Strengthening the Financing Arrangements

5.3. Strengthening the Financing Arrangements

Strengthening the financing arrangements is only possible in the broader context of national environmental policy. This should be based on economic incentives that encourage the active involvement of nature users in the implementation of environmental actions, including the actions identified in this SAP. At the same time, it is important to maintain a balanced mix of administrative and economic instruments for managing the nature uses.

New institutional arrangements have started to take shape in the process of transition to the market economy. They have been driven by a major change in the relationships between the state and private sector. As a result of large-scale privatisation, the management and operation of essential municipal services have been progressively taken over by the private sector in the course of large-scale privatisation. As a result, the role of direct command-and-control tools is also being reduced in response to policies that encourage political decentralisation and institutional reform. However, environmental values and considerations are still low in the agenda of businesses and industries. This problem is complicated by severe budget constraints, and the shortage of funds for financing the cost of required environmental actions is seen as a principal barrier to improvement.

The strengthening of Public-Private Partnership arrangements designed to encourage the active involvement of governance bodies, business community and civil society is seen as a potential option for improving the existing situation.

Emphasis should be placed on the reform of the environmental tax system. This should be based on the ‘polluter pays’ principle, translated into appropriate economic incentives for a reduction in the environmental impact of human activities. As part of this reform, the system of pollution fees should also be revised to ensure a greater level of cost recovery, simplicity and transparency. It is also important to enhance the system of fees charged for nature resource uses, in order to ensure the financial sustainability of environmental programmes and systems for nature resource use and management.

Financial sustainability of the SAP can be ensured through the introduction of new specific economic instruments designed to encourage environmental investments.

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