Title: Trends in Environmental Finance in EECCA
1Trends in Environmental Finance in EECCA
EAP Task Force
- Carla Bertuzzi, Xavier Leflaive
- Paris, 22 February 2007
2Outline of the presentation
- Rationale for the project
- A reminder on method
- Key messages
- Environmental protection expenditure (EPE)
- International environmental assistance (IEA)
3Rationale for the project
- To provide analysis and policy conclusions on
environmental finance in EECCA countries to
Ministers at the Belgrade Conference - a comprehensive picture of all sources of
environmental finance in EECCA - a basis for the ministerial discussion
- a synthesis of EAP Task Force work
- Two companion publications for Belgrade
- Category 1 paper on Mobilising environmental
finance in SEE and EECCA (with PPC and the World
Bank) - Category 1 paper on Progress assessment in the
implementation of the EECCA Strategy
4A reminder on methodEnvironmental expenditure
- Environmental Protection Expenditure
- Protection of ambient air and climate
- Wastewater management
- Waste management
- Protection and remediation of soil, groundwater
and surface water - Noise and vibration abatement
- Protection of biodiversity and landscape
- Protection against radiation
- Research and development
- Other environmental protection activities
- Abater principle vs financing principle
- Sectors
- Public sector
- Business sector
- Specialised Producers of Environmental Services
- Household sector
- Type of expenditure
- Investment Expenditure
- Current Expenditure
- Receipts from by-products
- Subsidies/Transfers
- Revenues
5A reminder on methodProject organisation
- Build on existing work
- EAP Task Force work on environmental finance
- DAC database on ODA
- Collect up-to-date and reliable data
- In EECCA, via national administrations, on
environmental expenditure and finance - Analyse information
- Compatibility of data
- Crosscheck with international sources
- Key messages
- Discuss key messages
- Annual meeting of the network of environmental
finance experts (February 2007) - Annual meeting of the EAP Task Force (March 2007)
6A reminder on methodThe data collected
- 10 countries out of 12
- no reporting for Turkmenistan and Uzbekistan
- Scope
- domains covered air, wastewater, soil and
groundwater, biodiversity, still little
information on waste - some countries included expenditure for the
management of natural resources and their
mobilisation - Level of detail
- insufficient coverage of the public sector
- low reporting on transfers
- Data quality
- enhancement of the register
- specification on sectors coverage
- distinction between financing and spending
- estimation of investments for integrated
technologies and cleaner products
7Structure of the report
- Economic trends in EECCA
- Environmental expenditure in EECCA
- Trends
- Share by domain, sector, type
- Sources of environmental expenditure
- International environmental assistance and
financing - Bilateral, multilateral
- Share by country, domain
8Key messages A sharp dichotomy
- In economic terms
- GDP, GDP per capita
- from USD 763.3 billion (Russia) to USD 2.3
billion (Tajikistan) - Growth performance,
- 26 per cent in Azerbaijan in 2006
- -0.6 per cent in the Kyrgyz Republic in 2006
- Drivers for growth
- energy- and resource-rich economies
9Key messages - EPEThree groups of countries
- In Russia, Ukraine and Kazakhstan
- between 1.6 and 1.2 of income allocated to
environment protection similar to CEE countries - environmental expenditure per capita remains low
at less than 40 USD per year (some 50 USD in the
Slovak Republic and 100 USD in Poland) - In Moldova, Azerbaijan, Georgia, the Kyrgyz
Republic and Armenia - environment protection expenditure are less than
30 million USD per year - between 1.0 and 0.2 of GDP
- environmental protection expenditure per capita
remains extremely low in both absolute and
relative terms (less than 10 USD per capita per
year) - Belarus
- relatively high levels of environmental
expenditure (499 million USD, 2.4 of GDP, 44 USD
per capita) - investments represent a significantly high share
of environmental protection expenditure
10Key messages - EPEThree groups of countries
- Environmental protection expenditure, 2000-05,
million 2003 USD
- Environmental protection expenditure per capita,
2000-05
11Key messages - EPEUneven benefits from GDP growth
- Environmental protection expenditure as a share
of GDP
12Key messages - EPEConcentration on few domains
- Wastewater
- The lions share (between 43 and 67 of the total
amount) - Especially for countries where EPE is low
- Air attracts a significant share of the total in
industrialised economies - 37 in Kazakhstan 22 in the Russian Federation
and Ukraine), in Armenia (32) and Belarus (20) - Waste attracts relatively little attention
- except in Kazakhstan (18), Ukraine (15) and the
Kyrgyz Republic (12)
13Key messages - EPEContrasted performances for
investments
- Environmental protection investments as share of
GFCF and GDP per capita, average 2000-2005
14Key messages - EPEContrasted priorities for
investments
- The public and the private sector do not put
their money in the same domain - the public sector allocates most of its
investments to wastewater - the private sector invests mainly on air
- Types of investment, by domain, by country
15Key messages - EPETowards a measurement of
transfers
- Azerbaijan
- only marginal transfers between sectors
- Belarus
- 40 of the total amount spent by the private
sector have been transferred - the public sector is a net financier in the
wastewater sector only - Kazakhstan
- all expenditure from the private sector for air
is financed by the firms own resources - transfers from the public sector for wastewater,
soil and groundwater, and biodiversity - for waste, net transfers go from the private
sector to the public sector - Kyrgyz Republic
- there are (marginal) transfers from the private
to the public sector only in the wastewater and
waste domains (some 6 of the total expenditure
of the private sector in each domain) - Moldova
- the bulk of public expenditure is in
biodiversity, where there are no transfer to
other sectors - transfers from the private sector are significant
for wastewater only
16Key messages IEAA structural change
- Environmental assistance to the EECCA countries,
2001-05, million USD
17Key messages IEAThe attraction of large,
oil-rich countries
- Donors and IFIs environmental assistance to
EECCA countries, total 2001-2005
18Key messages IEAA limited direct impact
- Neither ODA nor IFI finance can be a substitute
for domestic environmental finance in EECCA - Bilateral and multilateral environmental
assistance remains marginal as a share of GDP
(below 0.6 in most cases) - Bilateral environmental assistance represents
less than 5 USD per capita and per year - Multilateral environmental assistance is below 3
USD per capita and per year - Demonstration and catalytic effects
- technology transfer
- development of new skills and know-how
19Key messages IEADifferent priorities, by domain
- Donors and multilateral environmental assistance
by domain, total 2001-05
20Key messages An on-going challenge
- To scale up and disseminate the positive
experiences from donor and IFI projects - On the donors side
- improved coordination among donors and IFIs to
avoid overlaps and competition - On EECCA countries side
- explicitly identify environmental protection as a
priority in national economic strategies and
bilateral cooperation programme - design sustainable and realistic finance
strategies to achieve environmental goals - strengthen capacity to plan, at both central and
decentralised levels - improve capacity to prepare and implement
projects - demonstrate capacity to achieve environmental
objectives