ministry of environment and physical planning republic of macedonia financing environmental...
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MINISTRY OF ENVIRONMENT AND PHYSICAL PLANNINGREPUBLIC OF MACEDONIA
FINANCING ENVIRONMENTAL INSPECTORATES/ENFORCEMENT AGENCIES
- OECD/EAP Task Force Project -
3-th BERCEN Exchange Programme for Environmental Inspectors, Prague, Czech Republic
October 19-22, 2004
Autors : Vlasta Pasalic and Zoran Dimovski
Ministry of Environmental Protection, Physical planning and Construction
REPUBLIC OF CROATIA
• The role and importance of inspectorates in enforcement in the transition period in the region of Eastern Europe,Caucasus and Central Asia
• The EECCA governments face serious budgetary constraints
• the inspectorates have been under strong pressure to scale down their operations due to lack of funds.
• Inspectors operations have been reduced to a minimum; and in some cases compliance monitoring systems collapsed.
• At the same time, the countries economies start to recover from economic depression and there is a tendency to reduce, or increase efficiency of inspection activities.
• The members of the Regulatory Environmental Policy Implementation Network (REPIN) in EECCA at their 5th annual meeting in Kiev in 2003 requested a project which would provide support for developing sustainable mechanisms for funding environmental enforcement work.
• The REPIN Secretariat commissioned a study which would :
- provide examples of funding patterns and expenditure management in selected OECD and Central European countries, and
- provide inspirations for EECCA inspectorate for strengthening their funding base.
Study Approach• Questionnaires were sent across OECD and Central European countries,BERCEN, IMPEL and INECE Networks
• Responses were obtained from 10 countries
• Expert meeting was organized on 4-5 May 2004, at the OECD Headquarters in Paris :- to review good international practice- to discuss the challenges in funding compliance assurance in EECCA
• Report and Summary Report to the EAP Task Force of the OECD
• The results of the study was/will be presented at :- 6-th annual Repin meeting in September in Erevan- used in pilot projects in individual EECCA countries- IMPEL Network meeting in Dablin- Executive Planning Committee of the INECE in Montreal- The OECD Conference on Economics and Enforcement in December 2004
Structure of the Report
• Introduction
• Types of financing and nature of inspectorates
• Sources of funding
• Allocation of funds
• Budget process and estimating the budget deficit
• Addressing the budget/resource deficit
• Conclusions, recommendations and key questions
• most of the country detail being provided in the Annex I, II, III, IV and V
Principles and types of financing
1. POLLUTER PAYS PRINCIPLE and USER PAYS PRINCIPLE
2. FULL COST RECOVERY PRINCIPLE
3. PRECAUTIONARY PRINCIPLE AND PRINCIPLE OF PREVENTIVE ACTION
4. FULL COST ACCOUNTING PRINCIPLE
5. PERFORMANCE-ORIENTED BUDGETING
6. PREVENTION OF CONFLICT OF INTEREST PRINCIPLE
Nature of inspectorates/environmental protection agencies
Responsibilities :
1. Inspect whether installations/activities comply with legislation/permit condition and can involve :
- Actual inspection of sites- Background monitoring of environmental conditions-e. g. during operations; - Laboratory testing
2. Contribute to non-compliance enforcement actions
3. Offer guidance to companies to help facilitate their efforts to comply with legislation/permit conditions
4. Offer internal guidance and assessment to facilitate the inspection and enforcement activities.
Nature of inspectorates/environmental protection agencies
• Some of inspectorates / environmental protection agencies have key role in permitting depending on whether permitting and inspection activities are integrated or kept separate.
• The inspectorates / environmental protection agencies can be :
- central / national,
- regional / provincial, or
- municipal / local bodies,
Depending on level of centralization / federalization of the countries and general approach to public administration in the countries.
Sources of Funding Government budgets (central and local);
Administrative charges (including Permit fees);
Inspection fees – to cover the cost of the inspector/inspectorate in inspecting the site;
Environmental taxes/charges and resource use fees – levies on pollution (e.g. SO2 emissions), on environmental services (e.g. for water supply, waste water treatment) or of natural resources use); (these payments can be allocated for inspectors’ operations directly or first collected in extra-budgetary funds and then allocated to cover inspectorates expenses);
Non-compliance fees/fines
Paid services – e.g. for testing, laboratory services;
Donations; Other
Overview of funding sources
It is possible to group the countries into three groups according to revenue source:
1. The first group consists of countries which have all (or almost all) of their revenue provided by government grants. The state budget, therefore, pays for everything and no additional funding streams are used. (B, ES, F, MK, NL, SLO and USA).
2. The second group includes countries which receive some of their revenue directly through permit fees or inspection charges ( important sources of funding for CR, FIN, IRE, S and UK, and minor sources of funding for N and PL).
3. The final group includes those for which there are other sources, such as Environment Funds ( BG and PL).
Central government funds are the sole primary source of funding in many countries, such as the US, Slovenia, Macedonia, and Croatia.
Other examples of country financing schemes include:
Penalties from NGO action retained in a designated trust fund
Reduced taxes on air, waste, and water treatment technology
Natural resource usage fees
Prescribed set-aside from timber harvest from an environmental agency
Fees on imports such as tires, batteries, etc
National fee schedule for government services, permits, inspections and consultations
Some countries have saved the costs of administering revenue-raising programmes by including their fees on existing consumer bills, such as electricity bills.
Legal Limitation
Constraints imposed on government grants;
Legal obligations, e.g. for ‘full cost recovery’ – e.g. encouraging that permit fees cover full costs of associated regulatory activities;
Restrictions on types of funding (legal, practical, etc) – e.g. the global level, inspectorates can have little recourse to other funds and no right of initiative to request other sources of funds. Analyses undertaken to support decisions on types of fees, setting values, etc.
Limitation to avoid corruption
Allocation of Funds
Permitting – e.g. developing permit application forms and associate explanatory/guidance documentation, guiding companies in permit applications, reviewing permits and communication with the applicants; Monitoring and laboratory analysis (some of which linked to specific site inspections); Inspection; Non-compliance response;Compliance promotion/enforcement; Guidance –e.g. from central authorities to regional/local bodies or to industry; Training – e.g. for integrated inspection or on minimum criteria for inspections; Studies and public reporting/communication; Other.
Budget process and estimating the budget deficit
1. Setting budgets
determination of workload in the future !!! determination the recourses identify the necessary budget
!!!-critical issue in setting budgets is the determination of workload – both for current obligations and for ‘new burdens’ (new obligations from Multilateral environmental agreements, EU Directives).
Final stage (HOW and BY WHOM) :
An internal assessment of future budgetary requirements discussed, amended and approved by the Environment Ministry Finance Ministry (in some countries can be significantly involved) Government Parliament
2.Approval of budgets
3. Tracking Expenditure
A key tool is full cost accounting helps identify and qualify :
direct cost hidden costs contingent liability costs less tangible costs
Internal procedures to check the expenditure of budget :
recording of time spend on activities (Fin, Ned) monitoring of work programs (Ire) use of external auditing (Bul, Pol)
Critical elements in satisfying Governments/Finance Ministries and ensure confidence with industry and public stakeholders
Addressing the budget/resource deficit
two types of budget/resource deficit :- planed deficit- actual deficit
options to tackle shortfalls in the budget : re-allocation of budget, revising work plans, obtaining extra revenue, carrying out tasks more efficiently, outsourcing, seeking synergies with other bodies, encouraging activities.
Conclusion
At this moment in time, most inspectorates/environmental enforcement agencies are under significant financial pressure and the task of fulfilling their missions / objectives is often rendered difficult and needs a range of solutions.
Principles of financing varies across countries, and in some cases there are conflicts between the principles, notably between the integrity principle and full cost recovery principles.
The inspectors tasks differs across countries. There is no single ideal model, and the best approach depends on the national contexts.
The use of one or another source of funding will depend upon the principles adopted in a given country.
Further analysis is required to determine most suitable approaches for the countries of Eastern Europe,Caucasus and Central Asia (case studies).
Possible Recommendations
Develop priority list of installations that need particular inspection effort.
Develop programmes for clustering inspections so as to reap efficient rewards.
Encourage that the EU’s Minimum Criteria for Inspection is considered for application
Encourage the uptake of EMSs by companies.
Where relevant, increase collection rates, to make sure that companies realise that the taxes/charges and fines/fees mean something
See if possible to set up a ‘special reserves’ budget to allow flexible response.
Encourage NGO and public participation and potentially the interest of the press.