helpintegrate environmental concerns into the development process. They identify acountry's most urgent environmental problems, stimulate national debate, and raisepublic consciousness; assist decision makers in setting priorities and allocatinghuman and financial resources: and build institutional capacity to handle complexenvironmental issues.

NATIONAL ENVIRONMENTAL ACTION PLANS (NEAPs). Supported by theWorld Bank and other donors, NEAPs describe countries' major environmentalconcerns, identify the principal causes of environmental problems and formulatepolicies and actions to deal with them. NEAPs are intended to contribute to thecontinuing process by which governments develop comprehensive environmentalpolicies and programs to implement them. This process forms an integral part ofoverall national development decisionmaking.

NATIONAL SUSTAINABLE DEVELOPMENT STRATEGIES (NSDS). Called forby Agenda 21, NSDS is a generic name for a participatory and cyclical process toachieve economic, ecological, and social objectives in a balanced and integratedmanner. The process encompasses the definition of policies and action plans, theirimplementation, monitoring, and regular review. NSDSs may take many forms, andincorporate or build on the approaches briefly described above.

Sectoral and Thematic Strategies

NATIONAL TROPICAL FORESTRY ACTION PLANS. Sponsored by UnitedNations Food and Agricultural Organization (FAO) and promoted under the Trop-ical Forestry Action Programme, national TFAP exercises involved a multi-sectoral

(Box continues on thefollowing page.)

ix a

E NATIONAL ENVIRONMENTAL STRATEGIES

BOX 1 (CONTINUED)

review of forest-related issues and formulation of strategic plans that define national

targets and actions regarding afforestation and forest management, forest conser-

vation and restoration, and integration with other sectors.

NATIONAL PLANS TO COMBAT DESERTIFICATION. Sponsored by the Per-

manent Committee for Drought Control in the Sahel, these plans analyze the

socioeconomic and ecological situation, review current activities, and discuss

policies and actions to combat drought for a number of Sahelian countries.

National plans are now also being developed in response to the Global Climate

Change and Blodiversity Conventions adopted at the United Nations Confer-

ence on Environment and Development (UNCED) held in June 1992.

Documents Contributing to the Strategic Process

COUNTRY ENVIRONMENTAL PROFILES AND STATE OF THE ENVIRON-

MENT REPORTS. These are prepared by governments, bilateral aid donors, and

NGOs. Generally they present information on conditions and trends, identify and

analyze causes, linkages, and constraints, and indicate emerging issues of relevance

to national environmental management.

UNCED NATIONAL REPORTS (1991-92). These documents were prepared by

national governments, often in consultation with the private sector and local,

regional and international NGOs, prior to UNCED. Each report addressed develop-

ment trends, environmental impacts, and responses to environment and develop-

ment issues through policies, legislation, institutions, programs, projects and

international cooperation. Some UNCED reports also considered issues of equity

and social justice. Others were intended as the basis for future NSDSs.

Source. Carew-Reid, et. al. (1994)

weight to expert opinion; and (3) listening to the priority concerns of the

general public. In Nicaragua, for example, this approach was successfully

adopted by the team coordinating preparation of the national environmen-

tal strategy, which conducted extensive municipal workshops in parallel

with technical and economic analyses by national experts. Integration of

the findings led to the ranking of national and local environmental prob-

*x

OVERVIEW d

BOX 2 KEY LESSONS FOR POLICYMAKERS

Taking into account the lessons learned from a variety of environmental manage-ment initiatives can help ensure more effective strategies and plans in the future.The following lessons are based on experience in preparing and implementingTropical Forestry Action Plans, National Conservation Strategies, and NEAPs.

1. Set priorities. Strategies cannot be effectively implemented unless they definepriority actions. Priority-setting requires clearly defined criteria and agreementamong key stakeholders. In choosing priority actions, each stakeholder groupneeds to understand what will be gained and lost in meeting environmentalobjectives and be committed to its role in implementing the strategy.

2. Balance analysis and participation. Analysis and participation are bothcritical for effective priority-setting. Achieving the right balance between thefindings of economic and technical analyses on the one hand, and stakeholderconcerns and preferences on the other, is the over-riding challenge.

3. Involve the right actors. A plan is more likely to be effectively implementedwhen those responsible for economic as well as environmental decisionmakingparticipate in its preparation. An environmental document has more politicalinfluence when ministries involved with the environment work closely withthose responsible for overall national resource allocation. Well-trained and expe-rienced staff also are needed to manage the strategic process and ensure itscontinuity.

4. Clarify the objectives. Misconceptions about the purpose of an environmentalstrategy on the part of the public and donors can lead to disappointment andultimate abandonment of the strategy. The public needs to be aware that strategiesare not funding instruments and investments will not necessarily follow. Likewisedonors cannot expect their investments to solve problems unless the necessarypolicy reforms and intersectoral coordination are undertaken. To ensure thatexpectations are realistic, a strategy's objectives and scope need to be well definedat the time of its initiation.

5. Ensure quick victories. Local populations need evidence of positive changeto build and sustain their commitment to environmental management. The im-plementation of pilot programs or demonstration projects can show the importanceof environmental strategies in improving the quality of life.

(Box continues on thefollowing page.)

xi -

R NATIONAL ENVIRONMENTAL STRATEGIES

BOX 2 (CONTINUED)

6. Insist on donor coordination. Although the many extemal donors involved

in environmental programs frequently resist coordination, successful implementa-

tion of environmental strategies and action plans will depend on coordinating the

investments of the external actors involved in environmental management to

reduce duplication and inconsistencies. One possible mechanism to increase

collaboration and coordination is to form a coordinating group composed of

international agencies, major donors, recipient countries, and NGOs, to exchange

information, promote consistency of projects with environmental strategies, and

coordinate investments.

7. Monitor the results. Inadequate information places considerable constraints

on effective environmental management. In the earliest stages of environmental

strategy making, particular attention needs to be given to expanding and updating

the information base. In addition, the resulting strategy or plan needs to include

arrangements for monitoring, evaluation, and updating to incorporate learning

from experience and ensure appropriate adjustments to ongoing programs and

investments.

lems. Similarly successful approaches to priority-setting occurred in coun-

tries as diverse as Bangladesh, The Gambia, Madagascar, and Nepal.

Step 2: Defining Priority Actions

Agreement on priority problems does not necessarily translate into a set of

priority actions. Setting priorities for action involves selecting instruments

to achieve the greatest gain relative to given objectives and available

resources.

* Diagnosing underlying causes. Understanding the causes of envi-

ronmental damage is critical for designing appropriate solutions. Most

environmental problems stem from a combination of two broad sets of

factors: (1) "pressure" factors such as population growth, human and

economic activity, and poverty; and (2) "enabling" factors, that is

market, government, and institutional failures that make it possible for

M xii

OVERVIEW X

FIGURE 1 ANALYSIS AND PARTICIPATION

IN DECISIONMAKING

Technical Criteria Key Stakeholders* Economic * Affected population* Ecological * Polluters, resource users* Social * Government agencies* Other * Experts, NGOs

Decisionmaking Process* Prioritizing problems* Prioritizing actions* Ensuring effective

implementation

the pressures to cause harm. Diagnosing these causes, and targetingpolicies and investments towards them is key to successful action. Butthe present review found only a minority of existing environmentalplans systematically followed such an approach. One that did was thestrategy for Egypt, where proposed actions are explicitly tied to clearlyidentified causes. For example, it proposes phasing out price subsidiesto fossil-fuels which cause excessive fuel consumption and thus exces-sive emissions of air pollutants. A similar approach was applied in theenvironmental strategies for Yemen and Central and Eastern Europe.

e Finding cost-effective, feasible solutions. Environmental problemsare numerous, and the resources available to address them limited. Inthe ideal world the analyst would carry out a traditional benefit-costanalysis, comparing the social benefits and costs of alternative actions.While there are presently no good examples of cases where such acomprehensive approach has been taken across different types ofenvironmental problems, several interesting exercises have been car-ried out to determine priority actions within broad categories of prob-lems, such as air pollution in Poland. Recognizing the importance of

xiii U

R NATIONAL ENVIRONMENTAL STRATEGIES

this type of analysis, but lacking monetary estimates for many values,

the Sierra Leone NEAP produced a "non-monetary" cost-benefit anal-

ysis whereby costs and benefits were ranked by various experts on a

three-point scale, thus avoiding extensive data requirements and pro-

viding good initial guidance on priority actions. More common is the

use of cost-effectiveness analysis; the Environmental Action Pro-

gramme for Central and Eastern Europe adopted this approach and

clearly demonstrates the value of rigorous analysis in proposing solu-

tions. Choosing the most appropriate instruments likewise requires an

assessment of their administrative and financial feasibility. Deciding on

the most urgent actions is ultimately a political process influenced by

such factors as resource availability, political visibility, and the balance

of regional and sectoral investments. However the analysis of alterna-

tive actions can help save literally billions of dollars in investments.

Step 3: Ensuring Effective Implementation

Rigorous analysis and priority-setting are not sufficient on their own to

ensure successful implementation of national strategies and action plans.

Experience indicates the critical need to build government commitment and

institutional capacity to ensure effective implementation. The process of

preparing a strategy, therefore, needs to make provisions for five additional

factors:

a Integrating environmental with broader development objec-

tives. The search for sustainable development requires that environ-

mental objectives be integrated with broader development goals and

conform to the social and cultural values of the country. Treating the

environment as a separate "sector," divorced from the overall economy,

is shortsighted and often counterproductive. For macroeconomic pol-

icies, greater knowledge is needed to fully understand their effects on

the environment. Nonetheless, existing evidence suggests that: (1)

economic instability is not good for the environment, and stabilization

is necessary but not sufficient for the attainment of environmental

objectives, and (2) the effects of macroeconomic policies on the

environment are generally ambiguous and difficult to predict, although

in some cases they are quite straightforward and significant. Instru-

ments other than macroeconomic ones, moreover, are normally more

appropriate for achieving environmental objectives.

* xiv

OVERVIEW i

* Involving key stakeholders. A national environmental strategy can-not be developed by government alone. Numerous examples attest tothe fact that strategies are more likely to be successful if key stakehold-ers participate in their preparation. A participatory approach will bemore realistic, and will have embedded within it a broader base ofknowledge, understanding, and commitment from the groups in-volved. In The Gambia, for example, the strategy making processinvolved government officials and representatives of NGOs, commu-nities, donor agencies, and the private sector. In Guinea, priority-settinginvolved many local NGOs and a multimedia campaign to mobilizecommunity interest.

* Improving institutional performance. Most strategies identifywell-functioning institutions as one of the most important prerequisitesfor effectively implementing a national environmental agenda. Withouta clear legislative framework and capable institutions, well-conceivedpolicies and other actions to address priority environmental problemscannot be translated into practice. This general lesson is demonstratedin countries as diverse as Egypt, Chile, and Lesotho. Enhancing institu-tional performance normally involves: (1) assigning clear institutionalresponsibilities, (2) establishing consistent and transparent legislation,and (3) ensuring effective implementation capacity.

* Mobilizing financial resources. Implementing an environmentalstrategy is not always expensive. Environmental improvements mayoften be achieved at little or no financial cost simply by removingexisting policy distortions such as energy subsidies. These "win-win"opportunities should be pursued as a first priority. In many cases,however, environmental improvements require new investment. Fi-nancial support for the national environmental strategy can be mobi-lized through internal and external sources. Many countries, such asChina, Indonesia, Japan, Korea, and Poland have established nationalenvironmental funds to channel revenues from pollution charges,taxes, and other sources for environmental improvement purposes.Externally funded projects are supporting environmental plan im-plementation in various countries, including Madagascar, Mauritius,Ghana, and Sri Lanka, while others are under preparation.

* Monitoring and evaluation. Effective implementation requires mon-itoring what is happening to understand what works, and what does

xvf

NATIONAL ENVIRONMENTAL STRATEGIES

not. As strategies are implemented, moreover, new priorities may

emerge in response to new information or changing environmental and

institutional conditions. Changes in govemment structures and institu-

tional capacity may alter the effectiveness of the policies selected. In

all of these cases, it is important to leam from experience. Performance

indicators are one way to meet the need for information on the pace

and direction of environmental change; this information can then be

used to adjust polices as needed. Some performance indicators are

based on regularly collected statistical data for resources like forests

and fish stocks. In other cases, such as urban air pollution, special

monitoring systems may need to be established and maintained. Many

countries have only begun to set up environmental information sys-

tems and fewer still have developed performance indicators that draw

upon this data base. However, there are exceptions. In Chile, for

example, the Central Bank has an environmental accounting unit that

is exploring the use of resource accounting to measure the rate and

direction of change for several of the country's major natural resources

including minerals, fisheries, and forests.

Future Agenda

In both developed and developing countries environmental strategy mak-

ing is an on-going process, not a one-time event. Effective policymaking

will require environmental strategies to be updated on a regular basis as

has recently occurred in Bulgaria. Much has been learned to date with

respect to national environmental management and these findings are now

being applied to the next generation of environmental strategies. Two

lessons, in particular, stand out for future application: the need for rigorous

analysis, and the importance of public participation.

Rigorous analysis of both environmental impacts and their economic

consequences helps governments address the most important problems in

a cost-effective manner. Increasingly, analysts are able to identify the costs

and benefits of altemative policies, and help governments and the public

make the hard choices necessary for environmental improvement. The

importance of public involvement, both in identifying problems and feasi-

ble solutions, and in creating political will for change, is increasingly

recognized. Public awareness of environmental problems helps put these

issues on government agendas and creates the political climate to support

needed action.

a xvi

OVERVIEW dThe future of national environmental strategies lies in incorporating

environmental concerns into the broader process of decisionmaking forsustainable development. This will require increased attention to monitor-ing implementation, revising existing national environmental strategies,and improving coordination within and among countries, donors, andother international organizations. Particularly important challenges are theneed to develop environmental strategies at both the subnational andinternational levels, as well as to incorporate global concerns in nationalenvironmental priority-setting. Although sustainable development is oftenseen as an illusive goal, national environmental strategies and action planscan provide a critical contribution to this process.

xvii a

CHAPTER 1

IDENTIFYINGPRIORITYENVIRONMENTALPROBLEMS

Introduction: The Price of Inaction

Current environmental trends worldwide, with growing urban pollutionand an increasing depletion of natural resources, suggest that inactioncould prove devastating. More than 1 billion people presently lack cleanwater and over 1.7 billion do not have access to adequate sanitationfacilities. By 2030, even under optimistic scenarios, these numbers willprobably rise to 1.9 billion and 2.3 billion, respectively. Examples of thecosts associated with environmental problems in specific countries include:

* Degradation related to crop and livestock production in Ghana thatimposes an annual cost of at least 1.1 percent of GDP.

• Air pollution and acidic deposition in Hungary that have resulted inestimated agricultural productivity losses equivalent to US$100 millionand damage to forests of US$50 million.

e Annual health costs of particulate matter and lead air pollution inBangkok, Thailand that are estimated to be between 0.6 and 2.8 percentof GDP.

* Annual health costs associated with particulate matter and lead airpollution in Mexico City that are estimated at US$1 billion annually, or0.3 percent of GDP.

Despite growing evidence that environmental degradation is an import-ant socio-economic problem, govemments in many countries have beenunable to stop it. It is often said that environmental control is too costly and

1 K


that countries should concentrate on other development priorities. Under-

lying such thinking may be a lack of information and insufficient awareness

of the true costs involved, inertia, lobbying by powerful interest groups,

and limited public support and participation. Even where there is strong

political will, governments may not be able to act effectively because of

institutional deficiencies.

Experience in the industrialized world shows that the costs of preventing

environmental degradation are frequently much lower than those required

for remediation. Developing nations can learn from this experience by

anticipating environmental problems and learning how to use their scarce

resources efficiently to prevent environmental damage. The need to use

resources efficiently and effectively also calls for the preparation of sound

environmental strategies and action plans. Such efforts are essential be-

cause the solution to environmental problems, which are frequently caused

by market and property rights failures, requires government intervention

and resource mobilization. Unlike many other areas of human activity,

where market forces and minimal public sector intervention often lead to

efficient resource use, properly managing the environment requires con-

certed government action.

Formulating an Environmental Strategy

There is no standard approach for addressing environmental problems.

Devising environmental strategies and action plans is still a comparatively

recent activity, and much remains to be learned about the most effective

way of going about it. Each environmental strategy varies depending on

the physical, biological, social, and economic attributes of the particular

country involved. Nonetheless, experience from around the world suggests

that the most important ingredient in the preparation of successful environ-

mental strategies is achieving an adequate balance between rigorous anal-

ysis and participation by key stakeholders. Consultation in the strategy

making process should involve those who are responsible for environmen-

tal problems, those who are adversely affected, those who control the

instruments for solving the problems, and those who have relevant infor-

mation and expertise. The experience so far shows that the most effective

environmental strategies include three key elements: (1) identifying priority

problems; (2) defining priority actions; and (3) ensuring effective im-

plementation (Table 1.1).

* 2

IDENTIFYING PRIORITY ENVIRONMENTAL PROBLEMS dTABLE 1.1 FORMULATING AN ENVIRONMENTAL STRATEGY

Key element Descrtption

1. Identifying priority problems Consists of analyzing the extent andseverity of environmental concerns andidentifying those considered to be mostcritical based on specified criteria.

2. Defining priority actions Probably the most importantcomponent of a strategy, this comprisesthree major steps: identifying thecauses of problems, setting goals, andidentifying alternative policyinstruments to address the causes ofproblems based on the expectedbenefits and costs of each, and otherrelevant criteria and considerations.

3. Ensuring effective implementation Involves integrating the proposedactions with the government's macro-economic and sectoral policies; partici-pation by key stakeholders in the planningand implementation phases; findingincentives that ensure clear assignmentof institutional responsibilities, consistentand transparent legislation, and adequateimplementation capacity; mobilizingresources to finance strategy implemen-tation; and making provisions formonitoring, evaluation, and revisionof priorities during implementation.

In practice, environmental strategy making is not linear and countries donot necessarily carry out these three sets of activities in sequence. Defininga national environmental strategy may involve building on existing sectoralpolicies and plans, while pilot programs or demonstration projects may beundertaken before planning is completed. The work involved in preparinga plan often contributes to the achievement of some of its subsequentobjectives. Indeed, plan preparation and implementation are frequentlyintertwined. Government agencies involved in preparing environmentalstrategies need to seek to achieve consistency in the policies they adopt,and coordinate better. Preparing a strategy also has educational benefits.The more diverse the participants-government agencies, local communi-ties, technical experts, NGOs, etc.-the greater the opportunities for ex-changing information, improving understanding, and building capacity.Many of the main elements in a strategy or an action plan are also likely to

3 K

UNATIONAL ENVIRONMENTAL STRATEGIES

be repeated as implementation proceeds, and as environmental conditions

and institutional capacities change over time. To sum up, national environ-

mental strategy making is a dynamic process subject to periodic review and

revision as well as the participation of different agents. The remainder of

this paper provides a framework to help guide this process.

Identifying Critical Problems

In a context of limited financial and institutional resources, effective envi-

ronmental management means governments have to identify the most

severe environmental problems because the range of issues that can be

addressed is restricted. Deciding what are the priority environmental prob-

lems is basically a political process. Communities affected by environmental

degradation, major polluters, environmental experts, NGOs, and govern-

ment agencies should try to reach a consensus on what is most critical. This

dialogue, however, needs to be informed by sound technical and socio-

economic analysis. It involves several steps.

COLLECTING DATA. The first step in identifying priority environmental

problems is to collect information on baseline environmental conditions

and impacts such as air and water quality, environmental services, health

impacts, natural resource use, productivity losses, land conversion, and so

on. In many countries such data may be inaccurate, inaccessible, or not

systematically collected. Nevertheless, much can be achieved using the

available information. In Malawi and Zambia, for example, the creative use

of existing national data, along with information from other countries facing

similar problems, led to an initial identification and ranking of the most

critical environmental issues.

USING TRANSPARENT CRITERIA. Priority problems need to be iden-

tified on the basis of transparent criteria. These criteria can include the

impacts of environmental problems on: (1) human health; (2) economic

productivity; (3) ecological functions and ecosystem integrity; and (4)

amenity values.

* Effects on health. Environmental pollution may lead to increased

illness and premature death. Human health may be harmed both by

direct exposure to pollution and through its indirect impact on the

physical environment. These are tangible costs that influence the

* 4

IDENTIFYING PRIORITY ENVIRONMENTAL PROBLEMS Ugeneral well-being of the population. In Jakarta, for example, theestimated costs of the health effects of pollution in 1990 were morethan US$ 500 million. Moreover the health costs of environmentaldamage often tend to be higher than the costs associated with produc-tivity and amenity impacts. Recognizing this, governments involved inpreparing the Environmental Action Programme for Central andEastern Europe have given special emphasis to human health concerns.More generally, considerable progress has recently been made inmeasuring the expected health benefits of reductions in air pollutionand water-borne diseases. For example, dose-response relationships-that is, the physical relationship between environmental damage andits impact on human health-can be used to correlate changes in thelevel of emissions with changes in the incidence of premature deathdue to certain types of respiratory diseases. Recent studies of thelinkages between air and water pollution and health problems inSantiago, Chile illustrate how such analyses can be done.

* Effects on economic productivity. Pollution has a negative impacton health and thus on the productivity of human resources. Butenvironmental degradation can also reduce the productivity of naturalresources and physical capital. Typical indicators of natural resourcedepletion include the number of plant or animal species or hectares offorest or arable land lost each year. In Tunisia, for instance, it isestimated that 10,000 hectares of productive land is lost annually toerosion, 8,000 hectares to overgrazing, 4,000 hectares to urbanization,and 13,000 hectares to deforestation. As in the case of health impacts,economic analysis can help set priorities (Box 1.1). Using a "change inproduction" approach, for example, it has been estimated that lossesin agricultural productivity due to soil erosion in Mexico are roughlyUS$ 1 billion a year.

a Ecological impacts. The effects of environmental degradation onecological cycles and on the maintenance of ecosystems can be signif-icant. Resource overexploitation can disrupt key environmental ser-vices such as the natural cleansing capacity of water bodies or the yieldof fisheries. Deforestation can lead to soil erosion, sedimentation ofwatersheds, and habitat loss, thus threatening biodiversity and, inextreme cases, species extinction. Taking these risks into account,national environmental plans in various African and Asian countrieshave identified threats to terrestrial or marine ecosystems as major

5.

' NATIONAL ENVIRONMENTAL STRATEGIES

BOX 1.1 COSTING ENVIRONMENTAL DAMAGE

An essential step in determining what should be done about environmental damage

is to value it and compare it with the costs of preventing the damage. Measurement

is essential, since tradeoffs are unavoidable There are many practical problems in

deriving credible estimates of economic value. But four broad approaches can be

used in setting priorities.

Market prices

Market prices are used in valuation when environmental damage leads to losses in

productivity or to adverse health effects. Common applications include valuation

of damages due to soil erosion, deforestation, and air and water pollution. In

applying this approach, the physical or ecological relationship between environ-

mental damage and its impacts on output or health-the dose-response function-is

estimated and combined with prices to derive monetary values. For environmen-

tally related health risks, income foregone because of illness or premature death is

sometimes used to measure welfare losses. Such estimates are partial and contro-

versial because they rely solely on income losses and use causal links that are

difficult to quantify or to extrapolate from studies in high-income countries.

Costs of replacement

People and firms can respond to environmental degradation by making expendi-

tures to avert damage or compensate for possible consequences. Although some

effects of degradation are not accounted for, these expenditures can provide an

estimate of environmental damage. For example, when water supplies are polluted,

factories can invest in a private tubewell, and households can buy water from

problems. Terrestrial ecosystems which are at risk have been identified

in environmental plans in Benin, Madagascar, China and India. Threat-

ened marine ecosystems are identified in plans for Mauritius, the

Seychelles, Pakistan and Sri Lanka.

* Amenity impacts. A clean environment is appreciated for its aesthetic

value as well as for its positive contribution to human health, produc-

tivity, and ecology. The intrinsic value of national historical and cultural

heritage constitutes an amenity value as well. Environmental plans for

*6

IDENTIFYING PRIORITY ENVIRONMENTAL PROBLEMS d

vendors. Losses of soil fertility caused by erosion can be approximated by the costof using purchased fertilizers to replace nutrients.

Surrogate markets

Environmental degradation can sometimes be valued through its effect on othermarkets-especially on property values and wages. For example, clean air is im-plicitly traded in property markets, since buyers will consider environmentalattributes as characteristics of property. Similarly, environmental risks associatedwith different jobs are traded in labor markets, and wage levels for higher-risk jobswill include larger risk premiums. This technique is difficult to apply when propertyowners or workers are unaware of environmental problems or are constrained inresponding to them.

Surveys

Direct questioning can determine what value people place on environmentalchange. This approach is particularly relevant where markets are nonexistent orwhere people value an environmental resource that they do not use. Such surveyshave become more sophisticated to minimize the biases that may enter intoresponses to hypothetical questions. They are increasingly employed to determinethe amenity value of species or landmarks. In developing countries their use is rare,but examples that do exist include surveys to determine a willingness to pay forbetter access to clean water in Brazil, and for improved sanitation in Ghana, and toassess a tourists' valuation of elephants in Kenya.

Source: World Bank, World Development Report 1992.

Botswana, Cyprus, Egypt, Nepal and Tunisia have all identified thedeterioration of cultural assets as a priority problem. While this aspectof environmental quality is the most difficult to quantify, people arewilling to forego expenditures on other goods and services to protectendangered species and to enjoy the benefits of a pristine environmentboth for themselves and for future generations.

In addition to the types of impacts on the environment listed above,countries should consider several other factors when identifying prior-ity problems.

7 .


* Number of people affected. This is one of the main indicators of the

social impact of environmental problems. Hungary's environmental

strategy, for example, determined the relative importance of air and

water pollution by comparing the size of the population at risk: 40

percent of the population was found to be exposed to elevated sulfur

dioxide and particulate concentration levels, while 35 percent lacked

access to clean drinking water. Additional information about the rela-

tive toxicity of air and water pollution led to a priority ranking of air

pollution over water pollution.

a Effects on the poor. Equity is seldom used as a criterion in the

selection of priority environmental problems because it is difficult to

measure the incidence of any particular problem over a group of

people. However there are interesting exceptions. The environmental

strategy for Nigeria, for instance, gives distributional equity a numerical

ranking based on an assessment of the income level of the group

affected by the environmental problem. Where no income data are

available, sectoral employment statistics can be used as a rough proxy.

• Risk and uncertainty. A number of important environmental prob-

lems are characterized by their long-term effects or by great uncertainty.

For instance the impact of toxic waste disposal on air or water can be

long-term, while the value of biodiversity, or the capacity of polluted

ecosystems to purify themselves, are uncertain. Since traditional eco-

nomic analysis does not handle these dimensions well, it is necessary

to use other, multidisciplinary approaches to identify priority concems.

The precautionary principle (sometimes referred to as the Safe Mini-

mum Standard), which suggests that no action be taken if significant

environmental damage is likely, is one way of dealing with this situa-

tion. However it can involve high costs.

GIVING WEIGHT TO EXPERT OPINION. Expert judgment can influ-

ence the priority-setting process by providing a rough ranking of environ-

mental problems. However, specialists need to consider explicit technical

criteria in their ranking decisions so that the importance of the various

problems can be compared. In Nigeria, for example, a group of experts

assigned each problem a subjective risk value which was then used to rank

a diverse set of environmental problems (Box 1.2). This type of assessment

is implicit in many national environmental plans.

* 8

IDENTIFYING PRIORITY ENVIRONMENTAL PROBLEMS d

BOX 1.2. EXPERT JUDGEMENT IN NIGERIA

In setting environmental priorities in Nigeria, experts on economic growth, dis-tributional equity, and the overall integrity of the resource base were asked to judgethe impacts of specific problems on the basis of these three criteria:

Economic Distributional ResourceProblem growth equity integrity

Soil degradation High High HighWater contamination High High HighDeforestation High High HighGully erosion Moderate Moderate HighFisheries loss Moderate Moderate HighCoastal erosion Moderate Moderate ModerateWildlife and biodiversity loss Low Low HighAir pollution Low High ModerateWater hyacinth Moderate Low Low

LISTENING TO PUBLIC CONCERNS. One critical aspect in the pro-cess of identifying priority environmental problems, particularly at the locallevel, is consultation and participation. Even where attempts are made toundertake rigorous economic analyses by quantifying the damage of envi-ronmental problems, all estimates would benefit by being reviewed by localstakeholders. Only affected individuals know the effects of different envi-ronmental problems on their welfare, and only through direct involvementcan their preferences be articulated (see Chapter 3).

OBSTACLES TO PRIORITY-SETTING. Although clear in concept,finally, identifying priority problems is no simple matter. Numerous obsta-cles may complicate the process. For instance:

* It is often necessary to balance economic, social, political, and envi-ronmental objectives, and this may not be straightforward.

* Consultation and participation are essential, but if they are not properlyorganized this might lead to paralysis, or to a blurring of the priorities.

9.


* A lack of information and understanding can limit serious analysis.

Frequently decisionmakers and the public lack relevant information on

the health and other impacts of environmental problems.

• Powerful regional or sectoral interests may force governments to invest

in certain areas or endeavors even if these are not in the national interest

from an environmental or an economic point of view.

* Similarly, strong state or provincial govemments may block a national

initiative or disregard a national priority.

* 10

CHAPTER 2

DEFININGPRIORITYACTIONS

Even though environmental problems can be very costly, govemmentsmust allocate their available financial and human resources among manycompeting sectoral needs. Setting priorities for action therefore needs toinclude defining cost-effective interventions. As with the selection of prior-ity environmental problems, deciding what are the most urgent actions thatshould be taken to solve them is, in the end, a political matter that is swayedby such factors as the availability of funds, political visibility, balance ofregional and sectoral interests, and the willingness and capacity of localinstitutions to undertake investment. Taking these factors into account,policymakers need to base their decisions on a sound analysis of both theproblems that exist and their possible solutions.

Identifying the Causes of Environmental Problems

Understanding the reasons for environmental problems is essential forfinding the right solutions. While most national environmental strategiesidentify the general causes of environmental problems, few link thesecauses to specific environmental problems or to proposed solutions. How-ever there are some noteworthy exceptions, such as the environmentalstrategy for Egypt which provides an extensive analysis and rationale for eachproposed action. The causes of environmental problems can be dividedinto underlying pressures, on the one hand, and factors that "enable" thesepressures to do harm to the environment, on the other. (Figure 2.1).1

1. For a detailed analysis of the causes of environmental problems, see WorldDevelopment Report 1992: Development and the Environment (World Bank,1992).

11 -


FIGURE 2.1 CAUSES OF ENVIRONMENTAL PROBLEMS

Environment

Enabling Factors

* Market failures'II 1~ I * Government failures* Institutional failures

Pressure Factors

* Population growth

. Economic activity• Poverty

PRESSURE FACTORS. These include rapid population growth, human

and economic activity, and poverty. When not adequately managed any

one of these may cause extensive environmental damage. In most coun-

tries, however, these factors are not regarded as environmental problems

per se and are addressed in broader national development plans rather than

in environmental strategies.

* Population growth. Demographic growth affects environmental con-

ditions both in rural and in urban areas. Population growth in rural

areas tends to: force people into exploiting more fragile natural eco-

systems; increase the demand for arable land and fuelwood, often

resulting in deforestation; and shorten fallow periods, thereby reducing

land productivity. Similarly the inability to make provisions for rapid

urban population growth often results in inadequate urban waste

management, air and water pollution, a shortage of supplies of clean

water, land degradation, and congestion.

* 12

DEFINING PRIORITY ACTIONS d* Human and economic activity. All productive human activity de-

pends directly or indirectly on the use of natural resources. Even in thepresence of rapid technological change, the expansion of economicactivity coupled with population growth threatens both theenvironment's capacity to assimilate change, and the world's stock ofnonrenewable resources. 2

* Poverty. The poor are usually the first to suffer the consequences ofenvironmental degradation, and poverty on its own can have a signif-icant negative impact on the environment. When other alternativesbreak down, poor people are often forced to use land and water inways that threaten the productivity of these vital resources in the future.For example, in India as in many other low-income countries, peopleliving at subsistence levels have encroached on forests, wetlands,mangrove zones, and coral reefs causing large scale deforestation,erosion, and loss of terrestrial and marine biodiversity. Likewise, inmany developing nations the urban poor lack the financial resourcesto compete for housing in safe locations or for land where basic servicesare established. As a result, they are frequently forced to establish illegalsettlements on hazard-prone or environmentally-sensitive land poorlysuited to residential uses.

ENABLING FACTORS. Environmental problems occur when pressurefactors are not properly managed. Most national environmental strategiesand plans identify three general types of "enabling" factors that stronglycontribute to the severity of environmental problems: market failures-which are the basic cause of environmental problems-government fail-ures, and institutional failures.

m Market failures. Pollution or resource degradation often occur whenindividuals or enterprises make decisions regarding production with-out considering the potential negative effects of these choices on thirdparties (externalities). In many cases, such actions can be traced to thelack of markets or prices attached to the use of natural resources.

2. While certain environmental problems can worsen with increased economicactivity, environmentally responsible economic growth is nonetheless gener-ally viewed as a fundamental prerequisite for sustainable development.

13 .


Industrialists, for example, may dispose of waste products in a way that

is harmful to the atmosphere or to water systems, because they may

believe that these resources are limitless (and hence "free"). Unless

governments intervene, industrialists may have no incentive to stop

polluting the atmosphere or to treat harmful effluents.

* Government failures. While sound economic policies are normally

good for the environment, macroeconomic reforms can lead to envi-

ronmental degradation in certain circumstances, such as when such

reforms coincide with specific policy and/or market failures. For in-

stance, when environmental resources are not correctly priced, serious

distortions in resource use and allocation can result. Indeed, in Central

and Eastern Europe systematic under-pricing of energy and other

inputs has contributed to severe pollution problems. More generally,

in industrialized countries the physical stress the environment is put to

is often much greater than that endured by the environment in devel-

oping nations. However the actual amount of environmental damage

is often larger in the latter because governments lack the capacity to

intervene. National governments may not be directly or fully responsi-

ble for the problems listed below, but if the public sector's response is

not appropriate or effective then the omission can prolong and even

increase the environmental damage.

* Property rights failures. A lack of definition over property rights

can lead to numerous natural resource management problems.

Non-private ownership of resources, for example, has often led to

open access, giving rise to the overexploitation or degradation of

tropical rainforests, mangroves, rivers and fisheries. Among the

environmental plans prepared by African countries to date, accord-

ingly, the vast majority indicate that unclear rights over the use of

natural resources have led to poor management of these resources.

Private and communal forms of land ownership are preferable to

open access. However such forms of land ownership may also

result in unsustainable management practices if the potential ad-

verse effects on neighboring farms or the rupture of traditional

socio-cultural arrangements are not taken sufficiently into account.

* Inadequate public awareness and commitment. Factors that

perpetuate environmental degradation include: a lack of informa-

* 14

DEFINING PRIORITY ACTIONS dtion, inadequate public awareness about environmental problemsand about what causes them, and insufficient political will toaddress the problems. In Brazil, for instance, after the press publi-cized the health effects of extremely high air pollution onschoolchildren in Cubatao, an industrial city in the state of SaoPaulo, local communities organized demonstrations demandingreform. This grass roots action resulted in a major air pollutioncleanup program that yielded important health benefits.

* Institutional failures. Most national environmental strategies andaction plans identify institutional weaknesses as a vital factor contrib-uting to the perpetuation of environmental degradation. Unclear defi-nition of institutional responsibilities and/or weak implementationcapacity can undermine well-intentioned efforts to improve environ-mental management. In many countries, overlapping responsibilitiesamong agencies at different levels of government may send contradic-tory signals to polluters and lead to conflicting objectives among thevarious agencies charged with pollution control. Factors that contributeto institutional ineffectiveness include: lobbying by powerful interestgroups; short-term planning horizons; and a lack of accountability bypublic institutions. Other problems that often particularly affect envi-ronmental institutions are: a mismatch between assumed responsibili-ties and the available resources; a lack of qualified personnel; penaltiesfor noncompliance with regulations that are not strict enough; inade-quate communication; and a weak judiciary. Some or all of theseproblems were identified in environmental plans in Egypt, Ghana,Honduras, Poland, Seychelles, and Sri Lanka.

Setting Objectives and Selecting Instruments

Once priority environmental problems and their causes have been identi-fied, it is necessary to set realistic objectives and choose the most appropri-ate policy instruments for intervention. The two parts of the process areinterlocked. Before deciding what objectives are most realistic, policymak-ers need to be familiar with the available instruments for stemming pollu-tion and natural resource degradation, and gauge the administrative andfinancial feasibility of alternative ways of attaining desired results in terms

15K


BOX 2.1 CONSULTATION FOR ESTABLISHING

ENVIRONMENTAL REGULATIONS IN THE UNITED STATES

According to the Administrative Procedures Act, the Environmental Protection

Agency (EPA) must keep the public informed about all proposed regulatory actions.

First, the EPA must give notice of a proposed action in the Federal Register, a daily

publication containing proposals from all federal agencies. The public then has the

right to comment on the proposed rule. The period allowed for comment has to be

a minimum of 30 days. In the case of major or controversial proposals, the comment

period may be 60 or 90 days or more, with numerous public hearings held around

the country. When drafting the final rule, the EPA must consider the data and

information gathered during the comment period. The final rule may look exactly

like the proposed rule or be modified substantially. It is not uncommon for this

process to take as long as five years from the drafting of the initial proposal to

publication of the final rule in the Federal Register, illustrating the substantial costs

of obtaining an approval.

The most important factor slowing the regulatory process is the threat of, or

actual, litigation by industry, environmental groups, or both. Because of the high

probability that a rule will be challenged, EPA has developed a process called

regulatory negotiation, which tries to bring together all of the interested parties

before the "proposed rule" stage. All parties must agree that if a consensus is

reached by the group, none of its members will litigate the final rule. Not all

regulatory actions are good candidates for this process. In some cases there is so

much hostility between groups that they will not meet or will not trust the other

side not to litigate. Sometimes industry coalitions fall apart because one industry

may benefit at the expense of another based on the regulation.

of environmental quality and control. Establishing practical environmental

goals and targets is also a consensus-building process which requires

consultation with relevant stakeholders. Experience in the United States

illustrates how such a process works in one particular country (Box 2.1).

Environmental instruments include regulations, economic tools, prop-

erty rights, and other mechanisms such as information, education, and

direct government investment. These instruments can be applied to a broad

range of environmental problems. However they may require different

incentives, different types of information, and different degrees of institu-

* 16

DEFINING PRIORITY ACTIONS dtional capacity in order to be well implemented (Box 2.2). Annex 2 providesdetails of country-specific applications of various standard environmentalpolicy instruments.3 In all cases, however, when selecting policy instru-ments it is important to make maximum use of cost-benefit or cost-effectiveanalysis. Other criteria which normally need to be considered in choosinginstruments include the following:

* Transparency. A transparent and open process of adopting andimplementing environmental standards helps enterprises and othereconomic actors adapt to changing regulatory conditions. Firms andother stakeholders are more likely to comply with policy instrumentswhen they understand how and why they were chosen, or when theywere part of the decision making process.

* Flexibility. The flexibility of the instrument is an important consider-ation where local conditions are changing. For example, an environ-mental charge can be easily adjusted to reflect current conditions,factories can be closed under a smog alert, and standards can be madeless stringent during economic crises.

Examining Costs and Benefits

Ideally, determining priorities among environmental actions needs to bebased on a systematic comparison of their social benefits and costs. Toarrive at the net social benefits, control costs need to be compared with theexpected benefits originating from the proposed intervention. 4 This meth-

3. For additional information on the comparative advantages and disadvantagesof different environmental policy tools, see Bernstein (1993), Eskeland andJimenez (1991), Tietenberg (1988), and Opschoor (1994).

4. More formally, the marginal costs of reducing environmental degradationneed to be compared with the marginal benefits originating from it. This isbecause the real decision is whether new investments in control should bemade. Thus what is compared are the costs of making an additional invest-ment in control and the resulting benefit in terms of improved environmentalquality. The rule for action is to increase control until the marginal controlcosts are equal to the expected marginal benefits.

17-

- NATIONAL ENVIRONMENTAL STRATEGIES

BOX 2.2 ENVIRONMENTAL POLICY INSTRUMENTS

The most common types of policy instruments to address environmental prob-

lems are:

REGULATORY INSTRUMENTS. Often referred to as "command and control,"

regulatory tools are the most commonly used instruments in environmental man-

agement. They include direct regulation along with monitoring and enforcement

systems. A regulatory approach employs various measurements or standards:

emission, effluent, and product standards which are used on industries and motor

vehicles; public health codes; and land use regulations which are designed to

manage and protect environmentally sensitive land and cultural heritage. The

advantage of a regulatory approach is that, when properly implemented and

enforced, regulation affords a reasonable degree of predictability over how

land will be developed, or over how much pollution will be reduced. It has a

drawback, however: it can be economically inefficient and excessively costly to

implement.

ECONOMIC INSTRUMENTS. Economic instruments or instruments which em-

ploy market values rely on market developments and price variations to change

the behavior of public and private polluters and resource users. Such instruments

encompass various types of pollution charges; user charges; market creation or

emissions trading charges; and/or subsidies in the form of tax incentives, grants, or

soft credits, which are aimed either at persuading polluters to reduce their damaging

discharges, or at helping lower the costs of pollution abatement or prevention, or

at encouraging landowners to conserve natural resources. Some economic instru-

ments require direct payments by resource users, for example, loggers may have

to pay stumpage fees, or pollution taxes may be levied as a penalty according to

the volume and toxicity of discharges. In other cases indirect payments are

involved. For example, pollution taxes may be levied on inputs, for instance when

water used for industrial purposes is priced according to its social cost. The chief

advantage of a market-based approach is that firms and individuals are given the

latitude to compensate for environmental damage in market price terms. However

a major disadvantage of economic instruments is that their effects on environmental

quality are not as predictable as those under a traditional regulatory approach

because polluters may prefer their own, more limited, solutions.

* 18

DEFINING PRIORITY ACTIONS d

PROPERTY RIGHTS. It is important to define property rights and defend themin order to reduce conflicts over land ownership, and over access to naturalresources. This policy instrument may imply clarifying water rights to promotewater conservation; deciding on discharge or emissions rights to control pollution;and/or providing secure land tenure to encourage investment in housing andinfrastructure. Initiating programs to clarify land ownership rights normally requiresthe political will to institute land reforms and extensive preparation in reviewingexisting laws. In addition, it is necessary to understand customary systems of landtenure, and eventually to integrate them with modern land titling systems, and todesign simple and efficient land titling and registration procedures. Governmentprograms to clarify land rights also will need to protect the rights and productivityof poorer groups, particularly poor women, who may depend on public or commonlands for foraging and firewood collection.

INFORMATION, EDUCATION, AND AWARENESS RAISING. Some marketfailures leading to environmental degradation result from a lack of information. Forexample, in the absence of information about the nature and extent of pollutionemissions by firms, local communities may be unaware of potential hazards andwhat can be done to reduce risks. Information and education can be effective toolsfor mobilizing affected parties, expanding knowledge about environmental andhealth conditions, and supporting environmental management decisions. Theyinclude public information campaigns, environmental assessment, environmentalmediation, geographic information systems (GIS), research and monitoring, andprofessional education and information exchange.

DIRECT PUBLIC INVESTMENT. This approach consists of direct publicinvestment to manage pollution and wastes to develop new technologies, guidedevelopment, or to serve the special needs of vulnerable populations and re-sources. Because of the high costs involved, direct public investment should bemade only in cases where other instruments are not feasible or sufficient forresolving the problems. Further, where direct investment is required the strategywill need to indicate potential funding sources. An effective means for identifyingand mobilizing financial support is to discuss the environmental strategy and actionplan with central ministries, national development banks, and external agencies(see Chapter 3).

19K


BOX 2.3 COSTS AND BENEFITS OF AIR POLLUTION

ABATEMENT IN SANTIAGO

To identify the most cost-effective of several air pollution control options for the

Santiago metropolitan region, a cost-benefit analysis was undertaken. In this study,

four control options were studied: emission standards used by vehicles using lighter

types of fuel; emission standards for trucks which use heavier fuels; emission

standards for buses using compressed natural gas; and conversion of wood-buming

industrial sources to distillate fuel oil. The following steps were taken to assess the

benefits of each option: a dispersion model was used to estimate improvements in

ambient air concentrations from emission reductions. Population-based measure-

ments were used to estimate exposure above acceptable ambient standards.

Dose-response measurements were used to estimate the health effects of the

control strategy. And a simple valuation (lost productivity) was used to estimate

health benefits in terms of lost workdays. Finally, the average daily wage was used

as an approximate monetary measurement of health benefits.

The study then compared the health benefits with the estimated control costs.

As shown in the table, a number of interventions had impressive benefit/cost ratios:

for example, fixed source measures would cost $9 million per year to implement

and would yield expected benefits of over $26 million per year. More importantly,

the study yielded a priority-setting scheme for pollutants, with which air pollution

control initiatives can be evaluated.

Because the estimated benefits are on the low side (only including health and

not other benefits such as damage to infrastructure or aesthetics), the study indicates

that the proposed control strategy is attractive on the basis of health benefits alone,

and would be even more attractive if other benefits are included.

Ratio of Benefits

Source Health Benefits Control Costs to Costs

Fixed sources 26.7 9 3.0

Gasoline-fueled vehicles 32.8 35 .9

Buses 36.6 18 2.0

Trucks 7.7 5 1.5

Control strategy 103.4 67 1.5

Source: World Bank (1994).

* 20

DEFINING PRIORITY ACTIONS dodology was recently applied in Santiago, Chile, to evaluate altemativeapproaches to pollution control (see Box 2.3). Where cost-benefit ratios forseveral alternatives are very similar, however, it will be necessary to useother criteria to select priority actions. Actions generating the greatest netsocial benefits should be selected first. The following steps may helpidentify priority actions.

ASSESS COSTS OF ACTION. Environmental control actions are normallycostly. To stop soil erosion, for example, farmers generally have to investin terracing, fallowing, or managing crop residues. Similarly, pollutionabatement often requires investments in filters, or changes in productiontechnologies. Estimating the costs involved in controlling or preventingenvironmental damage is usually simpler and less subjective than estimat-ing the benefits associated with such actions. The costs of controllingenvironmental damage are linked to known technological changes,whereas the benefits to the environment of certain actions may not becompletely quantifiable. Not surprisingly, while many national environ-mental plans present lists of potential projects with specific control actionsand their estimated costs, few include monetary estimates of expectedbenefits.

While quantitative cost-benefit analysis is the ideal tool for establishingpriority actions, it requires information that is frequently unavailable indeveloping countries, particularly estimates of benefits (or damagesavoided). Moreover, for certain types of impacts like the loss of biodiversity,where monetary estimates may be impossible, decisions have to be basedon other considerations. To deal with this situation in Sierra Leone andseveral other African countries, a qualitative cost-benefit analysis, usingexpert judgement to weigh the relative importance of environmental prob-lems, selected interventions, and overall priorities, was undertaken (Box 2.4).

COST-EFFECTIVENESS ANALYSIS. Lack of the data needed to performcost-benefit analyses may lead decisionmakers to make inappropriatedecisions, by choosing actions whose benefits do not justify their costs.While this pitfall is not unique to environmental management, the difficul-ties in placing monetary values on many environmental benefits oftenrequires the use of altemative approaches. Among the most useful of theseis cost-effectiveness analysis, which identifies the least-cost way to reach agiven objective independently of the level of benefits. Expert opinion,

21 -

m NATIONAL ENVIRONMENTAL STRATEGIES

BOX 2.4 PRIORITIZATION INDEX USED IN SIERRA LEONE

In Sierra Leone experts used three levels (high, moderate, and low) and three

criteria for classifying environmental problems. The three criteria were: environ-

mental significance, potential intervention benefits, and potential intervention

costs. An overall priority was then computed for each problem by multiplying the

environmental significance by the difference between benefits and costs.

Environmental Interention Intervention Overall

Problem signiflcance benefits costs priority

Water Contaminants High High Moderate High

Water Availability High High Low High

Living conditions

urban High High Moderate High

rural Moderate Moderate Moderate Low

Land degradation High High Moderate High

Deforestation Moderate High Low High

Forest degradation Moderate Moderate Low Moderate

Biodiversity loss Low High Low Moderate

Mangrove loss Low High Low Moderate

Pollution from mining Low Low Low Low

Land degradationfrom mining High High Moderate High

public views, and experience in other countries can all be used to help

identify cost-effective priority actions.

Cost-effective instruments are those which achieve a desired outcome at

the least possible cost. In preparing an action program to control air

pollution in Poland, for example, a study was carried out that compared

the costs of various instruments to meet emission reduction targets for

particulates, sulfur dioxide, and nitrogen oxides. The study concluded that

relying on pollution charges, as opposed to regulatory instruments, would

reduce the present value of control costs by 54 percent (approximately

US$7 billion) over a period of twenty-four years. Similarly, cost-effective-

ness analysis carried out in conjunction with a program to control vehicle

pollution in Mexico City indicated that retrofitting heavy vehicles, which in

developing countries often use contaminating fuels like diesel oil or un-

* 22


FIGURE 2.2 COST-EFFECTIVENESS IN CONTROLLING AIRPOLLUTION IN MEXICO CITY

Marginal cost of emission reductions(dollars per ton)

2,600

Fuel

2,100 impn-)x eent.

Emissionstandards l1,600 | \ , Passenger car, X

1,100 \ Taxis(replacement) St sirengthened

Gasoline \lns)ectLion

600 - . trucks \4 Inspection of I c600 ~~~Minibuses

100 Inpcion of high-use vehicles'l0

~~~~~Retrofitting (natural gas and LPG)l

-400Cumulative emission reductions 1.2 million

(million weighted tons) tons

Technical controls only

..-- . Controls, matched with gasoline tax

Welfare cost when tax is excluded

Note: Calculations are based on -0.6 elasticity of demand for gasoline.

Source. Eskeland (1994).

leaded gasolines, with natural gas was preferable to introducing a vehicleinspection system, even though at a later stage a vehicle inspection systemwould probably be more cost-effective (Figure 2.2).

Market-based policy instruments (see Box 2.2) may provide the least-costsolution to selected environmental problems, so they tend to be cost-effec-tive. Even though such instruments have only rarely been tested in devel-

23 .


oping countries, in some circumstances they are relatively easy to apply.

This is illustrated by the environmental strategies for Bulgaria, Egypt,

Nigeria, Poland and Romania, all of which recommend fuel price increases

as a cost-effective means of reducing air pollution. Other examples of

market-based approaches include:

* the environmental plan for Egypt which proposes that water be priced

at its real opportunity cost to encourage conservation and recycling;

* the Ghana NEAP that explores the possibility of introducing tradable

permits for controlling effluent discharges in the Korle and Chemu

lagoons; and

n the plan for Cyprus which proposes the use of transferable develop-

ment rights to conserve historical or cultural sites without depriving

their owners of development options or requiring payment of large

sums in the form of compensation.

WIN-WIN SOLUTIONS. In a number of situations, policies implemented

in particular sectors for reasons of economic efficiency will also lead to

substantial improvements in environmental quality. From an environmental

standpoint, this is a "free ride" situation. Examples of common "win-win"

situations include:

* removing subsidies that encourage an excessive use of natural re-

sources (e.g., fossil fuels, irrigation water, trees for logging, etc.),

and compensating low-income groups when necessary to ensure

productivity;

n clarifying property rights to promote better land management while

ensuring the productivity of low-income groups who depend on the

land for food and firewood; and

* accelerating the provision of clean water, sanitation, and im-

provements in public transportation, or introducing energy-efficient

technologies.

Among the "win-win" solutions, eliminating price distortions is particu-

larly desirable for several reasons: (1) such a policy usually reduces gov-

ernment expenditures and may generate additional budget revenues;

* 24

DEFINING PRIORITY ACTIONS d(2) the distributional implications are favorable as subsidies often favor therich; and (3) such a solution tends to be easier to introduce than trying outcompletely new instruments or developing new institutions. In many cases,however, introducing changes in the way private industries and othereconomic agents use resources or manage waste may require overcomingstrong vested interests and empowering those who stand to gain most fromthe changes (Box 2.5),

Administrative and Financial Feasibility

When deciding which policy instruments are appropriate for achievingparticular environmental objectives, in addition to their comparative cost-effectiveness, it is important to take into account the administrative capacityof the proposed implementing agencies. These will have to undertake thecomplex measures that are frequently involved in carrying out environmen-tal strategies, such as charging and collecting taxes and fees, monitoringfuel and gas emissions, or determining environmental impacts. Such actionsalso often require careful coordination between different governmentagencies. Because of its critical importance for effective implementation,this subject is further discussed in Chapter 3.

It is also necessary to ensure that proposed interventions are financiallyfeasible. Alternative ways of mobilizing financial resources to support theimplementation of environmental strategies are also examined in the nextchapter. Working out how to finance the costs of environmental protection,however, can raise important equity issues. Requiring private firms toabsorb the full costs of pollution abatement ("the polluter pays principle")shifts the burden from those who normally suffer from environmentaldegradation (often the poor) to those responsible for causing it (industry).Equity considerations, moreover, need to be carefully balanced with envi-ronmental objectives. In Mexico, for example, vehicle ownership taxeswere lower for older (more polluting) vehicles. While this policy favoredthe poor, it also perpetuated ownership of older vehicles, thereby exacer-bating air pollution.

Strategic Considerations

Several strategic considerations, finally, should be kept in mind whendefining priority actions to address environmental problems.

25 -

X NATIONAL ENVIRONMENTAL STRATEGIES

BOX 2.5 BUILDING CONSTITUENCIES FOR CHANGE

In all countries actions can be taken to address environmental problems that are

cost-effective, feasible and in the public interest. But such actions are often not

taken. Sometimes, this is because of weak institutions or inadequate data and

knowledge. In most cases, however, govemments do not adopt these measures

because they may impose costs on large segments of the population or on those

who can exert strong political pressure to maintain the status quo. Accomplishing

change requires overcoming vested interests and empowering those most ad-

versely affected by environmental degradation.

OVERCOMING VESTED INTERESTS. Stopping environmental degradation

often means limiting the actions of groups of industrialists, farmers, loggers, and

fishermen who may staunchly defend their right to pollute or exploit resources. By

removing subsidies and reallocating resources, politicians usually risk losing votes.

The only way to generate support from these constituencies, who usually will try

to block any measure that threatens their immediate interests, is to demonstrate that

the measure will ultimately benefit them, or that more costly measures can be

expected if the proposed action is not taken. Politicians themselves also need to

be aware of the financial and other implications of continued environmental

degradation. Ways of overcoming powerful vested interests include:

* Information. Infomiation can be a powerful tool for changing behavior. In the

United States, a "community right to know" law requires that reports from

individual firms on their toxic chemical emissions be disclosed to the public.

When senior corporate executives realized that this information was to be made

public, many began to give greater attention to the use and disposal of toxic

chemicals, leading to improvements in waste management. In Zimbabwe,

taking politicians to a drought-stricken region to witness the full extent of land

degradation induced them to support the development of a national conserva-

tion strategy.

* Negotiation and mediation. As illustrated by the French river basin commis-

sions, negotiation and mediation can be another effective way of balancing the

short-term interests of industrialists with the longer-term objective of environ-

mental quality. Govemments can negotiate with individual private firms to get

them to agree to reduce pollution by a certain amount over a given period of

time.

* 26


EMPOWERING LOCAL CONSTITUENCIES. Public enforcement of environmen-tal regulations often goes against the interests of politically influential groups. Soto help counterbalance the opposition it is necessary to empower people who aremost affected by the environmental degradation. Before exerting political pressure,the most affected groups must first understand the causes of their problems and beable to vocalize their concerns in the planning and implementation of environmen-tal improvements. The means for building support for environmental improvementinclude:

* Interest groups. Interest groups can be built from the bottom up or from thetop down. Using a grassroots approach, groups of concerned citizens can bandtogether to demand improvements in environmental quality, either from publicofficials, private corporations, or both. In some situations, both may occur aswas demonstrated in Olinda, Brazil where initial political patronage resulted inthe creation of a community organization that lobbied successfully for environ-mental change.

• Information. Programs providing information about risks and altematives tothose most affected by environmental problems can lead these groups toparticipate in the process of environmental management. Such programs mayalso encourage local self-help and small-scale initiatives to improve and protectthe environment, and promote innovations and local know-how in organizationand management. Creating awareness can also involve providing practicalinformation on alternative actions, implementing solutions, or enforcement andmonitoring. In all these cases formal and/or informal education programs canbe used.

* Public participation. Another means for building political support for envi-ronmental improvement is through public participation in environmental man-agement activities. Where there is no formal public participation in governmentoperations, other approaches have been used to stimulate public involvementin environmental management. For example, NGOs have focused on or beencreated to articulate community concerns about environmental problems. Con-sultations and town meetings have been used to discuss environmental priori-ties, constraints, and opportunities. A third approach is direct action throughpublic protest, legal action, or grassroots management.

27 -


BOX 2.6 INSTRUMENTS TO CONTROL AIR POLLUTION IN

EGYPT

The national environmental action plan for Egypt recognizes that air pollution is

the result of the actions of millions of vehicle owners and the operation of electricity

generation plants and industries. A regulatory approach can have only limited

success in affecting the actions of so many agents. Thus greater reliance needs to

be put on market-based incentives for operating more efficient vehicles and plants

using cleaner technologies and fuels.

To address atmospheric pollution caused by motor vehicles, the Egyptian NEAP

recommends: phasing out energy subsidies by 1995; introducing a tax on gasoline

after 1995; reducing lead in gasoline by making refineries produce unleaded

gasoline, by introducing differential prices, and by requiring gasoline distributors

in Cairo and Alexandria to supply unleaded gasoline. Other recommendations are:

that traffic management be improved; that urban mass transit be improved; that

lower import duties be imposed on vehicles that run on lighter fuels; and that more

fuel-efficient vehicles and vehicles having catalytic converters be produced.

To reduce industrial pollution the plan recommends: reducing the utilization of high

sulfur fuel by requiring new plants in urban areas to use fuel with sulfur content below

one percent, and by levying a tax on the amount of sulfur in fuel oil to encourage

desulfurization of heavy fuel; developing air emission policies by refining and

developing emission standards and means of enforcing them and improving zoning

of pollution industries; and developing public awareness of air pollution costs.

* Find the right mix of instruments. No single instrument can on its

own achieve all the required environmental objectives. In most cases,

as illustrated in the environmental plan for Egypt, it is necessary to

select an appropriate mix of instruments that matches the specific

characteristics of each problem, its locality, the people and enterprises

whose habits have to change, and that achieves the desired behavioral

changes. (Box 2.6).

* Use existing projects. Governments often find it easier and less costly

to use existing projects rather than start totally new environmental

programs, as, for example, when environmental measures are inte-

grated into ongoing agricultural or industrial development initiatives.

Indeed, if project development had to await the detailed preparation

* 28

DEFINING PRIORITY ACTIONS dof various plans and programs, proposals could be overtaken by eventsor environmental damage could become irreversible.

* Obtain quick victories. Environmental programs need to achievesome early success, however modest, in order to build confidence andcredibility. In Mali, for example, the government identified eight majorpolluting facilities next to the Niger River and issued an ultimatum toclean up their operations within three months or face closure. Thisdemonstrated the government's commitment to improved environ-mental control and helped generate public support for the nationalenvironmental plan.

29 *

CHAPTER 3

ENSURINGEFFECTIVEIMPLEMENTATION

Preparing environmental strategies on the basis of rigorous analysis andpriority setting will not by itself guarantee effective implementation. Expe-rience in both industrial and developing countries demonstrates that envi-ronmental improvement occurs when there is public pressure for changeand governments have the necessary commitment and capacity to respond.To ensure successful implementation, it is important for the strategicprocess to integrate environmental concerns with broader developmentobjectives, involve participation by key stakeholders, ensure well-function-ing institutions, mobilize the necessary financial resources, and includeprovisions for adequate monitoring and evaluation.

Integrating Environmental Objectives with BroaderDevelopment Goals

Environmental measures may be perceived as impediments to growthwhen they are not properly integrated into broader national developmentstrategies. This can occur when environmental entities establish objectivesin the absence of sufficient consultation with other government agenciesand the general public, thus limiting their effectiveness. In Poland, forexample, some environmental standards were set at more stringent levelsthan in the United States and Western Europe. Because compliance withthese standards was not economically feasible, the government's desire topromote a cleaner environment was frustrated. To avoid such situations,environmental goals need to be realistic and, wherever possible, linked tocost savings or increases in productivity. When top priority is given tomaintaining production and employment, any environmental strategy thatdoes not take these objectives adequately into account may not be effective.Similarly, environmental objectives should reflect the social and cultural

31 -


values of the affected populations. There are several ways in which envi-

ronmental and broader development concerns can be better integrated.

INCORPORATING ENVIRONMENTAL GOALS INTO SECTORAL

PROJECTS AND POLICIES. At the sectoral investment and policy levels,

environmental concems can be incorporated into project and program

design through environmental assessments. Although project-specific en-

vironmental assessments are now common in both industrial and develop-

ing countries, policymaking at the sectoral level still frequently overlooks

environmental considerations. In many sectors that are characterized by

significant environmental impacts (for example, transport, mining, energy

and agriculture), environmental concerns are often taken into account only

after key investment decisions have already been made.

Sectoral environmental assessments are one way of addressing this

problem. Such assessments offer an opportunity for sectorwide environ-

mental analysis before investment priorities are established and, thus,

directly support the incorporation of environmental concerns into long-

term development and investment planning. To date sectoral environmen-

tal assessments have been used mainly in investment programs that involve

multiple subprojects (Box 3.1).

ECONOMYWIDE POLICIES AND THE ENVIRONMENT. A second

approach involves assessing the impacts of economywide policies on the

environment. Many developing countries, for example, are presently un-

dergoing economic reforrns that are characterized by increased reliance on

market mechanisms. Because such measures affect the use of natural

resources, it is vital to understand the links between these policies and the

environment, and, when appropriate, to promote policies that enhance

natural resource conservation.' Some of the key linkages between eco-

nomic reform policies and the environment are summarized in Box 3.2.

Available evidence suggests that economic instability is not good for the

environment. It can lead to accelerated consumption and thus to more rapid

depletion of natural resources. Reforms aimed at stabilizing the economy

are a necessary condition for the achievement of environmental objectives.

1. For a more comprehensive treatment of this subject, see "Economywide

Policies and the Environment: Emerging Lessons from Experience" (World

Bank, 1994a).

* 32

ENSURING EFFECTIVE IMPLEMENTATION X

BOX 3.1 INDIA: ORISSA WATER RESOURCESCONSOLIDATION PROJECT

A series of water resources consolidation projects being planned by four stategovernments in India will facilitate efficiency gains in existing facilities. A sectoralenvironmental assessment approach is being used for these projects because notall activities will be fully defined at appraisal. The main environmental issuesconcern monitoring and management rather than impacts from new construction.

The first of these projects was in Orissa. Preparation of the sectoral environmentalassessment was divided into two phases. Phase 1, currently underway, focuses onthe institutional and legal framework of the water sector and includes the followingobjectives and tasks: (1) to assist in establishing an environmental group within theOrissa Irrigation Department's central planning unit; (2) to review the status ofenvironmental legislation and its applicability to the water resource sector ingeneral; and (3) to provide guidelines for the approach to and the preparation ofrequired site and environmental documents for various irrigation projects. Othertasks in Phase 1 are: providing training for the water resource sector and relatedgovernment staff in environmental assessment procedures, techniques and analy-ses; establishing the organization, staffing levels, responsibilities, operating proce-dures, and budgeting for a proposed environmental sector unit; and delineatingprocedures for interagency liaison.

The second phase will include preparation of case studies, long-term training inenvironmental assessment, preparation of monitoring plans for the irrigation sector,and upgrading of environmental monitoring facilities.

However they may not be sufficient. The impact of such reforms on theenvironment tends to be uneven, and difficult to predict. Even favorablepolicies may be environmentally harmful if market failures are not ad-dressed.2 Furthermore, instruments other than macroeconomic ones are

2. In Thailand, for example, a tax on fertilizers, which in most circumstances isenvironmentally beneficial by reducing excessive chemical use, may haveresulted in environmental damage because it encouraged extensive farmingand forest clearing on land where property rights were poorly defined. Althoughthe tax on the chemical fertilizer triggered the environmental problem, theunderlying cause of the problem was poorly defined property rights.

33 -


BOX 3.2 LINKS BETWEEN ECONOMIC REFORM POLICIES

AND THE ENVIRONMENT

The most important links between certain economic reform policies and the

environment include the following:

* Exchange rate policies. The effects of exchange rate policies on the environ-

ment tend to be ambiguous. In different contexts both overvaluation and

undervaluation can lead to overexploitation of marginal lands. Effects through

technological changes and cropping patterns depend on energy use and the

mix of labor and capital.

* Monetary policies. Elimination of certain direct credit policies and subsidized

interest rates, as well as financial liberalization, are often associated with better

environmental practices. For example, low-interest loans for cattle ranching in

Costa Rica and Brazil encouraged cattle ranching over crop production, leading

to the use of unsuitable land. In Thailand, credit policies relying on mandates,

quotas, and interest rate ceilings restricted access to formal credit and discour-

aged investment and intensive farming, and promoted land clearance.

- Fiscal policies. Taxation of natural resources, such as user charges, resource

rent taxes, excise taxes on energy and water, and elimination of tax subsidies

on natural resource use are part of broad economic reforms that can have

significant positive effects on natural resource use. For example, fiscal incentives

like tax holidays, investment tax credits, and export tax or import duty exemp-

tions in the Brazilian Amazon contributed to its occupation and extensive jungle

clearing.

* Public expenditure. Restraints on public expenditure have positive and neg-

ative effects. On the positive side, reductions in spending may reduce subsidies

normally more appropriate for achieving environmental objectives. For

instance, should there be evidence that an exchange rate devaluation may

be inducing farmers to overexploit their land, resulting in soil erosion, the

solution does not lie in altering the exchange rate, which would have broad

economic side effects. Rather more targeted instruments that directly influ-

ence rural land management practices should be utilized to promote better

soil conservation.

* 34

ENSURING EFFECTIVE IMPLEMENTATION d

for water, energy, and agricultural inputs, and thus induce resource conserva-tion. It also may reduce investment in new infrastructure that can have negativeenvironmental effects (for example, building new roads). But reductions inpublic expenditure also can have substantial negative impacts by providinginadequate supply, operation, and maintenance of infrastructure services thatprotect the environment or by providing inadequate monitoring and enforce-ment of pollution and land use controls.

* Pricing policies. Appropriate pricing of productive inputs (water, petroleum,chemical fertilizers, pesticides) reduces excessive use and is good for theenvironment. In the agricultural sector, however, pricing policies have ambig-uous effects. In Sudan, for example, authorities lowered gum producer pricesfor several years, causing farmers to sell gum trees for fuelwood. By contrast,lowering commodity prices can lead to less intensive land use and thus reducesoil erosion and use of chemical inputs.

. Private sector development Privatizing state-owned enterprises tends toimprove productivity and efficiency. Environmental improvements are often anadded benefit of this process, as enterprises seek to minimize energy, water,and other natural resource inputs. This synergistic effect can disappear, how-ever, when certain inputs are subsidized or when competition is lacking. Forexample, it is estimated that countries in Central and Eastem Europe could cutsulfur air emissions by 60 percent simply by adjusting energy prices to their marketvalue. Privatizing state-owned enterprises could improve efficiency even more, butprivatization in the absence of subsidy cuts would bring only modest gains.

Source: Nellor (1993)

Involving Key Stakeholders

Experience with the implementation of environmental plans is still veryrecent. However lessons from countries such as Ghana, Madagascar, andMauritius suggest that environmental strategies have a better chance ofbeing successfully implemented when a wide range of stakeholders fromthe public and the private sectors participate in their preparation. Such

35.


strategies are also likely to be more realistic, and to be based on a broader

range of knowledge, understanding, and commitment on the part of the groups

involved.3 Key stakeholders in the environmental planning process include:

* those who control implementation instruments (government);

* those who cause or are affected by environmental problems (industry,

the poor, etc.); and

* those who have relevant information and expertise (the scientific

community, international and local NGOs, the media, and so on).

Two important sets of stakeholders that are all too often excluded are the

ministries of finance and planning, on the one hand, and those causing

environmental degradation, on the other (for example, major land users or

industries and other polluters). Efforts should be made to include these

stakeholders in the strategy making process at an early stage precisely

because they are so important in achieving environmental improvements.

BENEFITS OF PARTICIPATION. Participation is a process through

which stakeholders influence and share control over the development

initiatives, decisions, and resources that affect them (World Bank 1994).

The experience of an increasing number of countries confirms the benefits

of stakeholder participation. In formulating environmental strategies, con-

sultation and other forms of stakeholder participation can bring the follow-

ing benefits:

* a broad base of knowledge and opinion on issues, tradeoffs, and

options in the limited time available;

* increased debate on and understanding of major issues both within and

among different groups;

* the possibility of addressing issues that cannot be identified, properly

defined, or dealt with by any other means-for instance, issues that

may change values or lifestyles or local conditions, or which may cause

poverty or other problems that are not immediately evident;

3. For more guidance on the participatory process, see Carew-Reid, et, al. (1994),

World Bank (1994c), and World Bank (1994d).

* 36

ENSURING EFFECTIVE IMPLEMENTATION d• definition of practical and realistic objectives, targets, and standards,

which are negotiated so that they are locally acceptable, meaningful,and implementable;

e building up commitment to the strategy on the part of the groupsactually involved in its preparation; and

a greater political credibility than for strategies that are essentially drawnup by technicians and bureaucrats, along with greater accountabilityand transparency (Carew-Reid et. al., 1994).

Although the involvement of a wide range of actors can ensure broad-based consensus on national environmental issues, the participatory ap-proach can be costly in terms of time, special skills, communications, andmanagement requirements. While formulation of national environmentalstrategies with minimal participation has taken as little as three to sixmonths, the more participatory exercises have required from 18 months to4 years. Despite this trade-off, effective participation by key stakeholdersin the early phases of environmental strategy making has been demon-strated to facilitate agreement during the later stages, as well as duringsubsequent implementation. And as illustrated by numerous World Banklending operations, even though extensive participation may raise theinitial cost of project design, it does not substantially affect the overall timebetween project identification and loan signing, while often substantiallyincreasing the chances of successful implementation. 4

4. The benefits of participatory approaches in lending operations are most oftenevidenced as improvements in the quality, effectiveness, and sustainability ofthe development effort. 7beAnnualReview ofEvaluation Results 1992, by theBank's Operations Evaluation Department listed borrower ownership andbeneficiary participation as two of the most important features of the 24lending operations classified as outstanding. Further, a statistical analysis of121 rural water supply projects in Asia, Africa, and Latin America, identifiedbeneficiary participation as the single most important factor in determiningoverall quality of implementation and the most important factor contributingto increased access and control over water resources. Participation alsoresulted in community members acquiring water-related and organizationalskills and strengthened community organizations, which went on to under-take other development activities (World Bank 1994c).

37.


MANAGING THE STRATEGY. Coordinating those involved in participa-

tory environmental stragety development can minimize some of the costs

associated with the potentially large number of actors involved. Countries

such as The Gambia, Uganda, and Sri Lanka have used such devices as a

lead agency, steering committee, and issue-specific working groups to

achieve this objective.

* Lead agency. The entity that most often assumes the main coordinat-

ing role in strategic environmental management activities is the na-

tional environmental agency or ministry. National environmental plans

are generally most effective when preparation involves the ministries

responsible for economic as well as environmental decisions. In Nica-

ragua, involvement of the Ministry of Economy as the coordinating

agency in the planning process, with technical support from other

ministries, raised the political status of the resulting document, which

was ultimately signed by the President as the country's official strategy

for the environment.

* Steering committee. Multi-agency steering committees provide guid-

ance on major policies and issues and can ensure effective coordination

among key players. They usually include relevant national ministries,

NGOs, and representatives of the private sector. In Uganda, for in-

stance, NEAP preparation involved a Cabinet-level Steering Committee

chaired by the Prime Minister and composed of twelve other Ministers.

Representatives from donor agencies may also be included when the

country intends to seek external funds for subsequent plan im-

plementation.

* Issue-specificworkinggroups. In preparing national environmental

strategies for The Gambia (Box 3.3), Nepal, and most of the Central

and Eastern European countries, working groups were established to

provide inputs on specific environmental issues (for example, air and

water quality, natural resources, urban environment). These groups

included consultants, local NGOs, and members of the academic and

scientific communities.

DEVELOPING A COMMUNICATIONS STRATEGY. Recognizing the

need for effective communication in identifying the concerns of many

stakeholder groups, Guinea launched a priority-setting process that in-

volved local NGOs, and a multi-media campaign to mobilize community

* 38

ENSURING EFFECTIVE IMPLEMENTATION dinterest. This experience showed that a communications strategy can bevital in terms of encouraging participation in environmental planning. Sucha strategy should focus on how to keep participants informed, ensure thatthe various stakeholders receive relevant documentation, generate feed-back, and determine the most appropriate media for the dissemination ofinformation.

Improving Institutional Performance

Without a clear legislative framework and effective institutions, well-con-ceived policies and actions to address priority environmental problemscannot be translated into practice. Most national environmental strategiesemphasize three key areas for improving institutional performance: (1)assigning clear institutional responsibilities; (2) establishing consistent andtransparent legislation; and (3) ensuring effective implementation capacity.

CLARIFYING INSTITUTIONAL RESPONSIBILITIES. Because envi-ronmental problems cut across sectoral boundaries and involve manydifferent agencies, clearly delineating institutional arrangements is crucialfor effective implementation. In establishing institutional responsibilities,therefore, many of the more effective strategies highlight the need to:

* Minimize opportunities for conflict. Nicaragua's NEAPdemonstrates the importance of ensuring that regulatory, monitoringand enforcement responsibilities are not placed in agencies where aconflict of interest exists. In the Nicaraguan case, the Ministry ofEnvironment regulates the fishing industry, the seasons when fishingis allowed, the overall catch, the locations for fishing and so on.However the Ministry of Economy, whose main responsibility is togenerate foreign exchange, enforces fishing regulations. The incen-tives for the Ministry of Economy to overlook any constraining regula-tions are clear.

• Clearly define the status and functions of relevant agencies. Indelineating institutional responsibilities, numerous environmentalstrategies have attempted to determine the appropriate division oflabor between national and local or provincial governments. Manyrecommend, for example, that minimum air and water quality stan-dards should be established at the national level because competition

39 .


BOX 3.3 PARTICIPATION IN NATIONAL ENVIRONMENTAL

STRATEGY MAKING

THE GAMBIA. When The Gambia prepared an Environmental Action Plan known

as GEAP it employed a highly participatory approach. The approach started with

a consultative workshop that focused on providing information about the environ-

ment, and identifying solutions to critical environmental problems. The workshop

was attended by government officials, nongovernment agencies, community rep-

resentatives, donor agencies, and representatives of the private sector. Two work-

ing groups were then formed to consolidate the findings of this workshop. Once

they had completed their task, a second workshop was organized to harmonize the

various reports and start work on priority interventions. These findings were

incorporated into the GEAP draft. At this point a further working group started to

examine the economic, policy, institutional, and legal instruments required for the

implementation of the GEAP, and again the plan was revised. The revised draft was

then reviewed by various groups including permanent secretaries, the secretary

general, and the head of the civil service. The final draft was approved by the

National Environmental Management Council and the cabinet.

NICARAGUA. When Nicaragua prepared an Environmental Plan a coordinating

team sought a consensus among key institutions and social groups. The team first

prepared background materials using documents, like the National Conservation

among states or municipalities in attracting industrial development may

lead subnational jurisdictions to adopt lower environmental standards.

In contrast, decisions regarding the provision of local environmental

services, such as solid waste collection, should be left primarily to local

governments. As highlighted in the Yemen strategy, however, decen-

tralization of environmental management responsibilities must be ac-

companied by adequate transfers of financial resources or revenue

raising powers in order to permit the proper delivery of these services.

* Ensure effective coordiaation among government agencies and

other actors. While individual agencies should carry out their own

specific environmental management responsibilities, some type of

organizational mechanism is generally needed to ensure effective

coordination. This requires empowering an agency with enough polit-

* 40

ENSURING EFFECTIVE IMPLEMENTATION

Strategy for Sustainable Development (NCSSD) and the Environmental ZoningPlan. In addition it used the Consulta Municipal, a consultative process launchedin 1991 when the country's Forestry Environmental Action Plan was devised. Onthis occasion, the consultation involved more than 1,400 representatives frommunicipalities where major problems and environmental priorities had been iden-tified. Based on these consultations, a second phase began. This involved preparing18 thematic reports, which were then integrated into a document summarizing themain causes and effects of environmental problems. Eighteen workshops involvingsome 300 government experts, academic institutions, and the private sector wereheld. Experts then prepared a policy framework and identified geographical andaction priorities, followed by selected consultations. Finally, all proposals wereintegrated. The coordination team organized various internal workshops to fill inany gaps, minimize duplications, and correct inconsistencies between the goalsand actions of the 13 sectoral plans and 5 intersectoral plans. This final stage wascritical for establishing and mapping priority actions and facilitating the necessaryinstitutional coordination for implementation.

Sources: Njie (1994) and Govemment of Nicaragua (1993)

ical status to coordinate policies and provide technical and politicalsupport to state, local, and sectoral agencies (Box 3.4).

ESTABLISH CONSISTENT AND TRANSPARENT LEGISLATION. Al-though the existence of environmental legislation does not, in and of itself,guarantee successful implementation of environmental strategies, its ab-sence usually results in failure. A critical element in environmental manage-ment, therefore, is to establish consistent and transparent environmentallegislation. Several national environmental plans highlight the need to:

* Promulgate transparent and flexible regulations to implementthe law. The laws that are already in existence may provide com-prehensive protection of the environment. Nevertheless, many coun-tries still need to lay down standards and regulations that support such

41 U

r NATIONAL ENVIRONMENTAL STRATEGIES

BOX 3.4 IMPROVING INSTITUTIONAL COORDINATION

CENTRAL AND EASTERN EUROPE. To increase interministerial coordination,

the Environmental Action Programme for Central and Eastern European Countries

recommends: (1) creating a Deputy minister or equivalent senior position for

environmental policy and regulations to focus on economic policy issues, strategy

development, and policy implementation; (2) designing task-oriented teams to

connect existing departments and to provide links between ministries; (3) setting

up cabinet-level committees to bring together the ministries of environment with

economic and sectoral ministries; (4) establishing temporary task forces of high-

level officials to prepare the work for these committees and to provide career and

other professional incentives to encourage participation; (5) designating staff from

the ministry of environment to participate in strategy development in sectoral

ministries and invite staff from those ministries to working groups in the ministry

of environment on relevant issues; and (6) creating the capacity within the ministry

of environment to evaluate policies and set long-term targets for key environmental

indicators. In Bulgaria specifically, the environmental strategy paper recommends

establishing a Supreme Ecological Council of Experts to ensure interministerial

coordination in addressing pollution control. Serving as an advisor to the ministry

of environment, the council's main functions include reviewing applications for

project support and reviewing work in research and development in pollution

abatement activities.

THE GAMBIA. The Gambia national environmental plan recommends upgrading

the environmental unit from the Ministry of Natural Resources into a semiautono-

mous unit in the office of the President. This change will give the unit greater latitude

and responsibility for environmental policy formulation, coordination, monitoring,

and regulation. The recommendation also specifies that the new unit will support

the sectoral ministries through technical working groups and a technical advisory

committee, but will not be responsible for project implementation.

laws. As demonstrated in the environmental strategies for Bulgaria and

Poland, it may be necessary to revise existing standards and regulations

where they are excessively stringent, unclear, or obsolete.

* Ensure the consistency of environmental laws and other laws

and incentives. Agents responsible for causing environmental degra-

dation often respond more readily to economic incentives than to

* 42

ENSURING EFFECTIVE IMPLEMENTATION drestrictive regulations. So, to be effective, environmental laws shouldnot conflict with incentives. In some cases, ensuring a lack of conflictbetween laws and incentives will require alterations in the latter. Fiscalincentives applying to cattle ranchers in the Brazilian Amazon in theearly 1980s, for example, encouraged the conversion of primary trop-ical forests, despite laws requiring that 50 percent of the total area inall agricultural and ranching establishments be left in forest. Only afterthese incentives were eliminated did deforestation decline.

BUILD IMPLEMENTATION CAPACITY. Many national, state, and localinstitutions in developing countries lack the necessary resources, incen-tives, and trained staff to carry out environmental management functionsproperly. In some cases, weak institutional performance reflects a lack ofpolitical commitment to environmental goals. To address these concerns,environmental strategies for countries such as Poland and Indonesia high-light the need to:

* Ensure political will. Political decisions are usually the responsibilityof those at the center. One way to ensure political will is to empowerpeople on the periphery and to facilitate their participation throughenvironmental education, awareness-raising programs, and the devo-lution of legislative and administrative responsibilities. The adoptionof transparent procedures, development of accountable institutions,and promulgation of legislation to effect devolution and associatedadministrative reorganization are essential.

* Match management responsibilities with funding and availableexpertise. Environmental management responsibilities should be as-signed only to those agencies that have the necessary funding andtechnical expertise to execute them. As discussed in the next section,financial resources may be obtained from the national budget, fromrevenues which are specifically raised for environmental purposes,such as those related to environmental services, and from externalsources.

e Create a system of incentives and penalties. Whether in the privateor the public sector, people need incentives to comply with environ-mental laws. For private polluters, the threat of fines and jail terms canbe a powerful incentive limiting environmental damage. Sanctions alsoneed to be applied to government agencies or state-owned companies

43 K

RI NATIONAL ENVIRONMENTAL STRATEGIES

when these cause pollution or when they do not live up to their

environmental responsibilities. In China, for example, environmental

protection agencies conduct annual inspections of environmental qual-

ity in each urban district. The National Environmental Protection

Agency is responsible for monitoring 37 major cities; other cities are

examined by provincial environmental protection boards. The perfor-

mance of the various cities is then compared, and the ten best and ten

worst cities are singled out for attention in the national media.

a Expand opportunities for private sector involvement. The pri-

vate sector-that is, community groups, local and international NGOs,

private firms, research institutes-can play a key role in developing

and implementing an environmental strategy. Community groups are

in a unique position to identify the most important local problems and

propose ways of addressing them. As pointed out in the national

environmental plans for Madagascar and The Gambia, for instance,

NGOs can play an important role by monitoring the performance of

government agencies, carrying out traditional public sector tasks when

this is cheaper and more efficient, and disseminating information.

* Ensure effectiveness of the judiciary. Although rarely acknowl-

edged in national environmental plans, weak enforcement systems

motivate polluters and other offenders to delay investment in environ-

mental improvement. A strong and efficient judiciary, therefore, can

help ensure timely and effective enforcement of environmental laws

and regulations.

Mobilizing Financial Resources

Implementation of environmental strategies requires the mobilization of

adequate financial resources. To be consistent with the "polluter pays

principle," domestic funding should come primarily from those responsible

for environmental degradation. However because the benefits of environ-

mental improvement often accrue to society at large, particularly the poor,

governments are often required to contribute to these expenditures through

general revenues.It is normally easier to raise domestic resources for national environment

strategies if the country's planning and finance ministries and main banks

* 44

ENSURING EFFECTIVE IMPLEMENTATION Uare involved in the strategy's preparation. In Brazil, China, India, Indonesia,Korea, Poland, Russia, and Thailand, for example, governments haveestablished national environmental or pollution abatement funds to chan-nel revenues from pollution charges, taxes, and other sources to priorityenvironmental investments (Box 3.5).

External donors can also be an important source of funding as demon-strated by the implementation of several national environmental plans.5Following the approval of the NEAP for Mauritius, for instance, a joint WorldBank-government team prepared an Environmental Investment Programfor the country. The program was presented at a donors conference in 1989,which raised over US$90 million. Although it took another two years toestablish a new institutional structure to implement the plan, Mauritius isnow mobilizing available funding and initiating priority actions. Otherinternational donor-supported operations to implement national environ-mental action plans include:

* Madagascar. Through an IDA credit, the Bank, together with severalbilateral aid agencies and various NGOs, is providing resources tofinance the first five-year segment of the national environmental actionprogram. Project components include protection and management ofbiodiversity; soil conservation, agroforestry, reforestation and otherrural development activities; mapping and establishment of a geo-graphic information system; defining clear boundaries for protectedareas and land titling; environmental training, education and aware-ness; and research on land, coastal, and marine ecosystems.

* Ghana. IDA, several bilaterals, and the Global Environment Facility(GEF) are supporting an Environmental Resource Management Projectderived directly from Ghana's NEAP. The primary objective of thisproject is to strengthen the capacity of both the government and theGhanaian population to better manage environmental resources, par-ticularly land, water, and coastal wetlands.

5. In cases where the global benefits of particular environmental interventionsclearly exceed domestic ones, moreover, international financing can berequested from the Global Environment Facility as well as from numerousbilateral sources.

45K0

U NATIONAL ENVIRONMENTAL STRATEGIES

BOX 3.5 ENVIRONMENTAL FUNDS

Environmental funds are established to finance pollution control investments or to

compensate victims of pollution-related injuries. The following are examples of

environmental funds in both industrial and developing countries.

JAPAN. A 1973 law provided for compensation of two classes of victims of

pollution-related injuries. Class I victims are those suffering from illnesses that

cannot be related to specific pollution sources and Class II victims are those

suffering from specific pollution-related illnesses. While Class II victims are directly

compensated by the companies responsible, compensation for Class I is financed

with a pollution levy paid into a fund administered by the Pollution-Related Health

Damage Compensation and Prevention Association. The association also adminis-

ters a US$500 million fund to finance air pollution control, with polluting industries

contributing 80 percent and the government 20 percent of the capital.

KOREA. The Environmental Pollution Prevention Fund is financed from govern-

ment contributions and from fines (or pollution charges) levied on firms found to

be exceeding emission standards. The fund, which was established in 1983, is

administered by the semipublic Environmental Management Corporation. The

fund's resources are used to provide long-term, low-interest loans for pollution

control investments and to compensate pollution victims.

* The Gambia. The goal of the IDA-funded Capacity Building for

Environmental Management Project for the Gambia is to strengthen the

National Environmental Agency and other relevant institutions to en-

able them to implement the country's environmental plan. Through the

project, these agencies will develop a system to ensure full integration

of environmental concerns into the social and economic development

process.

* Kyrgyz Republic. Preparation of the environmental plan by a joint

Kyrgyz-World Bank team has already resulted in pre-identification of

a potential regional GEF biodiversity project as well as an environmen-

tal and water supply and sanitation project for the Republic. When

approved, the NEAP is expected to provide the donor community with

a framework for action.

* 46


THAILAND. In October 1991 Thailand launched an environmental fund with aninitial capital contribution by the government of about US$200 million. If a pollutiontax is introduced, it could become a major source of additional revenue for thefund. The proceeds are used to assist small-scale enterprises with investments inpollution control technologies.

INDONESIA. A pollution abatement fund was established to provide US$300million to banks for on-lending to companies investing in pollution control equip-ment or hiring environmental consultants.

POLAND. The national environmental fund finances the bulk of environmentalinvestments. Sources of revenue for the fund include air pollution charges, waterpollution charges, water use charges, and waste charges. The funds are allocatedthrough grants and interest-free and other soft loans to support air and waterpollution control and other environmental management-related purposes (soilprotection, monitoring, education).

Source: O'Connor (1994); Lovei (1994)

Monitoring and Evaluation

National environmental strategies need to be continuously updated andrefined to reflect new information and changing environmental conditionsand priorities. In this way, the planning and implementation of key actionscan be adjusted to address emerging issues before they become too costly.The Kyrgyz NEAP, for example, highlights the importance of monitoringand evaluation by incorporating follow-up steps to ensure that the plan willbe periodically revisited and updated. For this purpose, a small im-plementation office is being set up to undertake monitoring and evaluationas well as to provide a link between NGOs and the government, developtraining activities, and coordinate donor programs in the country.

In carrying out monitoring and evaluation, a key question is how tomeasure progress in reaching environmental objectives. Many countries

47 -


have developed indicators, such as those describing the state of the envi-

ronment in terms of pollutant concentrations or land area affected by

erosion, although these indicators are not directly linked to policy goals. A

recent trend has been the development of performance indicators (Box 3.6)

which can provide essential information on progress in priority sectors.6

To support routine monitoring, countries need to include provisions in

their environmental strategies for the collection and processing of environ-

mental performance-related information. Since new data gathering can be

both time-consuming and costly, many countries rely initially on existing

sectoral data, adapting it where possible to serve environmental manage-

ment needs. As priority information requirements are identified during

strategy implementation, efforts can be directed toward expanding the

country's data base.

Environmental data can also be used to help integrate economic and

environmental issues within the broad context of policymaking for national

development. The depletion of minerals and fossil fuels, the unsustainable

use of natural resources like fisheries and forests, and the erosion and

degradation of soils should all be viewed as the liquidation of national

economic assets. This approach to resource accounting attracts the atten-

tion of ministries of finance and planning, as well as environmental agen-

cies, and helps link resource issues to the broader economic policy agenda.

This connection is strengthened by newly developed economic indicators,

particularly measures of national savings that account for depletion and

degradation of environmental resources.

Finally, monitoring and evaluation are essential tools for the reformula-

tion of national environmental strategies and action plans. As illustrated by

the recent update of the environmental strategy prepared for Bulgaria in

1991-92, monitoring and assessing performance in relation to the objectives

and priority actions established in the original document was a key step in

its revision. Among the interesting findings of this review was that, even

though environmental quality had improved in general over the past 3 to

4 years, this was due at least as much to an overall decline in national

economic activity, accompanied by a drop in energy consumption, as to

implementation of the initial strategy, which has been carried out only in

6. For one recent effort to develop environmental performance indicators at the

national level, see World Bank, Monitortng Enutronmental Progress, April

1995.

* 48


BOX 3.6 PERFORMANCE INDICATORS

Performance indicators compare how actual measures of environmental quality,such as levels of suspended particulates in ambient air, relate to the targets orobjectives established in standards set by policymakers. For example, the concen-tration of suspended particulates can be compared to the levels recommended byWorld Health Organization guidelines. Although performance indicators are notroutinely used in developing countries, some industrial countries have incorpo-rated them into their pollution control programs.

For example, relative to the official goal of 100 for the year 2000, the Dutchperformance indicator for eutrophication shows an improvement from 332 in 1987to 287 in 1991; deposition of acidic compounds (sulfur dioxide, oxides of nitrogen,ammonia) fell from 242 to 171 during the same period. In aggregating performanceindicators to derive a composite measure of national environmental quality, theDutch give equal weight to each component; other countries use a weighted systemto aggregate indicators. For example, using the Dutch method, overall environmen-tal pressure fell from 219 to 195 between 1987 and 1991 (reaching all goals wouldput the indicator at 100). This average annual decline of nearly 3 percent isimpressive against a backdrop of real GNP growth averaging 3.8 percent a year,but less than the declines of nearly 7 percent per year required to reach the country'snational goal for the year 2000.

part. Noteworthy progress was nonetheless observed with respect to thedevelopment of environmental legislation and regulations, the strengthen-ing of environmental institutions, environmental monitoring, and the es-tablishment of mechanisms for funding environmental protection.

49 .

III

I

I

II

I

II

CHAPTER 4

FUTUREAGENDA

National environmental strategies and action plans are increasingly ac-cepted as part of an integral process of linking environmental managementwith economic growth. Much has been learned over the past decade, andthe broad outlines of the future agenda are now clearer. A major challengeover the next few years will be making the transition from successfullycompleting national environmental strategies to actually implementingtheir recommendations. The longer-term aim is nothing less than the fullincorporation of environmental concerns into national economic develop-ment to create truly environmentally sustainable development.' China is inthe lead in this process in terms of coordinating various initiatives andinvolving appropriate agents (Box 4.1).

Next Steps

With the number of plans and planning requirements continuing to grow,available resources of both donors and developing countries are stretchedto the limit. Future strategic environmental efforts therefore need to focuson improving the efficiency and effectiveness of implementation, and onavoiding duplication and inconsistency in environmental initiatives. As

1. In the wake of UNCED and other initiatives the international communityincreasingly recognizes the importance of plans for sustainable development.These plans generally try to integrate economic, social, and environmentalissues under a consistent framework. Although they are much broader inscope than national environmental strategies, environmental strategies can beused as a starting point for preparing sustainable development plans.

51-

rnNATIONAL ENVIRONMENTAL STRATEGIES

Box 4.1 TOWARD SUSTAINABLE DEVELOPMENT PLANS:

THE CHINESE EXPERIENCE

China has actively embraced environmental strategy making and has produced

both a NEAP and an Agenda 21 Action Plan. The NEAP was jointly produced by

the National Environmental Protection Agency (NEPA) and the State Planning

Commission (SPC), and was reviewed and extensively discussed with all sectoral

ministries, the Chinese Academy of Sciences, and researchers from several of

China's leading universities. At the political level, the NEAP was finally approved

by the State Council. For the first time all of China's environmental issues, objectives,

programs, and policies were laid out in one document, thereby greatly increasing

government and public awareness of environmental issues, and providing monitor-

able indicators to review progress. The Chinese NEAP focuses on: (1) identifying

major environmental problems and priorities in each sector (and the institutions

responsible for implementation, institution building, training and public educa-

tion); (2) selecting priority areas such as urban and water resource issues; (3) fixing

specific environmental objectives to be accomplished by the year 2000 ; (4)

proposing policies and measures needed to realize these objectives; (5) estimating

funding requirements and possible funding sources; and (6) providing a focal point

for international cooperation.

In addition to the NEAP, China recently produced an ambitious Agenda 21 Plan,

the first country to do so after the UNCED Conference. Prepared by the State Science

and Technology Commission and SPC, with inputs from other agencies and funding

from UNDP, China's Agenda 21 Plan supplements the NEAP by placing a greater

emphasis on integrating environmental sustainability concerns into economic and

social development plans.

A large number of Chinese organizations, largely governmental but also involv-

ing some non-governmental groups, were involved in preparing both documents.

Both also led to a big increase in publicity on environmental matters on Chinese

radio, television, and in the press. The plans contain many innovative projects and

policy recommendations that, if implemented, can form the basis of more environ-

mentally sustainable economic development in China.

suggested in Chapter 3, learning from the implementation of environmental

plans and improving coordination, both within the country and among

external donors, will be key tasks for the immediate future.

* 52

FUTURE AGENDA dLEARNING FROM IMPLEMENTATION. Many countries have com-pleted the first generation of national environmental plans. Most of theseare still in the early stage of implementation. However by monitoring theplans' progress governments can learn how to implement them moreeffectively and revise existing strategies as necessary. It will also be import-ant for govemments to ensure that environmental strategies and othernational initiatives are consistent. This paper provides guidance to policy-makers for improving the formulation of future national environmentalstrategies. But additional guidance will be needed for designing environ-mental programs and determining how donors and multilateral agenciescan best support the implementation of environmental strategies.

IMPROVING COORDINATION. An increasing number of agents arebecoming involved in environmental management: national governments,bilateral agencies, the multilateral development banks, the UN system, theprivate sector, and national and international NGOs. To reduce the possi-bilities of duplication or inconsistencies, opportunities for improved coun-try-international donor coordination should be explored. Thiscollaboration should focus on two key areas:

• Establishing a donor coordinating mechanism. A mechanism isneeded to reach agreement on broad guidelines and, after this, toimplement collaborative measures. One approach would be to form a"learning group" involving a small consortium of international agen-cies, major bilateral donors, recipient countries, and NGOs. The mainpurpose of this group would be to exchange information about variousenvironmental or sustainable development planning initiatives and toserve as an informal clearinghouse for coordination, collaboration, andinformation gathering and dissemination.

• Increasing donor assistance for plan implementation. A clearpriority is to increase donor assistance for environmental projects andother improvements recommended in national environmental strate-gies and action plans. In financing these initiatives, donors and lendersshould ensure that the projects are consistent with the plan. Theyshould not duplicate the investments of others. And they shouldestablish monitoring and evaluation systems with clear performanceindicators, ensure adequate support for supervision of the plan, includeprovisions for incorporating lessons learned during implementation,

53 K

X NATIONAL ENVIRONMENTAL STRATEGIES

and arrange periodic workshops to review issues and provide feedback

to the planning team.

The Future of Environmental Strategies

The main focus of environmental strategy making to date has been at the

national level. Many of the processes and methodologies by which national

environmental strategies are prepared or revised are reflected in the ana-

lytical approaches and methods discussed in this paper. The use of bene-

fit-cost analysis where possible, and cost-effectiveness analysis when

benefit estimates are not available, strengthen the analytical process. As

more is leamed about environmental strategies and their effective im-

plementation, the emphasis will increasingly be on integrating the environ-

mental dimension into the broader process of national economic growth

and development. Over time, formal national environmental plans may no

longer be required if these concems are incorporated into sectoral plan-

ning. In addition as the capacity of countries to estimate the monetary

benefits and costs associated with environmental impacts grows, so the

inclusion of these considerations in the normal process of national devel-

opment planning will become easier. In the future environmental strategies

will be increasingly formulated at the subnational and intemational levels,

while strategies at the national level will increasingly consider global issues.

IMPROVING ENVIRONMENTAL MANAGEMENT AT THE SUB-

NATIONAL LEVEL. As environmental planning is consolidated at the

national level, attention will shift to the need to strengthen environmental

decisionmaking at the provincial and local level. Subnational environmen-

tal strategy formulation, often supported by extensive public participation,

is playing an important role already in many countries. Especially in larger

ones such as Brazil, China, India, Indonesia and Russia, national strategies,

while useful for identifying major environmental issues and proposing

general solutions, are poorly suited for addressing the specific problems

found at the provincial or state and local levels. This is not surprising

considering the tremendous natural diversity in these countries, where

individual provinces may be comparable in size and complexity to major

European countries and have populations of 30 to 50 million or more. In

such cases, there is a clear need to develop subnational environmental

strategies that are consistent with national priorities. In a growing number

of countries urban environmental problems are also beginning to be

* 54

FUTURE AGENDA daddressed by plans defined at municipal or metropolitan levels. Thesedevelopments ought to be encouraged.

ADDRESSING MULTINATIONAL ENVIRONMENTAL PROBLEMS.At the other extreme there is a growing awareness that to address trans-boundary issues adequately, and to further raise consciousness aboutenvironmental problems at an international level, environmental analysesand strategies covering groups of countries need to be undertaken. At thevery least, multi-country environmental studies help to focus attention onproblems that are shared by several countries, and promote an exchangeof information and the discovery of potential solutions. The Central andEastern European Environmental Action Programme mentioned in previ-ous chapters is a good example of how countries can work together todevelop a common framework for environmental priority-setting. At theWorld Bank, broad environmental strategies have also recently been pro-posed for Asia, the Middle East and North Africa to serve as inputs intonational strategy making processes within these regions. Environmentalaction plans involving different groups of countries have also been devel-oped around important international waters such as the Mediterranean,Baltic, and Black Seas,

ADDING THE GLOBAL DIMENSION. Even though they are compara-tively minor contributors to global warming and ozone layer depletion atpresent, developing countries house the most extensive sources ofbiodiversity, occupy the largest land and coastal areas and contain most ofthe world's population. Moreover, they are signatories of numerous agree-ments and treaties to protect global environmental resources. Against thisbackground, developing countries should rightly continue to apply theirlimited resources to solve environmental problems that pose the mostsevere threats to national development. However, in many instances,successfully tackling domestic problems will also contribute to the solutionof global problems. For example, arresting deforestation, soil degradationand the destruction of mangroves and coastal resources-all of which canhave major global impacts-are often ranked high on the environmentalagendas of developing countries. Similarly, reducing urban air pollutionand designing more energy efficient cities can reduce carbon dioxideemissions and thus slow global warming. Beyond this, developing nationsshould attempt to integrate global concerns into national environmentalpolicies to the extent possible, as a number of countries are alreadybeginning to do.

55 -


Making Development Sustainable

Although there is no clear consensus as to what constitutes sustainable

development, achieving this objective is likely to become increasingly

possible as more is leamed from the growing intemational experience with

national environmental management. As highlighted throughout this re-

port, successful environmental strategies appear to depend on three key

elements: identifying priority problems, defining realistic priority actions,

and creating the conditions for effective implementation. When supported

both by careful analysis and active public participation, along with strong

political will, it is possible to devise and implement environmental strate-

gies that go a long way toward the goal of sustainable development.

* 56

ANNEX 1

National Environmental Strategies and Action PlansReviewed

Albania, National Environmental Action Plan, July 1993.

Arab Republic of Egypt, Environmental Action Plan, May, 1992.

Bangladesh, National Environmental Management Action Plan, Septem-ber, 1994.

Benin, Plan D'Action Environnemental, May 1993.

Bhutan, Seventh Five Year Plan, 1992-1997, Vol. I, Main Plan Document.

Botswana, National Conservation Strategy, December 1990.

Bulgaria, Environmental Strategy Study, 1992.

Burkina Faso, National Environmental Action Plan, August 1991.

China, Environmental Action Plan of China 1991-2000, August 1993.

Cyprus, Environmental Review and Action Plan, March, 1993.

Czech and Slovak Federal Republic, Joint Environmental Study, January, 1992.

Dominican Republic, Environmental Issues Paper, July 1993.

Fiji, The National State of the Environment Report, 1992.

Ghana, National Environmental Action Plan, Vol. I, 1992.

Guinea-Bissau, Towards a Strategic Agenda for Environmental Manage-ment, April, 1993.

Honduras, Plan de Accion: Ambiente y Desarollo, June 1993.

Hungary, Environmental Strategy Study, 1992.

India, Environmental Action Programme, 1993.

Iran, Environment Strategy Study, 1994.

57 -

rnNATIONAL ENVIRONMENTAL STRATEGIES

Kyrgyz Republic, National Environmental Action Plan, March 1995 (draft).

Lesotho, National Environmental Action Plan, June 1989.

Madagascar, Plan D'Action Environnemental, July 1988.

Maldives, UNCED and 1989 EAP (accepted as EAP).

Mauritius, Economic Development with Environmental Management

Strategies for Mauritius, November, 1988.

Nepal, Environmental Policy and Action Plan, June 1993.

Nicaragua, Plan de Accion Ambiental, May 1994.

Nigeria, Towards the Development of an EAP for Nigeria, December, 1990.

Pakistan, The Pakistan National Conservation Strategy with Attachments,

July 1993.

Philippines, Philippine Strategy for Sustainable Development: A Concep-

tual Framework, January 1990.

Poland, Environmental Strategy, 1992.

Romania, Environmental Strategy Paper, 1992.

Rwanda, Strategie Nationale de L'Environnement au Rwanda, October

1991.

Sao Tome and Principe, Country Economic Memorandum and Key Ele-

ments of an Environmental Strategy, June, 1993.

Seychelles, Environmental Management Plan of the Seychelles, 1990-

2000, Vols. I&II.

Sierra Leone, Initial Assessment of Environmental Problems, February, 1994.

Sri Lanka, National Environmental Action Plan 1992-1996, October, 1991.

The Gambia, The Gambia Environmental Action Plan 1992-2001, May, 1992.

Tunisia, Country Environmental Study and National Action Plan, 1989.

Uganda, National Environmental Action Plan, 1994.

Yemen, Toward a National Environmental Action Plan: Strategy Paper,

1994.

Yugoslavia, Environmental Strategy Paper, 1991.

* 58

ANNEX 2

Environmental Policy Instruments:Illustrative Applications

59.0

ENVIRONMENTAL POLICY INSTRUMENTS: ILLUSTRATIVE APPLICATIONS

Instrument Description Application

Regulatory Instruments

Ambient Standard Establishes the highest allowable Brazil. Ambient water quality standards cover a range of pollutants and characteristics including

concentration of specified pollutants oil, solids, fecal coliform, dissolved oxygen, and various toxic substances. State government

in the ambient air and water agencies, which have jurisdiction over state waters, designate the principal uses and of specific

segments of streams and water bodies. In some states (e.g., Rio de Janeiro) supplemental

standards exceed federal maximums.

India. A use based classification of river stretches provides the pre-requisites for setting water

quality goals. Any river stretch may be subjected to one or more uses such as irrigation, drinking,

industry, power generation, fisheries, and wildlife propagation. The designated best use, requiring

the highest quality of water, is then marked on an official water use map with the degree of

treatment required for all discharges.

United States. The states are responsible for establishing ambient water quality standards. The

standards are set for designated uses for the water and identify the maximum concentration of

various pollutants that would not interfere with that use.

Effluent Standard, Establishes legal ceiling on the total Brazil. Effluent limitations and equipment requirements are negotiated largely on a case-by-case

Emissions Standard quantity or concentration of a basis between state environmental agencies and polluters. These emissions limitations and

pollutant discharged from a pollution equipment requirements subsequently become part of construction and operating licenses. To

source reduce automotive air pollution, the vehicle air pollution control program defines phased and

increasingly rigorous emissions limits and standardized emissions testing procedures for all new

gasoline-alcohol- and diesel-powered engines in automobiles, trucks and buses. The required

reduction of automobile exhaust emissions would occur in three progressively stringent stages. As

part of the vehicle air pollution control program, state and local governments are authorized to

implement inspection and maintenance programs to verify the effectiveness of the vehicle

emission control devices.

Turkey. The Izmir Water and Sewerage Authority monitors and controls effluent from about 450industries which have been analyzed and placed into categories according to their respectivelevels of pollutant dischargers. The discharges must conform to standards covering suchparameters as BOD, COD, ph, temperature and heavy metals. Once violations are detected, IZSUinforms the municipality which can take legal action to fine or close the plant (a grace period isallowed if the company can provide evidence of an investment in pre-treatment). The threat ofclosure, usually brought about under a parallel public health ordinance often brings results.

United States. All municipal and industrial point sources of pollution are subject to effluentlimitations as required by the Clean Water Act. The best practicable technology (BPT) limitationsfocus on conventional pollutants(i.e. BOD, dissolved oxygen, suspended solids, metals) and takeinto account such factors as age of equipment, facilities involved, process employed, processchanges, engineering aspects of control techniques, environmental impact, and the balancebetween total cost and effluent reduction benefits. The more stringent best available technology(BAT) limitations apply to toxic substances. In addition, EPA issued water quality criteria for over115 pollutants which recommend ambient levels for pollutant and provides guidance to states forestablishing water quality standards. Municipal discharges must comply with secondary treatmentrequirements. Industrial dischargers must comply with pre-treatment standards for discharginginto municipal treatment plants.

Performance Standard Type of effluent standard that defines United States. New Source Performance Standards (NSPSs) are the most important controls overa performance measure (e.g., volume stationary sources (e.g., factories, power plants, refineries). They set maximum emissions for newor concentration of a pollutant in a or extensively modified facilities which are major polluters with emissions levels determined bydischarge, percent pollution removal the 'best technical system of continuous emissions reduction.to be achieved)

.N


Product Standard Establishes legal ceiling on the total Belgium. Belgium requires the biodegradability of certain agents in detergents to be equal or

quantity or concentration of superior to 90 percent and the sulphur content of fuels not exceed one percent.

pollutants that can be discharged intoenvironment per unit of product Hong Kong. The use of heavy fuel oil has been banned since July 1990. Consequendy sulphur

output (e.g., kg per 1,000 kg of dioxide emissions have been reduced by 80 percent. Easily enforced, the ban requires only that

product). This type of standard also inspector check a factory's fuel tank; violation carries a threat of a six-month prison term.

can prohibit the addition of certainsubstances to products Italy. Only those fuels whose viscosity and sulfur and volatile substances content fall within certain

limits may be used for domestic heating.

Process Standard Limits the emission of pollutants Japan. Mandatory replacement of mercury cells by diaphragm cells is required to prevent mercury

associated with specific emissions from chlor-alkali manufacture.

manufacturing processes

Land Use Regulations Primarily local government Germany. Land use planning authorities are responsible for supervising and preventing the

(zoning, subdivision instruments for regulating land use. installation of polluting factories colse to protected areas. For over 200 categories of firms, there

regulations, building Zoning refers to the division of a are minimum distances of new developments of between 50 and 1,500 meters according to their

codes) municipality or other jurisdiction into effect on adjacent residential areas.

districts (or zones) in which certainuses are permitted and others are not. Guatemala. To protect the historic district of Antigua, the government designated the city as an

Zoning also establishes allowable historic district and established height limitations, advertising controls, and other regulations on

heights of buildings and other building material, lighting, and new additions. Despite numerous violations, the city has

structures; minimum lot sizes; maintained its historic character largely due to the application of a workable system of permits and

minimum setback from the street or building inspections as well as the availability of local expertise to assist owners of historic

property lines; and density of buildings in meeting their requirements.

development. Specific types ofzoning relevant to managing sensitivelands and cultural resources include:agricultural zoning, floodplainzoning, wetland zoning, historic areazoning, overlay zoning

Subdivision regulations govern the Korea. Over 20 years ago, the government of Korea established a Green Belt around the Seoulprocess of converting raw land into capital region. Its purposes are to prevent urban; sprawl, preserve ample space for future uses (forbuilding sites by controlling physical example, environmental protection, preservation of lands for recreational and cultural facilities,layout (lot size, width, length of protection of water supply sources); and to contribute to national defense. The Green Beltstreets, adequate space for public encompasses 5,397.1 square kilometers covering 34 cities and 36 counties of 14 major urban areas.services, etc.). Although this control has been considered to be effective, its continued application poses severalproblems. For example, when the Green Belt was designated, the areas 100 meters above sea levelBuilding codes control the materials were uniformly selected, with many places awkwardly designated. In some extreme cases, theused for constructing new buildings designation boundary line passes through houses and buildings without any changes during theand the manner in which they are past 20 years. In addition, there are 3,346 small towns and villages where the residents cannot fullyconstructed. exercise their property rights. In these areas, there have been protests from 1.24 million residents,refusal to issue new building permits, and overall control without any consideration of the presentsituation. Other problems associated with the Green Belt is chronic congestion and high landprices in the capital region.

United Kingdom. Local authorities can designate all or parts of their areas as Smoke Control Areas,in which it is an offense to emit smoke. In these areas, only authorized fuels may be bumed inexempted appliances capable of buming without smoke. Local authorities also can determineheights of new chimneys or chimneys for extension to existing furnace capacities. Further,permission from development of all kinds must be obtained from local planning authorities.

0U

.J

', Instrument Description Application

Land Use Regulations United States. Some local govemments use planning and/or zoning regulations to protect ground

(continued) water. Specific instruments include minimum lot size requirements, rezoning industrial land to less

intense residential use, restrictions on density of septic requirements, rezoning industrial land to

less intense residential use, restrictions on density of septic systems, zoning overlay districts which

encompass zones of contribution to existing and future supply wells, and protective zones around

aquifer recharge or wellhead areas where ground water is most vulnerable to contaminants. some

regulatory authorities have designated wellhead protection zones (i.e., surface and subsurface

areas surrounding a drinking water well or wellfield supplying a public water system). To ensure

that contaminants do not enter these sensitive zones, authorities impose a mix of control

mechanisms. To protect wetlands, a conservation overlay district can specify minimal protection

for various types of wetlands. In North Carolina, for example, New Hanover County's conservation

overlay district establishes the amount of wetland area that can be developed based on specific

types of wetlands. If a parcel contains a swamp forest of at least 2.5 acres, at least half of the area

cannot be developed. Other types of wetlands are assigned 'conservation space factors" (that is,

amount of undevelopable area on a particular parcel. For example, a fresh marsh area with a

minimum area of one acre has a conservation space factor of .8 and a natural pond must be

completely preserved (conservation factor of 1.0). Overlay historic districts can permit the uses

and densities permitted in the underlying zone, but require that structures within the historic

district be built or maintained in conformance with regulations to ensure historic compatibility.

(Mantell et al. 1990).

Shoreline Exclusion Regulations that prohibit or Costa Rica. The jurisdictional area of Costa Rica's shoreline restriction is a 200-meter wide marine

or Restrictions substantially limit certain uses and terrestrial zone divided into two components: the 'zona publica," which extends inland 50

within a strip or ban in the meters from mean high tide or the inland limit of the wetlands and the upstream limit of the

coastal zone estuaries as defined by salt or tidal influence, and the "zona restringida," which covers the

remaining 150 meters inland. The zona publica is devoted to public use and access; commercial

development is generally prohibited (except for sport fishing installations, port installations, and

their infrastructure). In the zona restringida, development is controlled by a permit and

concessions system based on a detailed regulation plan formulated at the local level of

govemment.

Local Ordinance Local regulations directed at specific China. The Beijing Govemment issued a decree banning the construction of skyscrapers in the(historic preservation environmental issues. For example, city center because they threaten the city's style as well as historic and cultural features. Theordinance, slope- historic preservation ordinances govemment also imposed height restrictions on new buildings located near ancient buildings anddensity) establish a process for designating streets. The success of these measures has encouraged other similar decrees throughout thehistoric properties and districts and country.for reviewing alterations to and thedemolition of, designated historic Pakistan. The Lahore Development Act of 1975 allows the Lahore Development Authority toproperties. In designated districts, declare a controlled area to regulate building activity. The Punjab Special Premises Ordinance ofthey establish procedures and 1985 allows any premises to be declared govemment property if it is of public value (includingstandards to ensure that alterations historic or cultural value) and requires compensation to the owner. This ordinance appliesand new construction are compatible specifically to the protection of 19th and early 20th century buildings.with the historic character of thedistrict

Permit Licenses and permits are issued to Sri Lanka. To protect coastal areas, the Govemment requires a permit for all developmentapproved facilities to ensure activities (that is, any activity likely to alter the physical nature of the coastal zone in any way andenvironmentally safe waste and/or includes the construction of buildings and works, the deposit of wastes, or other materials fromland management practices outfalls, vessels or by other means, the removal of sand, coral, shells, natural vegetation, seagrassor other substances, dredging and filling, land reclamation and mining, or drilling for minerals)within a 300 meter coastal zone.

United Kingdom. The Control of Pollution Act of 1974 authorized a comprehensive licensingsystem for the disposal of wastes over and above existing planning controls. The act makes it anoffense to deposit household, commercial, or industrial waste on land or to use waste disposalplants unless the land in question is licensed by the waste disposal authority (or explicitiyexempted form licensing). Site licenses can be issued only if the required planning permission forthe site is in force. They can be made subject to conditions as determined by the waste disposalauthority and may cover such items as: duration of the license, supervision by the license holderthe kinds and quantities of waste, methods of dealing with waste and the recording of information;precautions to be taken; hours when the waste may be dealt with; and the works to be completedbefore licensed activities begin or while they continue.vi

U

Instrument Descriptton Application

Permit (continued) United States. Industrial and municipal dischargers must obtain National Pollution Discharge

Elimination System (NPDES) permits in order to discharge into the nation's waters. An NPDES

permit requires the discharger to obtain technology-based effluent limitations (BPT or BAT for

industry, secondary treatment for municipalities, or more stringent water quality protection).

Permits are issues for five year periods and must be renewed thereafter to allow continued

discharge. Dischargers also are required to maintain records and carry out effluent monitoring

activities. The Resource Conservation and Recovery Act requires anyone involved in the

generation, storage, transportation, treatment, or disposal of hazardous wastes to be licensed by

the EPA or an authorized states. Licensed treatment, storage, and disposal facilities must comply

with all standards and technical requirements under the Act.

Protected Area Any area of land that has legal Cbina. Country-wide policies established by regulation for Scenic and Historic Interest Zones

Designation measures limiting human use of the include establishment of buffer zones, active measures to maintain wildlife habitat and protect

resources (plants, animals, etc.) forests with ancient and famous trees totally protected and management of other areas of forest

within that area subject to consent of the administering body. Developments for tourism and other purposes must

be in harmony with the environment and new structures are not permitted on sites of high value.

For example, the regulations for managing the Mt. Taishan area promulgated in 1985 identified a

core area known as the first-class preservation zone and a buffer under the administration of the

Taishan Forest Farm. The Administration has power to order the dismanding of unauthorized

buildings or buildings that pollute the environemnt and to order renovation of buildings that are

not harmonious with their surroundings. Natural, cultural, and historic features are protected.

Quarrying is forbidden in the first-class preservation zone. Other regulations provide controls on

felling or thinning of trees, collection of firewood, medicinal herbs and other forest by-products.

Economic Instruments

Pollution Tax or Charge Fee levied on the basis of quantity Brazil. Some states (Rio de Janeiro, Sao Paulo, Parana) introduced effluent charges based on

(effluent charge, and/or quality of discharge into the pollutant content to cover the costs of public water treatment.

emission charge) environment

France. A water pollution charge has been levied since 1968 on domestic and non-domestic waterdischarges. The charge is based on location within regional water basins and is calculated ondifferent bases for water pollution from domestic and non-domestic sources

Germany. The German water effluent charge (originally introduced in 1976) primarily promotescompliance to permit standard. The charge is implemented by the states. The charge base is amenu of polluting substances, COC, and heavy metals. The charge rate is diminished by 75percent if a source can demonstrate compliance standards are regularly updated to technologicalprogress. Whenever there is an update, the new standards become, for existing plants, obligatoryonly after a transitional period. If these plants comply with the new standards before they areobliged to do so, they get the 75 percent reduction.

TheNetber/ands. A surface water pollution tax has been levied since 1969. It applies to thepollution of state waters (state tax), the pollution of non-state waters (local tax), and thecontribution in respect of direct or indirect connection to a purification plant operated by a publicbody not pursuing an active form of water quality management (local tax). The rate is determinedby the quantity and/or nature of the waste matter, pollutants or noxious matter and the manner inwhich they are discharged.

Poland. Emissions fees are the principal instrument of air pollution control from stationarysources. polluters are required to obtain a point source emission permit; fees are computed on thebasis of kinds and quantities of air pollutants. The fee rates apply only to emissions not exceedingthe permissible point source emission norm. The fees paid by the polluters to the government buythe right to use the environment as a receptor of pollutants, but the polluter is not relieved of hisliability for any damages and losses than may occur. In practice, the level of fees can be higher orlower than the costs for abatement. In general, however, it appears that the fee rates provide noreal economic incentive for reducing pollution.


Product Charge Fee added to the price of product or Denmark. The Danish system of product charges has shown that a product charge on glass bottles

product input that causes pollution aimed at increasing the number of trips of bottles in the deposit refund system has encouraged

(e.g. charge on sulfur content in wine bottlers to pack their products in cartons which face a much lower charge. A high charge on

mineral oil or mineral oil itself). new retumable bottles favors the use of retumed bottles, but also the use of one-way containers.

One form of product charge is taxdifferentiation leading to more Norway and Sweden. Product charges are applied to non-returnable containers, batteries,

favorable prices for "environmental lubricating oil, fertilizer, and pesticides.

friendly' products and vice versaTheNetherlands. A carbon tax is applied on motor fuels and are a small addition to existing motor

fuels taxes. The tax is strictly for the purpose of raising revenue with proceeds to be used to fund

govemment environmental investments.

Administrative Charge Fee paid to authority in return for Norway. Charges are levied to fiance the registration and control activity for fish farming and

such services as chemical registration agricultural pollution, control of emissions from industrial sources, and for the licensing of

or implementation or enforcement of chemical products.

environmental regulations

User Charge Direct payment for the costs of Colombia. Sewerage tariffs are set at 60 percent of the water tariff in Cali; 50 percent in Cartegena;

collective or public treatment and 30 percent in Bogota.

of pollution, often applied tothe collection and treatment ofmunicipal solid waste anddischarge of wastewater into sewer

Singapore. The Area Licensing Scheme (ALS), introduced in 1975, incorporates a license fee toindividual automobiles as a part of a larger package of transport measures aimed at reducing trafficcongestion. Motorists are required to buy special licenses to enable them to enter a restricted zonecorresponding to the central business district during morning rush hours. Along with othermeasures, the ALS contributed to reducing automotive air pollution. Although revenue generationwas not a key motivation for introducing the scheme, it has a considerable surplus of income overexpenditure ever since it was implemented. In addition, public awareness of environmentalproblems has grown in the island - as exemplified by the recent 'Singapore Green Plan" (1992)which sets clear targets for reducing pollution from road transport.

United States. A limited number of communities have been experimenting with fees for municipalwaste services that vary with the level of refuse discarded. These systems typically take two forms:the first requires households to specify a number of containers irrespective of how full or heavythe containers are. The second form requires that all waste containers for pickup be speciallymarked plastic bags or self-provided containers marked with a sticker or tag. Under this variant thehousehold is charged a price for the bags which reflects collection and disposal costs. Althoughboth types provide some incentive to the household to reduce its level of refuse, it also encouragesillegal dumping of refuse to avoid a fee.

Tax Incentive Tax incentives which can be Korea. Two provisions under the Tax Exemption and Reduction Control law provide direct and(accelerated differentiated by the nature of the indirect incentives for pollution control. First, there is a direct investment tax credit of 3 percent (ordepreciation, partial base for determining the tax benefit, 10 percent for equipment made in Korea) of the value of the investment which are restricted toexpensing, investment timing of the benefits from such facilities for increasing productivity, energy-saving facilities, anti-pollution facilities, facilities fortax credits, tax incentives, and the conditionality preventing industrial hazards, and other specified facilities. More indirectly, for persons starting aexemptions or deferrals) attached to their use business using technology, there is a choice between accelerated depreciation of 30 percent (50percent in the case of machinery manufactured in Korea) of the asset's acquisition price in thefiscal year of acquisition or an investment credit at the rate of 3 percent (or 10 percent in the caseof machinery made in Korea) of the value of the investment in new assets.

U8


Tax Incentive Turkey. The Government provides subsidized credit for relocating polluting industries to

(continued) alternative industrial zones. For example, leather tanneries relocating to the Maltepe Industrial

Zone north of Izmir are entitled to subsidized interest rates of 35 percent for general loans and 22

percent for construction and infrastructure investment, implying negative real interest rates at an

80 percent annual rate of inflation. This is a clear incentive because interest costs in 1988 and 1989

account for 20 percent of total investment expenditures. The government also offers a 40 percent

tax deduction on investment for tanneries relocating to anodher industrial zone during the first two

years of estate construction and a seven percent reimbursement on investment for small and

medium-scale tanneries.

Subsidies Includes grants and low-interest Australia. The South Australian Government's Save the Bush Programme includes not only grants

loans that act as incentives to to private owners of bushland but provides an advisory service on the management of remnant

polluters or resource users to native vegetation. In 1989-90, the Australian Government announced a grants scheme to save

change their behavior or reduce native bush remnants with funding for survey and conservation projects for farming, educational,

the costs of pollution abatement land care, and environmental groups and local government.

to be borne by pollutersTaiwan. (China). Provides subsidies for eligible activities, including construction of solid waste

treatment plants by local authorities; acquisition of land for waste treatment facilities; and

installation of pollution equipment

United States. The National Park Service makes federal funds available for surveys, planning,

acquisition, and appropriate development of National Register properties. Similarly, the Coastal

Zone Management Act of 1972 authorized funding for states to develop coastal zone management

programs which includes the establishment of permissible activities within the zone, designation

of critical environmental areas, and promulgation of guidelines on the priory of uses in the zone.

Marketable Permit After responsible authority establishes Cbile. Air pollution permit trading supplements CAC measures in Santiago, Chile to curb pointtarget level of environmental quality source emissions(translated into total number ofallowable emissions), discharge rights New Zealand. To reduce the amount of a particular species of fish being taken, regulators imposedare allocated to firns in the form of catch quotas on which fishermen had to pay an annual fee. The revenues for this fee were used topermits which can transferred from buy out fishermen who were willing to forgo future fishing form the endangered species. Eachone source to another fisherman states the lowest price that he or she would accept for leaving the industry; theregulators selected those who could be induced to leave at the lowest price, paid the stipulatedamount from the tax revenues, and retired the licenses that had enabled the fishermen to fish forendangered species. In a relatively short time, a sufficient number of licenses had been retired andthe fish species was protected.

United States. EPA's Emissions Trading Program allows stationary air pollution sources toundertake internal and external trades. Any source that reduces emissions more than is requiredby the standard can apply to the control authority for an emission reduction credit (ERC), whichcan be used to satisfy emission standards at other discharge points controlled by the same sourceor can be sold to other sources

Deposit-Refund System Consumers pay a surcharge (deposit) United States. At least ten states have implemented mandatory deposits on soft drinks and beerwhen purchasing potentially containers; the states with these deposit-refund systems report that 80 to 95 percent of depositpolluting products and receive a containers are retumed voluntarily for recycling. The economic incentive (5 to 10 cent refund perrefund when they return the product container) is sufficient to produce the desired behavior.to an approved center for recycling orproper disposal. They can be used for Finland Deposit-refund systems for beverage containers have been very successful; thebeverage containers, lead acid percentage of containers retumed is about 90 percent.batteries, automobile bodies, rubbertires, and objects such as refrigerator Norvay. A deposit-refund on hulks of passenger cars and vans was introduced in 1978. Under thisshells and lubricating oils system, new car buyers pay a deposit; when the car is no longer wanted and returned to an officialrecovery site, a larger amount is refunded. The percentage of cars retumed is between 90 and 99percent; the revenues are used for refunds and financial assistance for collection, transportation,and scrapping facilities.

'NI

.

-4


Deposit-Refund System Sweden. Doubling the deposit charge for aluminum beer cans increased the percentage of cans

(continued) retumed from 70% to more than 80%. A special feature of the Swedish deposit-refund system is

that it is operated by a private company.

Enforcement Incentives Non-compliance fees are imposed United States. Non-compliance fees apply to facilities that fail to install or properly operation air

(non-compliance fees, when polluters do not comply with pollution equipment required by the Clean Air Act. Detection of violations results in a two-part

performance bonds) regulations. Performance bonds are penalty. The first part is a mandatory administrative fine computed to equal the firm's economic

payments to authorities in gain after the notification of non-compliance. The second part is a fine of up to US$25,000 per day

expectation of compliance with based on judicial discretion, for the period of violation before detection. In addition, CERCLA

regulations; refunds are made when requires all 'potentially responsible parties" to be held liable for damage due to releases of

compliance is achieved hazardous wastes into the environment from inactive waste sites. The fee levied will be equal to

the damage that has occurred; the level of the fee can be determined by settlements or by court

judgement.

Property Rights The govemment establishes a system Tbailand. A flexible land titling system combined with other measures to cut down on land market

for clarifying land ownership and regulations allowed the country to maintain land and housing costs that are unusually low relative

boundaries and provides secure to household incomes. Under this system, relevant information is recorded on the land title

tenure to land occupants to illegal certificate which is held at the offices of the lands Department and can be used to record any

settlements subsequent changes of ownership, rights, or obligations. There is no need for title searches or title

insurance. Moreover, most transactions do not require lawyers because the Lands Department

requires the use of standardized land sales contracts and other documents. Ownership transfers

and recording of changes of rights and obligations can be completed quickly.

Educaton and Information

Environmental A tool for analyzing the potential Sri Lanka. An environmental impact assessment is required for all major development and is anAssessment environmental impacts of a proposed integral part of the country's coastal zone management program. The director of the Coastproject and its alternatives prior to Conservation Department has the discretion to require a developer to submit an impactimplementation so as to ensure that assessment.the proposed project or action isenvironmentally sound and that any Thailand. The environmental impact assessment process frequently has been used to mitigateenvironmental consequences can be unacceptable degradation of beach resources and nearshore waters, especially with regard torecognized early and taken into hotel construction and operation.account during the project design

Environmental Environmental communications and Bangladesh. Information dissemination about the pollution records of large polluters facilitatescommunications and public participation are critical for information bargaining between polluters and affected parties.public participation achieving environmental objectivesThailand. NGOs have played an important role in conserving valuable old buildings and inensuring that new development is compatible with the historic character in old town center. InChiang Mai, competitions and other local events have been organized to raise awareness ofbuilding design issues. Through these means, communities will support and assist the municipalityin ensuring that conservation and development proceed together.

United States. Public participation in coastal decision making is one of the priority objectives of thenational Coastal Zone Management Program. In each state participating in the program, thepractices and procedures are similar: laws adopted by each state are subjected to public hearingsand comment prior to enactment; agency adoption of rules, standards, and regulations requirepublic notice of intent, hearing, and debate before and among members of the coastal zonemanaging board; extensive public meetings in affected areas are required prior to designation ofspecially protected areas; permits for major development activities are reviewed by permittingagencies and require public comment; when a permit application is received, it is normal for thepermitting or coastal agency to notify the local goveming board as well as adjacent propertyowners to solicit their comments; permits may be appealed by individuals or organizations whomay be affected or who have an interest in the proposed activity; and citizens are heavily involvedin the coastal zone management process in each stateU

.


Geographic Information Tool for systematically collecting, Colombia. The Puerto Bogota Department of Cundinamarca used GIS to identify hazard-free

System (GIS) organizing, combining, modelling, urban areas suitable for the relocation of 34 families living under high landslide risk.

analyzing, and presenting variousdata about a geographic area. It cancontain mapped informationrevealing spatial relationshipsbetween various attributes such ashazardous events, natural resources,and socioeconomic conditions. It canbe used to determine likely land useconflicts, predict environmentalimpacts on a spatial basis, and assistin making resource allocation anddevelopment decisions

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Environment DepartmentThe World Bank1818 H Street, N.W.Washington, D.C. 20433202 473 3641 202 477 0565 Fax