Environmental Cost Assessment and Investment Plan

1
Environmental Cost Assessment and Investment Plan

• Financing the implementation of the water and
  wastewater treatment directives
• Jean Tilly, Team Leader

2
TWO KEY QUESTIONS

• How much will Romania have to pay to comply with
  the EU environmental directives? COST
• How and when will Romania pay? FINANCING

3
COMPLIANCE COST IN POSITION PAPER

• Total investment for compliance 29.3 billion,
  almost 60 percent of Romanias Gross Domestic
  Product (GDP) --50 billion in 2003
• Annualised investment over 20 years at 8 percent
  3 billion --about 6 percent of Romanias GDP

4
CURRENT ENVIRONMENTAL EXPENDITURES
5
FINANCING SOURCES IN POSITION PAPER
6
REVISED COST ESTIMATES -- PV in 2005 Billion
7
COST DISTRIBUTION BY ENVIRONMENTAL SECTOR -- PV
in 2005 Billion at 4 Real Discount
8
COSTS OF WATER DIRECTIVES
9
FINANCIAL SOURCES

• Grants
• National Local Budget
• EC Grants (Investment Technical Assistance)
• Loans
• International Financial Institutions (IBRD, EBRD,
  EIB)
• Bilateral financing organisations
• Commercial banks
• Equity

10
CURRENT FINANCING OF ISPA WATER PROJECTS
11
FINANCING MIX FOR DRINKING WATER
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FINANCING MIX FOR DRINKING WATER

• Reduce grants from 66 of investment in
  implementation plan to 61
• Increase add-on tariff to 0.44 of average
  household income

13
FINANCING MIX FOR URBAN WASTEWATER
14
FINANCING MIX FOR URBAN WASTEWATER

• Increase grants from 40 of investment in
  implementation plan to 69
• Increase add-on tariff to 0.69 of average
  household income

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AFFORDABILITY
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CONCLUSIONS

• High cost of compliance
• Grants will ease financial burden
• Expect significant tariff increase
• GDP growth will reduce impact of tariff increase