Environmental Finance and Development

Sanja Tišma, Ana Marija Boromisa, Ana Pavičić Kaselj

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136296659
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book focuses on environmental financing in the process of alignment with the EU.

Based on comparative analysis of national environmental strategies and financial needs, and their links with strategic development documents in five selected countries (Bulgaria, Romania, Slovenia, Croatia, Turkey) the book identifies main achievements and remaining challenges in the main areas of environmental regulation: nature protection, water, waste, air and climate change.

For each area the same concept is applied: current situation is presented, followed by an overview of institutional and legal frameworks. Division of competences between actors at the same or at different levels is addressed. Costs of implementation are estimated and possible sources of financing identified.

1 Development strategies, environmental protection and financing

Sustainable development

Global policy framework

The 1992 Rio Summit¹ established sustainable development as the guiding principle for development. Sustainable is ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’ (Brundtland, 1987). It integrates economic, social and environmental objectives and recognizes that economic growth is necessary, but not sufficient for economic development.

The principle of sustainable development was integrated in key documents produced at the Earth Summit:

•Agenda 21, the strategy for sustainable policies in 21st century.

•The Rio Declaration on Environment and Development, which states that the only way to long-term economic progress is to link it with environmental protection and health.

•Forest Principles, which deal with sustainable use of forests and balance the need to protect forests (for environmental and cultural reasons) and to use trees and other forest life for economic development.

•The Convention on Biological Diversity, aiming at sustainable use of biological diversity.

•The Framework Convention on Climate Change which sets the long-term objective to stabilize atmospheric greenhouse gas concentrations at a level that would prevent dangerous anthropogenic interference with the climate system, and an overall framework to tackle challenges posted by climate change.

The final declaration of the UN Millennium Summit, the Millennium Declaration, adopted in 2000 and signed by 189 countries, reaffirmed Agenda 21 and outlined the international agenda for development. The Millennium Declaration lists eight interdependent Millennium Development Goals (MDGs) to be achieved by 2015, including environmental sustainability. The interdependence of goals, activities and results at local, regional and global level makes it difficult to formulate, cost, finance and implement adequate policies. Despite these difficulties, MDGs articulated a long-term perspective and provided direction for the implementation of development strategies. They called specifically for integration of the principles of sustainable development into country policies and programmes. Based on the Agenda 21 and MDGs each country was expected to adopt its own national sustainable development strategy (NSDS) and begin implementing them by 2005.

EU approach

Sustainable development became a fundamental objective of the EU in 1997, when it was included in the Treaty of Amsterdam. It was reiterated in the Treaty of Lisbon.

The first EU Sustainable Development Strategy was launched by the European Council at the Gothenburg Summit in June 2001. The 2001 strategy was composed of two main parts: the first with objectives and policy measures, and the second which called for a new approach to policy making. Central to this new approach was impact assessment, which was expected to ensure that the EU’s economic, social and environmental policies were mutually reinforcing. Persistence of unsustainable trends required revision of the Sustainable Development Strategy (SDS) in 2006. The renewed SDS set overall objectives and concrete actions for seven priority areas:

1 climate change and clean energy

2 sustainable transport

3 sustainable consumption and production

4 conservation and management of natural resources

5 public health

6 social inclusion, demography and migration, and

7 global poverty and sustainable development challenges.

However, the issue of Europe’s economic competitiveness has dominated the political agenda. Thus, sustainable development has been regarded as a pillar of growth strategies (first the Lisbon Strategy, and since 2011 the EU 2020 Strategy) instead as an overreaching principle.

In accordance with the Agenda 21 and MDGs, the EU SDS also requires the EU member states to develop national sustainable development strategies and stipulates the importance of an external dimension of sustainable development, e.g. the need to tackle global poverty and strengthen cooperation with partners outside the EU. However, sustainable development is still regarded as one of the pillars of growth, and not the other way around.

Within the current EU’s growth strategy, Europe 2020, a sustainable economy presents one of the three priorities — the other two being a smart economy and an inclusive economy. Based on these priorities, targets — on employment, innovation, education, social inclusion and climate/energy — were set to be reached by 2020. Inclusion of climate and energy targets (i.e. reducing greenhouse gas emissions by 20 per cent compared to 1990 levels, increasing the share of renewable in final energy consumption to 20 per cent and moving towards a 20 per cent increase in energy efficiency) among EU 2020 headline targets shows that the Europe 2020 Strategy recognizes that high standards of environmental quality and climate protection are necessary for long-term and sustainable development.

To achieve these targets, previously planned environmental measures have to be fully implemented and unsustainable trends (e.g. relating to loss of biodiversity and natural resources) reversed. Biodiversity conservation is recognized as one of the key environmental challenges of the EU 2020 Strategy (European Council, 2010: 6). The shift to ‘a greener economy’ (European Commission, 2010d), i.e. a safe and sustainable low-carbon and low input economy, will require more efficient and transparent governance structure and adequate investments in environmental protection (European Commission, 2011).

The implementation of the EU 2020 is guided by ten integrated guidelines and headline targets. Based on the guidelines, member states should develop their national reform programmes (NRPs), while the Stability and Growth Pact serves as the framework for the establishment of stability and convergence programmes.

According to the integrated guidelines the use of environmental taxation is seen as an instrument for achieving public finance stability. Shifting tax burden on environmentally harmful activities is considered as a measure that opens the space to lowering the tax burden on growth enhancing categories (e.g. labour) and boosts green growth, green technologies and green jobs, which is a long-term reform goal. The European Economy Recovery Plan tries to ensure consistency of the short-term anticrisis measures with the long-term goal: the transition of the EU towards an inclusive low-carbon and knowledge-based economy, as defined by EU SDS and EU 2020.

Based on the common principles (Agenda 21, MDGs, and for the EU member states EU SDS) each country was expected to prepare its sustainable development strategy.

Thus, NRPs should define short-term measures (for a three-year period) enabling economic recovery and reaching sustainable development goals, as defined by NSDS.

National policies

Slovenia

In 2005 Slovenia adopted the Development Strategy (Šušteršic et al., 2005) for the period until 2013. The Development Strategy represents Slovenia’s SDS and at the same time transposed the Lisbon Strategy goals into the national environment. The Development Strategy defines the vision and goals of the development of Slovenia and provides guidelines for institutional and development reforms after accession to the EU.

The Strategy serves as a long-term umbrella document for development planning and promotes principles of sustainable development and integration of development policies. It involves economic development, social, environmental, political, legal and cultural issues and defines five development priorities:

1a competitive economy and faster economic growth

2effective generation, two-way flow and application of the knowledge needed for economic development and quality jobs

3an efficient and less costly state

4a modern social state and higher employment, and

5integration of measures to achieve sustainable development.

(Šušteršic et al., 2005)

The integration of measures to achieve sustainable development covers development in the areas of the environment, sustained population growth, regional and spatial development and culture. In accordance with Slovenia’s Development Strategy, the sectoral programmes were also adopted, for environment (the National Environmental Action Programme for the Period 2005–2012), for energy (The National Energy Plan) and waste (Waste Management Strategy).

The implementation of Slovenian Development Policy is guided by the National Strategic Reference Framework (NSRF), the National Development Programme 2007–2013 and operational programmes.

The NSRF is the basic document for the implementation of the EU cohesion policy. It defines the general strategy of an EU member state for achieving faster convergence, and also inc...