Economic instruments for environmental protection

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Economic Instruments for Environmental Protection
in Israel- Looking Ahead Nahum Yehoshua Economics
Division Ministry of Env. Protection "The
Sustainable Economist An event to honor Prof.
Mordechai Shechter November 29th,
2007 University Of Haifa
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21,000 sq.km
7 million population
Coastline 196 Km
population growth 2.17
93 urban
Population density/sq km 333
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Main Environmental Challenges

• Solid Waste
• Hazardous waste
• Water quality quantity
• Rehabilitation of Rivers and streams
• Air pollution
• Open space conservation and Urban sprawl

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Main Instruments

• The environmental regulation is still mostly
  relies on Command and Control.
• In the last few years, a step forward in the
  introduction of new market based incentives.

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Israels Economy

• an annual GDP of approx. 27,000 per capita
  (PPP).
• 2006 growth rate 5.1
• Israel economy has characteristics of a developed
  country
• High GDP per capita and low inflation rate
• Developed High technology Sector
• On the other hand, it has
• High growth (economic Pop. ) rates
• Ethnic heterogeneity and migration
• Security burden.

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OECD

• Israel entered the process of joining the OECD.
• The OECD has outlined basic issues in which
  Israel should focus in order to meet the OECD
  standards.
• among the environmental issues, was the
  introduction of Market Based Instruments and
  other economic instruments

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OECD

• The OECD have no specific demands in that (or
  any) issue
• However, Israel will not be able to successfully
  end this process by fulfilling the lowest common
  ground.

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Use of market based instruments in Israel

• Taxes, fees and charges
• Deposit- refund systems
• Producer responsibility extension
• Environmental subsidies and tax benefits
• Investments and supports

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Water resources management-1

• Water scarcity is a major challenge for the
  Israeli Economy (low precipitation, Salinity)
• Water resources are nationalized by law (water
  act, 1959).
• The state allocates production permits to the
  national water company (70) and private
  producers (agr. Associations, municipalities,
  industries)
• The producers pay scarcity rent levies per Cm
  produced.

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Water resources management -2

• In the past, production levies were fixed to all
  producers, and water types
• Recently , Production levies differentiate
  according to
• sectors
• hydrology quality
• Quantity
• Catchments location
• Levies range
• Agriculture producers pays approx 1-4 cent per
  Cm.
• Municipalities and other pays aprox. 20-22 cent
  per Cm.

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Water resources management -2

• Water prices are determined by government
• differential pricing to sectors

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Wastewater recycling

• Israel reuses 60-70 of its wastewater (mainly
  agricultural irrigation)
• wastewater consumer fee.
• Not load based.
• Correlated to water consumption- (0.4-0.6 cent
  ).
• Differential pricing and standardization of
  effluents quality
• Based on regional CBA
• Tackling the problem of treatment cost allocation
  (who pays? the city or the beneficiary farmer?)

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marine pollution

• Coastal protection charge point- source
  pollution emissions to open coastal water.
• (to be brought to parliament approval in the
  present winter seat).
• Load based charges, determined by the harmfulness
  of the pollutant.
• In addition to permit system (non tradable) based
  on BAT and lack of land based alternative.

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Waste management

• Landfill Tax (2007- in discussions in parliament
  since 99),
• incremental up to 2011.
• Applies to all wastes directed to land fill
  (beside hazardous- different charge to take
  place)
• Revenues earmarked to support waste reduction.

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Waste management

• Mandatory deposit system on non refillable drink
  containers (1999)
• 0.4 cent per container.
• Applies on PET, tin cans and glass, up to 1.5
  liter.
• Though controversies , shortly to be expanded
  into containers of 1.5 liter and above.
• Recycling rates60-70.

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Waste management

• Drink containers levy
• Applies to all drink containers, beside those
  under the deposit tax base.
• Levy rate 0.25 of drink container sale
  revenues.
• Earmarked into non-budgetary funds.

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Waste management

• Road tires disposal act (2007)
• Producer/importer responsibility extension
• Producers and importers of tires and vehicles are
  required to collect and recycle up to 85 of
  their annual production/import. (incremental up
  to 2012)
• Vehicles importers are required to achieve 30 of
  that rate.

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Transportation- vehicles
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Energy saving management

• other measures- transportation
• incentives (grants- up to 500 ) to removals of
  old (and polluting) vehicles from the road
  (suggestion).

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Energy saving management

• incentives to renewable energy producers
• for all renewable energy producers (beside
  solar)
• 1.12- 1.79 cents per Kw/h (max rates - no
  emissions at all)
• If the renewable energy producer emits in
  production, it will be deducted from the
  incentive.
• For solar energy producers
• Small producers (up to 20 MGW) 15.3 cent per
  kw/h
• Medium-large producers (20 MGW and up)12.2 cent
  per kw/h

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Energy saving management

• Eco building
• Eco labeling for green buildings
• Implementing green building criteria in public
  housing

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Costal Protection Charge

• ( at final legislation procedures)
• Background excess demand for coastal resources
  due to relatively short coast and high demand for
  water recreation.
• Divides to
• Coastal tax- apply on facilities on coast, mainly
  infrastructures that prevent the use of the shore
  for recreation uses. Tax base captured area in
  100m coastal strip
• Marine tax- will apply on marine installations
  that have an adverse effect on sediment flow
  along the shore

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Natural resources protection

• Mining tax
• Gravel mining- 0.4 per ton
• Sediment mining- specifically determined by
  tenders

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Other environmental economic instruments

• Standardization process based on CBA
• Polluter profit calculation as part of
  enforcement and prosecution
• Financial sector initiatives
• stock market authority
• Governmental owned public companies authority
• Insurance

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Concluding Remarks

• Israel has made a major progress in its
  Environmental Regulation and scored some major
  success in the past decades
• In addition, the reliance on CC has gradually
  changed, and new MBI and other economic based
  instruments have been introduced.

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Thank you