/3 986p~ EENVI RON M ENT DE PA RTM ENT

WORK IN PROGRESSV71 TOWARD ENVIRONMENTALLY AND SOCIAILY SUSTAINABLE DEVELOPMENT

NATIONAL ENVIRONMENTAL STRATEGIESAND ACTION PLANS:

KE ELEMENTS AND BEST PRACTICE

FEBRUARY 1995

A.ENMRONMEWALY SUSTAIBLEDEVELOPMENr VICE PRESH)ENClr THE WORID BANK

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PREFACE

Faced with a growing recognition that environmental damage threatens human welfare andundermines development prospects many countries are undertaking systematic efTorts to incorporateenvironmental concems into their development policymaking. At the national level many nations haveprepared strategy documents that seek to chart a course of action to address the most importantenvironmental issues. This paper takes stock of these efforts. Drawing on a review of a large sample ofNational Environmental Action Plans and other equivalent documents, it seeks to distill the hallmarks ofa successful planning exercise, and to highlight some examples of good practice. It is intended to be ofuse to developing country policymakers and other practitioners.

It is part of a series of such "Best Practice" papers being prepared by the World Bank'sEnvironment Department. Partner papers include: "Economywide Policies and the Environment"(September 1994), which addresses how countries can incorporate environmental concerns intomacroeconomic and sectoral policymaking; "Environmental Assessment Of Investment Projects" (April1995), which addresses recent World Bank experience in environmental assessment at the project level;'Reducing Pollution in Developing Countries" (October 1995), and "Natural Habitat and EcosystemManagement" (January 1996), which present respectively the state of knowledge and recent experiencem environmental management in urban and rural areas. The present paper, which addresses overallpriority setting and policy formulation at the national level is thus complemented by these other moredetailed perspectives.

TABLE OF CONTENTS

EXECUTIVE SUMMARY

1. INTRODUCTION

The Cost of No ActionFormulating an Environmental Strategy: Overview

2. SELECITING PRIORITY PROBLEMS

Collecting DataUsing Transparent Selection CriteriaGiving Weigh to Expert OpinionListening to the PublicObstacles to Priority-Seting

3. SELECTING PRIORITY ACTIONS

Identifying the Causes of ProblemsSetting Objectives and Identifying InstrumentsComparing Costs and BenefitsIdentifying Prioit Actions With Incomplete InformationObstacles to Selecting Priority Actions

4. ENSURING EFFECTIVE IMPLEMENTATION

Involving Key StakeholdersImproving Institutional PerformanceMobilizing Financial ResourcesIntegrating Environmental With Broader Development ObjectivesMonitoring and Performance Indicators

5. FUTURE AGENDA

Towards Successful ImplementationThe Future of Environmental PlanningMaking Development Sustainable

EXECUTIVE SUtMMARY

i. Environlmental degradation and natural resource depletion impose high costs in many developingcountries. The total cost of soil erosion, urban congestion and pollution in some countries has beenestimated to be as much as five percent of national income. Equally alarming are the costs associatedwith specific problems. In Thailand, for example, the annual health costs of air pollution in Bangkokalone are estimated to be as high as 2.8 percent of GDP; in Ghana land degradation related to crop andlivestock production imposes annual costs equivalent to 1.1 percent of GDP. Aware of the magnitudeof these costs and the need to address them in a cost-effective way, many countries have preparedstrategic environmental plans to guide policy and investment decisions.

ii. Since the mid-l980s the World Bank, together with other donors and nongovermmental agencies,has been assisting countries in preparing national environmental strategies and action plans. Thesestrategies often are based on environmental profiles, national conservation strategies, and sectoral andeconomic analyses performed by the countries themselves or with the assistance of international andbilateral organizations. In 1990, the principal IDA donors urged that national environmental action plans(NEAPs) be completed by all low income countries receiving IDA credits. As of the end of 1994, mostIDA borrowers and some higher income countries had completed NEAPs or similar documents; manyare now beginning their implementation phase.

Mii. Environmental action plans should be living documents that change as new problems arise, andas our understanding of economy and ecosystem links matures. A review of existing plans, therefore,provides valuable lessons for future efforts. To identify best practice and draw lessons from thiseperience, the Bank conducted a detailed review of over 30 recently completed NEAPs. The results ofthat survey form one of the bases of this paper, which also draws from the lessons of broader experiencein environmental management. The most important findings are:

* Successful strategies involve three elemrents: identying priority problems, definingpriority actions, and ensuring effective implementation-

* Implementable environmental strategies and plans require a skillfil merging of soundtechnical and economic analysis with the active voices of key stakeholders.

* Environmental objectives should be realistic and consistent with broader political,economic, and social conditions.

Key Elements of an Enviromnental Strategy

iv. The diversity of national environmental problems requires that each country tailor itsenvirommental strategy to reflect national conditions and capacities. But the following three key elementsof a successfil strategy are common. Each of these elements requires a balance between rigorousquantitative analysis and involvement by key stakeholders (figure A. 1).

Step 1: Identifying Priority Problems

V. Experience has shown that an essential step for effective environmental planning is identifyinga set of priority problems. Because resources are scarce, governments have to restrict the range ofproblems to be addressed. Consensus on the most critical enviromnental problems confronting the

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country should be reached by the people affected by environmental degradation, the major polluters andnatural resource users, experts in various enviromnental fields, and relevant government agencies.Identifying those problems involves: (1) using transparent selection criteria such as ecological impacts,the number of people affected, and effects on health, the poor, and economic productivity, (2) givingweight to expert opinion, and (3) listening to the priority concerns of the general public and affectedpersons. In Nicaragua, this approach was successfully adopted by the NEAP coordinating team, whichconducted extensive municipal workshops in parallel with technical and economic analyses by nationalexperts. The integration of the resulting findings led to the ranking of national and local environmentalproblems. Similarly successful approaches to priority-setting occurred in countries as diverse asBangladesh, The Gambia, Madagascar, and Nepal.

FIGURE A.1: ANALYSIS AND PARTICIPATION IN DECISION-MAKING

Technical criteria Key Stakeholders

- Ecnmomic -Affected populatons- Ecological - Polluters, source users-S0cial. -. .Government agencies

O-ter - Experts,- NGOs::.

Declsionmaking process

- Prioritizing problems- Prioritizing actions- Ensuring effective implementtion

Step 2: Defining Priority Actions

vi. Agreement on priority problems does not necessarily translate into a set of priority actions.Setting priorities for action requires defining measures that will achieve the greatest gain relative to givenobjectives and available resources.

Diagnosing underlying causes. Understanding the causes of enviromnental damage is criticalfor designing appropriate solutions. Most enviromnental problems stem from a combination ofthree broad sets of factors: (1) "uressure" factors (population growth, human and economicactivity, poverty), (2) "enabling" factors which allow these pressures to cause harm, such asmarket and property rights failures and inadequate information or public awareness, and (3)institutional failures, including unclear management responsibilities and weak technical capacity.Diagnosing these causes, and targeting policies and investments towards them is key to successfulaction. But only a minority of NEAPs fbllowed such an approach. One that did was the Iran

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NEAP, where proposed actions are explicitly tied to clearly identified causes. For example, itproposes phasing out price subsidies to fossil-fuels which cause excessive fuel consumption andthus excessive emissions of air pollutants. Similar approaches are included in the Egypt andYemen NEAPs, and most Eastern European NEAPs.

Finding cost-effective solutions. Envirommental problems are numerous, and resources availableto solve them are all too few. In the ideal world the analyst will carry out a traditional benefit-cost analysis, comparing the social benefits and costs of alternative actions. But there are noexamples of where such comprehensive approaches have been undertaken cross different typesof environmental problems, although a few such exercises have been carried out to detenninepriority actions within broad categories of problems, such as air pollution in Poland. Recognizingthe importance of this type of analysis, but lacking monetary estimates for many values, theSierra Leone NEAP produced a "non-monetary" cost-benefit analysis whereby costs and benefitsare ranked by various experts on a threepoint scale, thus avoiding extensive data requirementsand providing good initial guidance on priority actions. More common is the use of cost-effectiveness analysis; the Environmental Action Programme for Central and Eastern Europeadopted this approach and demonstrates clearly the value of rigorous analysis in proposingsolutions. Although deciding on the most urgent actions is ultimately a political processinfluenced by such factors as funding availability, political visibility, and the balance of regionalinvestments, the analysis of alternative actions will help save literally billions of dollars ininvestments.

Learning from Experience. As strategies are implemented, new priorities may emerge inresponse to new information or changing environmental and institutional conditions. Changesin government structures and institutional capacity, for example, may alter the effectiveness ofthe policies selected. For example, the process of economic decentralization in China has beenaccompanied by a similar process giving greater authority to the provincia and municipal levelto better identify and address pressing local problems.

Step 3: Ensuring Effective Implementation

vii. Rigorous analysis and priority-setting are not sufficient on their own to ensure the successfulimplementation of national strategies and action plans. Experience to date indicates the critical need tobuild implementation capacity and government commitment to ensure effective implementation. Theprocess of preparing a strategy, therefore, should make provisions for five additional factors:

Involving key stakeholders. A national environmental strategy cannot be developed bygovernment alone. Numerous examples attest to the fact that strategies are more likely to besuccessful if key stakeholders participate in planning. A participatDry approach will be morerealistic, and will have embedded within it a broader base of knowledge, understanding, andcommitment from the groups involved. In The Gambia, for example, the process involvedgovernment officials and representatives of NGOs, communities, donor agencies, and the privatesector. In Guinea priority setting involved many local NGOs and a multimedia campaign tomobilize community interest.

Improving institutional performance. Most NEAPs identify well-functioning institutions as oneof the most important prerequisites for effectively implementing an environmental strategy.Without a clear legislative framework and effective institutions, well-conceived policies and other

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actions to address priority environmental problems cannot be translated into practice. This is ageneral lesson as demonstrated in countries as diverse as Egypt, Chile, and Lesotho. Enhancedinstitutional performance normally involves: (1) assigning clear institutional responsibilities, (2)establishing consistent and transparent legislation, and (3) ensuring effective implementationcapacity.

Mobilizing financial resources. Implementing an environmental strategy is not alwaysexpensive. In many situations environmental improvements can be achieved at little or no cost.For example, costless changes in farming practices can increase agricultural yields and reducesoil erosion. Similarly, certain adjustments in technology can increase production efficiencywhile minimizing energy consumption and thus overall pollution. These opportunities should bepursued as a first priority. In many cases, however, environmental improvements can only beachieved through investment. Financial support for the national environmental strategy can bemobilized through internal and external sources. Many countries, such as Japan, Korea, andPoland have established national environmental funds to channel revenues from pollution charges,taxes, and other sources to environmental improvement purposes. Externally fundedenvirornmental projects are supporting NEAP implementation in a number of countries, such asMadagascar, Mauritius, Ghana, and Sri Lanka.

Setting and monitoring performance indicators. Effective implementation requires monitoringwhat is happening to understand what works, and what does not Performance indicators are oneway to meet the need for information on the pace and direction of environmental change; thisinformation is then used to adjust polices as needed. Some performance indicators are based onregularly collected statistical data for resources like forests and fish stocks. In other cases, suchas monitoring urban air pollution, special monitoring systems have to be established andmaintained. Many countries have only begun to establish environmental information systems andfewer still have developed performance indicators that draw upon this data base. Notsurprisingly, the most advanced performance indicator systems are found in some of the wealthierEuropean countries such as the Netherlands and Norway; a number of developing countries,however, are now developing their own performance indicators. In Chile, for example, theCentral Bank has an environmental accounting unit that is exploring the use of resourceaccounting to measure the rate and direction of change for several of Chile's major naturalresources including mining, fisheries, and forests.

Integrating environmental with broader development objectives. The search for sustainabledevelopment requires that environmental objectives be integrated with broader developmentobjectives and conform to the social and cultural values of the country. We have learned thattreating the environment as a separate sector, divorced from the overall economy, is shortsightedand often counterproductive. For macroeconomic policies, greater knowledge is needed to fullyunderstand their effects on the environment. Nonetheless, existing evidence suggests that: (1)economic instability is not good for the environment, and stabilization is necessary but notsufficient for the attaiment of environmental objectives, and (2) the effects of macroeconomicpolicies on the environment are generally ambiguous and difficult to predict, although in somecases they are quite straightforward and significant. In addition, instruments other thanmacroeconomic policies are often better for countering negative effects. For example, if thereis evidence that exchange rate devaluation increases soil erosion, one should not attempt to useinstruments such as increasing the exchange rate to promote soil conservation; other, moretargeted policies will be much more efficient and cause fewer negative side effects.

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Future Agenda

viii. As seen in both developed and developing countries environmental planning is not a one-timeevent. Effective policy making will require that environmental strategies be updated on a regular basis.Much has been learned in the first decade of strategic environmental planning and these lessons are nowbeing applied to the next generation of environmental strategies. Two lessons, in particular, stand out:the need for rigorous analysis, and the importance of public participation and involvement.

ix. Rigorous analysis of both environmental impacts and their economic consequences helpsgovernments address the most important problems in a cost effective manner. Increasingly, analysts areable to identify the costs and benefits of alteriative policies, and help governments and the public makethe hard choices necessary for environmental improvement. The importance of public involvement, bothin identifying problems and feasible solutions, and in creating political will for change, is increasinglyrecognized. Public awareness of environmental problems helps put these issues on government agendasand creates the political climate to support needed action.

X. The future of national environmental planning lies in "mainstreaming" environmental concernsinto the broader process of economic development. This will require increased attention to monitoringimplementation, revising existing national environmental strategies, and improving coordination amongcountries, donors, and international organizations. A particularly exciting development is the appearanceof environmental planning strategies at both the local, subnational, and the international, regional level.In this way countries can more efficiently address important local needs, as well as recognize theinternational links, and commonalities, among nations. Although sustainable development is often seenas an illusive goal, the evolution of national environmental action plans and strategies is an importantcontributor to this process.

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NATIONAL ENVIRONMENTAL STRATEGIES AND ACTION PLANS:KEY ELEMENTS AND BEST PRACTICE

1. Introduction

1.1 In the wake of Agenda 211' and parallel environmental initiatives (annex 1), many countries haveformulated strategies and plans to identify priority environmental problems, define policies and cncreteactions to deal with them, and determine investment needs. A review of national environmental actionplans (NEAPs) revealed that nearly half do not define priority problems and actions, and most do notidentify appropriate policy instruments andlor involve all the right actors. Consequently, some of theseNEAPs may not be implementable. While much is still being learned about implementation of thesestrategies, this paper highlights best practice in preparing enviromnental strategies and carrying themthrough to implenentation. The paper also suggests a future agenda for national environmental planning.Although targeted at environmental and sectoral ministries and agencies having major environmentalmanagement responsibilities, this paper should be of interest to a broad range of professionals involvedin environmental planning and management.

1.2 The inter-sectoral and dynamic nature of environmental problems necessitates a continuingstrategic planning process that takes into account changing needs and priorities. This paper, therefore,is intended both for countries preparing initial strategies and those in more advanced stages of preparationor implementation. Further, the guidance presented applies not only to the preparation andimplementation of NEAPs and similar environmental strategies,2 but to other environmental orconservation strategies prepared at the national, local, or regional levels. Although largely based on areview of NEAPs, it does not evaluate NEAPs or similar strategies. the preparation process in thecountries, or the World Bank's performance in supporting NEAP preparation. Tbis paper differs fromothers? on the topic because it focuses oA analytical approaches to preparing environmental strategies,hat is, the methods and criteria used in identifying priority problems and defining priority actions. Italso differs from other papers focusing on the use of economic analysis in environmental managementbecause it discusses how analytical approaches should incorporate participation (that is, consulting withand involving the public) in planning.

1.3 The findings are based on an in-depth analysis of national environmental strategy documents,primarily NEAPs; World Bank country environmental strategy papers (CESPs), and other relevantliterature; discussions with various country officials involved in preparing and implementingenvironmental strategies; and interviews with NGOs and World Bank task managers. In addition, tworelated exercises contributrd to the findings of this paper: a background paper documenting the resultsof an in-depth review of NEAPs and equivalent documents and a paper analyzing how urban

I/ Agenda 21 is the main product of the United Nations Conference on Environment and Development(UNCED) held in Rio de Janeiro in 1992.

2/ Throughout this paper, the term 'NEAP" refers to a specific document prepared by countries to formallyfulfill IDA requiremnts, and designated as NEAPs. However, NEAPs are only one type of national environmentalstraegy, although probably the most commonly encountered.

3/ Other major documents include IUCN and lIED (1994) and Falloux and Talbot (1993).

environmental problems are addressed iii NEAPs. Because there is limited experience in implementingnational environmental strategies and action plans, the analysis is based primarily on the process ofpreparing NEAPs and the. contents of these documents.

1.4 The paper is presented in five chapters. The remainder of chapter 1 addresses the costs of nottaking action to improve environmental management and presents a brief overview of the process ofpreparing a national environmental strategy. The next three chapters detail key steps in formulating anenvironmental strategy: identifying priority problems (chapter 2), defining priority actions (chapter 3),and ensuring effective implementation (chapter 4). Chapter 5 explores next steps for future work in thisarea and the next generation of national environmental strategies.

The Cost of No Action

1.5 Current trends in urban degradation and the continuing depletion and degradation of naturalresources such as water, flora, fauna, soils, coastal, and marine resources suggest that continued inactioncould prove devastating to many developing countries. More than 1 billion people lack safe water andmore than 1.7 billion people do not have access to adequate sanitation facilities worldwide World Bank1992). By 2030, even under optimistic scenarios, these numbers will probably grow to 1.9 billion and2.3 billion, respectively. Estimates of the costs of environmental degradation in OECD countries rangebetween 0.5 and 5.0 percent of gross domestic product (GDP). In developing countries, examples of thecosts associated with specific environmental problems include:

e Ghana - degradation related to crop and livestock production activities imposes an annualcost of at least 1.1 percent of GDP (Ghana NEAP).

* Hungar - air pollution and acidic deposition have resulted in estimated agriculturalproductivity losses equivalent to US$100 million and damage to forests of US$50 million(Hungary NEAP).

* Thailand - the annual health costs of particulate matter and lead air pollution in Bangkokare estimated to be between 0.6 and 2.8 percent of GDP World Bank 1994b).

* Mexico - the annual health costs associated with particulate matter and lead air pollutionin Mexico City are estimated at US$1 billion annually, or 0.3 percent of GDP (Margulis1992).

1.6 Despite evidence that environmental degradation is an important economic problem, mostgovernments have been either unable or unwilling to arrest it. A common argument is that environmentalcontrol is too costly and that countries should concentrate on other development priorities. Underlyingsuch thinking is the lack of information and disseminated knowledge on the true costs involved, the inertiaand lobbying by powerful interest groups, and the limited public support and participation. Even wherepolitical will exists, governments often cannot act effectively because of institutional deficiencies.

41 See Lampietti and Subramanian (1994) and Bernstein (1995).

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1.7 The experience of industrial countries shows that the costs of preventing environmentaldegradation are frequently much lower than chose involved in remediation and clean-up. Developingcountries should thus anticipate environmental problems and use resources efficiently and effectively inpreventing environmental damage. lThis approach will require assigning priority to investments thatgenerate the highest net social benefits, regardless of their nature.

1.8 The need to use resources efficiently and effectively calls for the preparation of soundenvironmental strategies and action plans. Strategies also are needed because the solution toenvironmental problems, caused typically by market and property rights failures, requires governmentintervention in the market and in resource mobilization. Unlike many other sectors, where market forcesand minimal government action often lead to efficient resource use, managing the environmnentai requiresa concerted plan of government action.

Formulating an Environmental Strategy: Overview

1.9 There are no standard solutions for solving environmental problems. The process of fbrmulatingenviromental strategies and action plans is still evolving, and much remains to be learned about the mosteffective ways of preparing them. Each environmental strategy will vary depending on the physical,social, and economic attributes of each country. Nonetheless, experience from countries all over theworld suggest that the most important element in the preparation of a strategy is achieving balancebetween rigorous analytical criteria and involvemnent by key stakeholders. Consultation and participationinvolves those who are either responsible for the problems or who are adversely affected by them, thosewho control the instruments for solving the problems, and those who have relevant information andexpertise (figure 1.1). Experience to date also indicates that most effective strategies include three keyelements: (1) identifying priority problems, (2) defining priority actions, and (3) ensuring effectiveimplementation (table 1.1).

1.10 The process of planning is clearly not linear. Many aspects of preparation may contribute tosome objectives of the resulting strategy, demonstrating that pceparation and implementation are linked.For example, discussions between government agencies involved in the preparation of environmentalstrategies encourage these agencies to adopt consistent policies and coordinate their actions. In addition,strategy preparation has educational benefits. The more diversified the actors involved (govermentagencies, local communities, technical experts), the greater the opportunities for exchanging informationand improving understanding.

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FIGURE 1.1: ANALYSIS AND CONSULTATION IN DECISION-MAKING

Technical crjSeria - ~~~~~~Consultation

- Econiomic - Affected populations- Ecological -Polluters-Social : -Govemment agencies

.Other. -Experts, NGOs

Dedisionmaking prot^m-

- Prioritizing problems- Prioritizing actions- Ensuring effective implementation

Table 1.1: FORMULATING AN ENVIRONMENTAL STRATEGY

Key dement Description

1. Selecting priority problems . Consists of analyzing the extent and severity ofenvironmental problems and selecting those consideredmost critical based on specified criteria.

2. Defining priority actions Probably the most important oomponent of a strategy,this comprise three maor steps: identifying the causesof problems, setting goals, and identifying altemativepolicy instuments to address the causes of problemsbased on the expected benefits and costs of each, andother relevant criteria and considerations.

3. Ensuring effective implementation Involves participation by key stakeholders in theplanning and implementation phases; finding incentivesthat ensure clear assignment of institutionalresponsibilities, consistent and tranent legislation,and adequate implementation capacity; mobilizingresources to finance sategy implementation; integratingthe proposed actions with the govemment'smacroeconomic and sectoral policies; and makingprovisions for monitoring, evaluation, and revision ofpriorities during implementation.

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2. SelectingrPriority Problems

2.1 Successful environmental management requires that governments identify the most severeenvironmental problems to restrict the range of issues to be addressed. Deciding on priority problemsis ultimately a political process. Communities affected by environmental degradation, major polluters,enviromnental experts, and government agencies should reach a consensus on the most criticalenvironmental problems. This consensus, however, must be supported by sound technical and economicanalysis.

Collecting Data

2.2 The first step in identifying priority problems is to collect information on baseline environmentalconditions and impacts (air and water quality, environmental services, health impacts, natural resourceuse, productivity losses, land conversion data). In most developing countries such data often isinaccurate, inaccessible, and not systematically collected. Nevertheless, much can be done using existingdata. In Malawi and Zambia, for example, a creative use of existing data and information from othercountries with similar conditions led to an initial identification and ranking of the most criticalenvironmental problems.-

Using Transparent Selection Criteria

2.3 Commonly used criteria to select priority environmental problems are: (1) ecological, such asphysical impacts and irreversibility or recurrence of problems, (2) social, such as the number of peopleaffected, health effects, and incidence among the poor, and (3) economic, such as effects on economicproductivity and growth, and factors such as risk and uncertainty.

* Ecological impacts. Ecological impacts are especially important when dealing withnatural resource management. Typical examples are the number of animal species orhectares of forest or arable land lost each year. For instance, it is estimated that inTunisia 10,000 hectares of productive land is lost each year to erosion, 8,000 hectaresto overgrazing, 4,000 hectares to urbanization, and 13,000 hectares to deforestation. Todetermine which activity causes the most serious damage, these data should becomplemented by data on productivity losses.

* Number of people affected. This variable is one of the main indicators of the socialimpact of environmental problems. Hungary's NEAP compared the relative importanceof air and water pollution by estimating the size of the population at risk: 40 percent ofthe population is exposed to elevated sulfur dioxide and particulate concentration levels,while 35 percent of the population lacks access to potable water. Additional informationabout the toxicity of air and water pollution permits a rough priority ranking of airpollution over water pollution.

* Effects on health. Health impacts are usually the most useful criteria for settingpriorities among urban environmental problems. One reason is that when pollution issevere enough to affect human health, there are usually related impacts on productivity,eoDsystems, and aesthetic values. Moreover, health impacts impose economic losses dueto increased illness (morbidity) and premature death (mortality). These are tangible costs

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influencing the general well-being of the affected population and tend to be higher thanthe costs associated with decreased productivity and losses of aesthetic value.

* Effects on the poor. Equity is seldom used as a criterion because it is difficult tomeasure the impact of a problem over a group of people. The Nigeria NEAP givesdistributional equity a numerical ranking based on an assessment of the income level ofthe group affected by the environmental problem. Where no income data are available,statistics on the mode of production may be used.

* Effects on economic productivity and growth. The most critical environmentalproblems can be identified, in theory, by comparing the social costs that they generate.These costs can help identify priority problems both within a sector and in relation toproblems in other sectors. Although this method is a reasonable way to set priorities, itis seldom applied because the links between enviromnental problems and outcomes arenot easy to establish. Even when a connection can be made, it may be difficult to valuethe impacts in monetary terms. Recent advances in cause-effect analysis and economicvaluation are reducing some of these difficulties (box 2.1). In some situations theeconomic approach can be direcdy applied: in the relatively developed, and 'data rich"countries of Central and Eastern Europe, the economic approach was extensively usedto identify problems and set priorities.

- Risk and uncertainty. A number of important environmental problems are characterizedby long term effects (e.g. the impact of toxic waste disposal on air or water) or greatuncertainty (e.g. the "value' of biodiversity, or the ability of polluted ecosystems topurify tht-nselves). Since traditional economic analysis does nothandle these dimensionswell, it is necessary to use other, multidisciplinary approaches to identify priorityconcerns. the precautionary principle (sometimes referred to as the Safe MinimumStandard), that suggests that no action be taken if there is the likelihood of significantenvironmental damage, is one approach to dealing with these factors, although it mayimply much higher control costs.

Giving Weight to Expert Oninion

2.4 Expert judgment can influence the political process by providing a rough ranking ofenvironmental problems. Experts should base their ranking decisions on explicit technical criteria so thatthe importance of the various problems can be compared. In Nigeria a group of experts assigned eachproblem a subjective risk value - high, medium, and low - which was then used to rank the problems(box 2.2). This type of assessment is implicit in many NEAPs.

Listenine to the Public

2.5 One critical feature in identifying priority environmental problems, particularly at the local level,is participation. Even where attempts are made to do rigorous economic analyses by quantifying thedamage of environmental problems, all estimates require close involvement by local stakeholders. Onlyaffected individuals know the effects of different problems on their welfare and only through their directinvolvement can their preferences be known (see chapter 4).

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BOX 2.1: VALUING ENVIRONMENTAL PROBLEMS

Environmtal degradation imposes costs on society, and whenever possible these costs shouldbe measured in monetary terms to help set priorities. Ihe main difficulty in assigning monetuy valuesto environmental problems is the lack of adequate information. A usefiul distinction is' between urbanand rural environmental problems.

Evauating the health costs ofpoUunonL Helth impacts are usually LthP most usefil indicatorfor setting urban priorities. It is increasingly possible to measure the expected health benefits fromreductions- in air pollution and prevention of wate-borne diseases. In the case of air pollution,- forexample, -dose-response relationships correlate changes in thelevel of air pollutants with changes in theincidence of illness and premature death. For water pollution the important deteminant of healthimpacts is- exposur to plluted water, not ambient poilution levels per se. For example, in Jakarta,Indonesia, .tbe eshmated cost of the health effects of pollution in 1990 was more than US$500 million,with more than US$50 million spent each year by households to boil-impure water (Woodd Bank 1994).

The costs ofnarurat resource degradation. Economic analysi can also be used to set priorities--in-the rural sector. EThe most damaging results of improper environmental management are declines inthe physical productivity of soil and water resources, forests, and fisheries. Ihe "charige inproduction-approach can be used to assess the costs. of these productivity declines. For insunce, in Mexico it has*been estimaed that losses in- agricultural prductivity-due to soil-ersion were on the order of US$1-billion a-year. -

Moste For a more detualed discussion regarding the-valuation of environmental problems see Dixon et.al.1(1994), Freema (1979), and Pearce etal. (1989)..

Obstacles to Priority-Setting

2.6 Although conceptualy clear, identifying priority problems is not easy. Numerous obstacles maycomplicate the process. In some countries there is resistance to quantifying envirornmental problems soas not to create regional rivalries that might result if resources were allocated on the basis of cost-effectiveness alone. Other obstacles to priority-setting include:

* Multiple objectives must be balanced (including economic, social, political andenvironmental).

S Although participation is essential to priority-settng, if not properly conducted it maylead to inaction or unclear priorities.

* Information and understanding shortfalls often hamper analysis. Decisionmakers and thepublic often lack information on the health and other impacts of different problems.

* In some countries powerful sectoral or regional interests may generate strong pressuresto invest in those areas even if they are not priorities.

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BOX 2.2: EXPERT JUDGEMENT IN NIGERIA

Surmarizing Nigeria's enviro-nmtal piorities requires essablishing how any given problem impactseconomic grwth, distinbutional equity, and the overall integrity of the resource base. Although the actualrining would depend on how each criterion is weighted, evidence suggests that water contamination,deforestation, and soil degradation rank high as environmental priorities, whereas gully ersion and coastal

.erosion.tend to be ranked lower. IThe rlngof piorities based on thee criteria:.

Problem: Ecnomic Distributioal Resource: _____-: _.---_:_- __:_- _ .____ .____ growth equnty. integrity

Soil dgra-atio I High High HighWater contaumnation High High - HighDeforestation Higb High High

. ully erosion:- : - : f -Moderate- Moderate. - HighFIuIIe -Floss: -. .: - . :: : : - -Moderate Modera. - High.Coastal erosion Moderatc Moderate: Moderte

-WilBdife andbiodivaersity loss- Low L- High.Air oLltion - LowH Mod;t:. tr -hyacith - . -~ - . : :-::Moderate: Low .Low

S In some cases (for example, Argentind and Brazil) strong ste or provincial governmentsmay block national initiatives or disregard national priorities.

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3. Defining Priority Actions

3.1 Although environmental problems may impose high costs on society, govermments must allocateavailable resources, both financial and human, among many competing sectoral needs. Setting prioritiesfor environmental action, therefore, involves defining cost-effective interventions. As in selecting priorityproblems, deciding on the most urgent actions is a political process influenced by such factors as theavailability of funds, political visibility, balance of regional investments, and the willingness and abilityof local institutions to undertake investmenL Taking these factors into account, decision-makers shouldbase their decisions on a sound analysis of problems and possible solutions

Identifyine the Causes of Problems

3.2 Understanding the causes of environmental problems is essential to finding the right solutions.While most NEAPs identify the causes of environmental problems in general terms or as a result ofgovernment policies, few clearly link these causes to specific environmental problems and proposedsolutions. The Iran NEAP is one exception; for each proposed action the strategy provides an extensiveanalysis demonsating its rationale For example, the proposal to phase out subsidies for fossil fuels wasbased on the benefits to be derived from reduced fuel consumption, such as reduction in air pollution.The causes of environmental problems can be separated into underlying pressures and the factors thatenable these pressures to harm the environment (figure 3.1)Y

FIGURE 3.1: CAUSES OF ENVIRONMENTAL PROBLEMS

4 4 4 ENVIRONMENT 4 4 4

t tt tENABLING FACrORS

: *:: :- Mrketand property rigbts falures- Inadequate public awareness- Poor regulatory and pricing policies

t t f t- Istituional faiures

PRESSURE FACrORS:- Population growth- Economic activity- Poveny

51 For a detaied analysis of the general causes of enviromna problems. see World Development Report 1992:Develowment and the Environment (World Bank, 1992).

9

Pressure Factors

3.3 Pressure factors include rapid population growth, human and economic activity, and poverty.When not properly managed these factors can cause extensive environmental damage. In most countries,however, they are not considered environmental problems per se and are addressed in broader nationaldevelopment objectives and strategies.

3A4 Population growth. Populationgrowthaffects environmental conditions in rural and urbanareas. In rural areas poorly managed population growth tends to push people into more fragileecosystems; increase the demand for arable land, often resulting in deforestation; and shorten fallowperiods, reducing land productivity. In many developing countries inadequate capacity to accommodaterapid urbanization often creates problems with poorly managed waste and pollution, lack of safe water,land degradation, and congestion.

3.5 Human and economic activity. All human activities, from recreational pursuits toproductive acdvities, directly or indirectly depend on the use of natural resources. Even if technologiescould change quickly, economic growth coupled with population growth inevitably threatens theenvironment's assimilative capacity and stck of nonrenewable resources?°

3.6 Poverqty Although the poor are often the ones most adversely affected by environmentaldegradation, poverty itself can have a significant effect on environmental quality. When the poor haveno alternatives they use land and water in ways that threaten the future productivity of these resources.In India, for example, people living at subsistence levels have encroached on wetlands, mangrove zones,and coral reefs causing large scale deforestation, erosion, and loss of biodiversity. In urban areas thepoor lack the financial resources to compete for serviced land and adequate housing in safe locations.Consequently, they often are forced to occupy illegal settlements on hazard-prone or environmentallysensitive land poorly suited to residential uses.

Enabling Factors

3.7 Enviromnental problems occur when pressure factors are not properly managed. Most of theNEAPs identify three principal enabling factors as leading to enviromnental problems: government failureto intervene, inefficient or ineffective govermnent interventions, and institutional failures.

3.8 Government failure to intervene. Although the physical pressures (especially theproduction of air and water pollutants) placed on the environment in developed countries are often muchgreater than in poorer countries, the actal level of environmental damage is usually much less becauseof government's capacity to intervene. While governments may not be directly responsible for thefollowing failures, ineffective or inappropriate government responses allow them to cause environmentaldamage.

* Property rights failures. Numerous natural resource management problems originatefrom unclear property rights. For example, government ownership of resources has often

6! While certain environmental problems can worsen with economic activity, economic growth is a fimdamentalobjective of sustinable development, which must always be pursued with the minimizaion of negativeenvironmental effects.

10

meant open access, giving rise to overexploitation and degradation of tropical rain-forests, mangroves, fisheries, land, and water resources. For example, 12 out of 14NEAPs prepared for African countries cite unclear resource use rights as having led topoor management of natural resources. Private and communal forms of land ownership,while clearly preferable to open access, can also result in unsustainable managementpractices through lack of consideration of the potential effects on neighboring farms(extemalities) or rupture of communal arrangements.

* Market falures. Pollution often develops when individuals make decisions withoutconsidering their potential negative effects on third parties (externalities). In most casesthe cause of such actions can be traced to the lack of markets and prices attached to theuse of natural resources. Industries, for example, dispose of their wastes in the air andwater when these resources are free. Unless the govermnent intervenes, polluters haveno incentive to curb emissions or treat effluents.

* Inadequate public awareness. Lack of public awareness of environmental problems andtheir causes and insufficient political will to adequately address them are among the maincauses of environmental degradation. In many cases, for example, the poor could avoidwater-borne diseases if they had better information on the risks of drinking untreatedwater. In Brazil, after the press publicized the health effects among schoolchildren ofextremely high air pollution levels in Cubatao, an industrial city in the state of Sao Paulo,local communities mobilized to press for reform- This resulted in a major air pollutioncleanup program that has since yielded important health benefits.

3.9 Inefficient or ineffective government interventions. Sound economic policies are usuallygood for the environment. But macroeconomic decisions regarding exchange rate, monetary, fiscal, andpublic expenditure policies can promote environmental degradation, particularly when combined withother policy and market failures (see chapter 4). Where environmental resources are not correctly priced,for example, there can be serious distortions in resource use and allocation. Pesticide subsidies, forexample, often lead farmers to overspray their crops, which induces pest resistance to pesticides. Thisin turn promotes a greater number of applications, escalating costs, and environmental contamination.In Central and Eastern European (CEE) countries, systematic under-pricing of energy and inputs forindustry and agriculturehave caused severe pollution problems through excessive and inefficient industrialenergy consumption.

3.10 Institutional failures. The vast majority of NEAPs identified institutional weaknesses asthe major factor contributing to environmental degradation. Unclear definitions of institutionalresponsibilities and weak implementation capacity often undermine effiective enviromnental management.In many countries overlapping responsibilities among several agencies at different levels of governmentlead to contradictory signals to polluters, and conflicting objectives among different agencies charged withpollution control. Common factors contributing to weak capacity include lobbying, short-term planninghorizons, and lack of public consultation. Factors more specific to environmental initiatives include amismatch between responsibilities and budgeting (a major cause of weak implementation capacity); ashortage of qualified personnel; insufficient penalties for noncompliance with existing regulation;information gaps; and ineffectivejudiciary systems. Some or all of these institutional failures have beenidentified in countries as diverse as Egypt, Ghana, Seychelles, Honduras, Poland, and Sri Lanka.

11

Setting Objectives and Identifying Instruments

3.11 Once priority problems and their causes have been identified, the next step in environmentalplanning involves determining the most appropriate policy instruments and establishing problem-specificgoals and objectives through an iterative process. To agree on such objectives, the key actors must knowtwo things: the available instruments for controlling pollution and the costs of using alternativeinstruments for achieving different levels of control. Based on this information, they can assess thefeasibility of achieving the proposed objective.

Identifying Alternative Instruments

3.12 Environmental instruments include regulations, economic tools, property rights, and othermechanisms such as ilformation, education, and direct government investment. These instruments canbe applied to a range of environmental problems and require varying degrees of incentives, information,and institutional capacity for implementation (box 3.1).2' Increasingly national governments are comingup with creative solutions to local problems; annex 2 presents details on selective country-specificapplications of numerous standard environmental policy instruments.

CompIaring Costs and Benefits

3 '3 While the basic framework of benefit estimation permits a comparison of the environmental costsof various problems to determine the priority ones (see box 1.1), determining priority actions requiresanalyzing the costs of control and the benefits associated with their solution. Ihe following steps helpidentify priority actions.

3.14 Assess costs of action. Environmental control actions will most often have some costs.To control soil erosion, for example, farners will have to invest in terracing, fallowing, or managingcrop residues. Similarly, pollution abatement often requires investments in filters, or changes inproduction technologies. Estimating control costs tends to be simpler and less subjective than estimatingihe benefits associated with them because the costs only involve technological coefficients. NumerousNEAPs present lists of potential projects with specific control actions, but few include the expectedbenefits in monetary terms (see below).

3.15 Compare costs and benefits. Determining priorities among environmental actions shouldbe based on comparisons of their social benefits and costs. To arrive at the net social benefits, controlcosts need to be compared witn the expected benefits originating from the control.Y Actions generatingthe greatest net social benefits should be selected first. This approach was recently applied in Santiago,Chile, to evaluate alternative pollution control options (see box 3.2). Where cost-benefit ratios for several

7/ For more information on comparing the advantages and disadvantages of environmental policy instruments,se Benstein (1993), Eskeland and Jimenez (1991), Tietenberg (1988), and Opscoor (1994).

8/ More formally, the marginal costs of reducing environmental degradation must be compared with themarginal benefits originating from it. This is because the real decision is whether new investments in control shouldbe made. Thus what needs to be oompared are the costs of making an additional investment in control and theresulting benefit in tenms of improved environmental quality. The mle for action is to push control until themarginal control costs are equal to the expected marginal benefits.

12

BOX 3.1: ENVIRONMENTAL POLICY INSTRUMENTS

The following are the most common types of policy instruments to address environmental problems.

Regulatora instruments. Often referred to as 'commad and control", regulatory tools are the mostcommonly used instruments im environmental management. They involve direct regulation along withmonitoring and enforcement systems. Examples of this approach include various types of standards (that is,emission, effluent, and product standards) for industries and motor vehicles; public health codes; and land useregulations designed to mnage and protect sentive land and cultural resources. The advantage of thisapprach is thzit, whean properly implemeted. and enforced, regulition affords a reasonable degree ofpredictability about how land will be used or:how much pollution will be reduced. Its main drawback is thatit can be economically inefficient and excessively costy to implement.

:Economic instruments. Economic or market-based instruments rely on market forces and changesin relative prices to modify the bebavior of public and private polluters and resource users. They includevarious types of pollution charges, user charges, market creation (emissions trading), and subsidies (forexample, tax incentives, grants, low interest loans) to induce polluters to reduce their discharges, lower thecosts of pollution abatement or prevetion. or to encourage landowners to conserve Laiul resources. Someinvolve direct costs to the resource user (for example, stumpage fees for loggers, pollution taxes based on thevolumie and toxicity of discharges); others involve indirect costs, such as pollution taxes on inputs (forexample, pricing water for industrial use at its true marginal social cost). The main advantage of-the market--baed approaches is that thly allow firms and individuals to respond flexibly and independently in line withmarket prices. The major i t is that their-effects on enviromental quality are not as predictableas those under a traditional regulatory approach becaui a polluters may choose their own solutions.

f.ggW s P gijhL Defining and enforcing property rights is aimed at reducing conflicts over land andaccess to nahtual resource. This may involve clarifying- water Lights to promote water conservation,allocating discharge or emissions rights to control pollution, or providing secure land tenure to encourageinvestment in housing and infrastructure. Initiating programs to clarify. land tenure normaliy requires the -politicalwill -to institute land reforms and extensive prparation in reviewing existin laws,' unierstandingcustomary systems of land-tenure and eventuallyintegrating them mith modem land titling systems, anddesigning simple and-efficient lamd-titling and registration procedures.

- Informaton and education Some market aiilures leiding to environmental dedao result oma lack of information. For :example, in the absence of informiafion about-the nature and extent of pollutionemissions by finrs, loca nommunities may be- unaware of pitential haz-rand what can be done to reducerisks. lnfiomation and edi=ion can be effective tools fo rmobilizing affected parties, expanding knowledgeabout enviromnental and health conditions, and supporting environmental management decisions. They includeenvhinmental assessment,- environmental-mediation, public information campaigns, geographic informationsystems (GIS), resah and monitoring, and professional education and- information exchange.

Direct public investment. This appmach involves direct public ivestment to manage pollution and-wastes, develop new technologies, guide develont, or serve the ial neds of vulnerable populations-and resources. Because of the high costs associated with this approach, direct investment should be applied

ly -in -cases where other itruments are not feasile or sufficient for resolving critical problems. Furthr,where direct investment is required the strateg 'should indicate-potential funding sources.. -An effective means-for identifyingand mobili.ingfinacial spport is:to discuss the environmental strategy and-action plan withcentral ministries, national development banks, and external agencies (see Chapter 4).

13

alternatives are very similar, however, it is necessary to consider other criteria in selecting priorityactions.

BOX 3.2: THE COSTS AND BENEFITS OF AIR POLLUTION ABATEMENT IN SANTIAGO

To identify the most cost-effective of several air pollution control options for the Santiago metropolitan rgion,a cost-benefit analysis was undcrtakcn. In this study, four control optins were evaluated: emission standards for light-duty gasoline vehicles, emissio standards for tnrc, compnessed natural gas for buses, and conversion of wood-buniingindustrial sources to diilat fiel oil. The following steps were taken to assess the benefits of each option: a dispcrsionmodel was used to estimate the improvenents in ambinkt air concentrations from emission reductions. Population-basedweights were used to estimate exposure above acceptable ambient standards. Dose-response fimctions were used toestimate the heath effects of the control strategy, and a simple valuation (losL productivity) was used to estima healthbenefits in terms of lost workdays Fially, the average daily wage was used to approximate a monetary mcasure for tehbeah bcner-

Becausc the costs of each intcrvention are known, ih is possible to campare the (partial) benefits to the knowncosts. As -shown in the following lable, a number of the interventions had very impressive bencfitcost raios: forexample, fixed source measures would cost 59 millin per year to implemcnt and would yicld cxptd benefits of ovcr$26 million per yar. hc stdy lso alowedcomparison acrss varous air-poDutants to help set priorities among airpoilution control invcstments.

Bemuse th estinmatd benefits ar on the low side (only including healh and not other benefits such as damageto infrauctur or aesthetics), the study indicates that the proposcd contrl strategy is attractive on the basis of healthbenefits alone, and would be even more atractive if other benefits are included.

-f"Benefits K Cast Rati of be-f-t to costs

Fixed sources 26.69 9 3.0

I Gaine-eh vehicles 32.71 - X;:2 35 .e9

Buses Pw, . : : .36.57 18 2=0

Tr -:ks 7.73 .5 1.-

.Control strategy -10342 67 A.5

3.16 While cost-benefit analysis seems plausible for establishing priority actions, it requiresinformation that frequently is not available in developing countries, particularly estimates of benefits (ordamages avoided). Moreover, for problems like the loss of biodiversity, where monetary estimates arevirtually impossible, decisions have to be based on additional considerations. For example, the WorldBank proposed a nonmonetary cost-benefit analysis in Sierra Leone and some other African countries,using expert judgement to weight the relative importance of environmental problems, selectedinterventions and overall priorities (box 3.3).

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BOX 3.3: PRIORITIZATION INDEX USED IN SIERRA LEONE

Each envilromental problem is rated by expcrts on a three-point scale as high, moderate, or low for cach of thethree fictors: cnvironmental signilicance, potential intervention bencfis, and potential intervention costs. Anoveral priority is then computed for each problem by multiplying-the environmental significance by the difference[benefits - cos]._-Problem Environmantal Intervuion hIntrvention Ovrall-

________________J significanc benefits costs . prrity|Watcr Conhnat Hih igh Moderat HigWater AvailabiLity High High Low HighLiving conditions

urban. High High Moderate -Highrura Moderate Moderae Moderate Low

Land degmadaion High. High Moderate ighDeforestation Moderate High Low HighForcst degadation Moderate Moderat. Low .ModerateBiodiversity loss Low. High Low ModerateMangrove loss0 . Low- High Low Moderate-Poluion fom miningI Low Low Low Lowlanddegradation finm minin High. - High - Moderate High

Identifyin2 Priority Actions With Incomplete Information

3.17 Lack of data needed to perform full cost-benefit analyses may lead decisionmakers to makeinappropriate decisions by choosing actions whose benefits do not justify their costs. While this problemis not unique to environmental management, the difficulties in placing monetary values on manyenvironmental benefits calls for the use of alternative criteria. One of the best things to do in this caseis to perfbrm cost-effectiveness analysis, which identifies the least cost way to reach a given objective,without considering the level of expected benefits. Expert opinion, public views, and experience fromother countries can all be used to help identify cost-effective priority actions.

318 Settinz obiectives. Establishing environmental objectives is a consensus-building processrequiring a balance of rigorous technical analysis with consultation among relevant actors. This process,which requires continual consultation with stakeholders, will eventually lead to the appropriate level ofpollution control and the selection of appropriate instruments or actions. Moreover, even if no precisemonetary estimates can be made, the process will lead to mutually agreed objectives, which is preferablein terms of likelihood of compliance and economic efficiency. Experience in the United States illustrateshow such a process works in practice (box 3.4).

3.19 Selecting Cost-effective lnstruments. Cost-effective instruments are those that achieve the desiredoutcome at the least possible cost. For example, in preparing the action program for controlling airpollution in Poland, a study was carried out comparing the costs of various instruments to meet emissionreduction targets for particulates, sulfur dioxide, and nitrogen oxides. The study concluded that relying

1C

on pollution charges rather than regulatory instruments would reduce the present value of control costsby 54 percent (approximately US$7 billion) over a period of 24 years. Cost-effectiveness analyses madein connection with the action program for transport air quality management in Mlexico City indicated thatretrofitting heavy-duty vehicles with naturl gas was more cost-effective than introducing a system ofvehicle inspection, which over time would have been more cost-effective than improving fuels (figure3.2).

BOX 3.4: CONSULTATION FOR ESTABLISHING ENVIRONMETAL REGULATIONSIN THE UNfTED STATES

According to the Administrtive Procedures Act, the U.S Environmental Protection Agency (EPA)must ensure that the public is informed of all proposed regulatory actions. First, the EPA must give notceof a p action to the: public by publishing it in the Federal Register, a daily publication containingproposals from all federal agencies. -T7he public then has the right to comment on the proposed rule. Thecomment period must be at least 30 days; in the case of major or controversial proposals, the comment period.-may be 60 or:90 days or more, with numerous public hearings held around the country. When drafting thefinal rule, the EPA must consider the data and information-gathered during the comment period. The fialrule may look exactly like the proposed rule or be modified-substantially. It is not uncommon for this processto-take-as long as five.yars *fom the drafiing of the initial proposal to publication of the final rule in the*Federal Register.

Thie most important fctor slowing the regulatory process is the threat of or -actual itigation byindustry, environmental grups, or both. Because of the high probability that a rule will be chalenged. EPAhas developed a process called regulatory negotiation, which tries to bring together all of the interested partiesbefore the proposed rue -stage. All parties must agr that if a consensus is reached b the group, noneof its members will litigate the final rule. Not all regulatory actions are good-candidates for this process._In some cases there is so much hostility between groups that they will not meet or will not trust the other sidemot to litigate. Sometimes industry coalitions:faHll apart because one industry may benefit -at the .expense ofanotherbased on the regulation.--

3.20 Market-based instruments (box 3.1) may offer the least-cost solution to selected environmentalproblems, so they tend to be cost-effective. Nonetheless, there is relatively little experience in usingthem, particularly with respect to natural resource management. But for some resources such instrumentsare fairly easy to apply: the NEAPs prepared for Bulgaria, Egypt, Nigeria, Poland and Romaniarecommend increasing fuel prices as a cost-effective measure to reduce air pollution. Other examplesof market-based approaches include:

* The Egypt NEAP, which proposes that water, a scarce resource, be priced at its realopportunity cost, to encourage water conservation and recycling.

* The Ghana NEAP, which explores the possibility of introducing tradable permits forcontrolling effluent discharges in the Korle and Chemu lagoons.

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FIGURE 32: Cost-Effectiveness in Controlling Air Pollution in Mexico City

In controlling air pollution from transport, the Mexican govemment identified a number. of policies andactions to reduce pollutant emissions. The benefits of each instrument in terms of reduced emissions iscompared to its cost. The cost-effectiveness criterion calls for the early implementation of those measuresshown closest to the origin of the graph.-

Incremental cost of reducing emissions(thousands of dollars per ton)2,600

Fuel2,100 imnprovements

Emission standards7 psnS, X|1.600-CaE

,200 (' {replacements)Gasdn

- Uwlinibuses tru t\

lGlltl _ 1 1 ! FIren~~~~~~~~~~~gthenelVaparrecovezv k Luspection

lrInspecdon of passengercars100 Inspection oi high-use vehicks'

a - - ------ -------

Natural gas retrofi~s400 U I I

0.2 0.4 Oh O.S 1.0 1.2 1.4Reduction in toxicitv-weighted emissions

(millions ot tons)

SOURC -Eskeland (1992).

3 The Cyprus NEAP, which proposes the use of transferable development rights toconserve historical or cultural sites without depriving their owners of developmentoptions or paying large amounts for compensation.

3.21 Win-win solutions. In a number of situations, policies implemented in other sectors ofthe economy will lead to improvements in environmental quality. From the environmental perspective,therefore, this is a free-ride situation. Examples include:

* Removing subsidies that encourage excessive use of natural resources (fossil fuels,irrigation water, trees for logging).

* Clarifying land rights to promote better land management.

* Accelerating the provision of clean water, sanitation, and improvements in publictransportation or introducing energy-efficient technologies.

17

3.22 Among the win-win solutions, eliminating pricing distortions should be considered first for severalreasons: (1) it usually reduces government expenditures and may generate additional budget revenues;(2) the distributional implications are in the right direction because many subsidies favor the rich; and(3) it tends to be easier t.hn introducing new instruments or developing new institutions.

3.23 Administrative and financial feasibility. The selection of appropriate instruments has tobe matched with the capacity of implementing agencies to undertake the complex measures involved, suchas charging and collecting taxes and fees, measuring emissions, and determining environmental effects,all of which require coordination among government agencies. As discussed in the Poland CESP, forexample, since instruments that require strong enforcement capacity or a high rate of voluntarycompliance are difficult to implement, the recommendation was that the government should abolish theexisting set of unrealistic standards and adopt the less-stringent, but potentially more enforceable,European Community standards.

3.24 Equity. The sharing of the costs and benefits of environmental protection may haveimportant equity dimensions. For example, requiring private firms to absorb the full costs of pollutionabatement (the polluter pays principal) shifts the burden from those who normally suffer fromenvironmental degradation (often the poor) to those responsible for causing it (industry). Equityconsiderations, however, should be carefully balanced with environmental factors. For example, inMexico vehicle ownership taxes were lower for older (more polluting) vehicles. Although this policyfavored the poor, it perpetuated ownership of older vehicles, thereby exacerbating air pollution.

3.25 Other Criteria. Other important factors include the following:

* Transparency. The transparent and open process of adopting and implementing standardshelps enterprises adapt to changing regulatory conditions. Firms and other stakeholdersare more likely to comply with instruments when they understand how they were chosen,or were part of the decision making process.

* Flexibility. The flexibility of the instrument is an important consideration where localconditions are changing. For example, a regulation can be implemented with greaterspeed and flexibility than a charge or tradable permit, factories can be closed under asmog alert, and standards can be made less stringent during economic crises.

3.26 No single instrument can ach;eve all environmental management objectives. In most cases it isnecessary to select an appropriate mix of instruments matched to the special characteristics of eachproblem and locality, the actors whose behavior needs changing, and the desired behavioral response (box3.5).

Additional Considerations

3.27 Three further considerations are important. The first is the continuity of existing projects andprograms. Governments may find it less costly and easier to complete existing projects than to interruptand redefine ongoing actions. Indeed, if project development had to await the detailed preparation ofvarious plans and programs, proposals could be overtaken by events or environmental damage couldbecome irreversible. The second consideration is the complementarity with other government priorities,both regional and sectoral. For example, environmental initiatives can be cheaper and easier toimplement when they are part of larger agricultural or industrial programs. Finally, programs should

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BOX 3.5: INSRIJMENTS TO CONTROL AIR POLLUTION IN EGYPT

The Egypt NEAP recognizes that air pollution is the result of the actions of milLions of vehicleowners and the operation of electricity generation plants and industries. A regulatory approach can have onlylimited success in affecting the actions of so many actors. Thus greater reliance should be put on market-based incentives for operating more efficient vehicles and plants using celmer technologies and fuels.

To address urban air pollution from motor vehicles, the NEAPs specific recommendations include:phasing out energy subsidies by 1995; introducing a tax on gasoline after 1995; reducing lead in gasoline byrequiring refineries to produce unleded gasoline and leaded gasoline with maximum lead concentrations,introducing differential prices, an requiring gasoline distributors in Cairo and Alexandria to supply unleaded

.gasoliiie; iproving triffic m ment; improving mlss transit in long term; and setting lower import dutieson veiicles with low emissions, fiel-efficient vehicles, and vehicles with catalytic converters-

To .reduce air pollutionafrom industrial sources, the Egypt NEAP recommends: reducing the use ofhigh sulfuir fuel by requiring new plants in urban areas to use fiuel with sulfur content below one percent and=by levying a taxon the amount of sulfuir in fuel oil to encourage desulf'urization of heavy fuel; developmg air*emissionpolicies by refining and developing emission staasand means of enforcing them and improvingzoning of pollution industries; and developing public awareness of air pollution costs.

be structured to achieve some early success, however modest, so as to build confidence. In Mali, fbrexample, the government identified eight major polluting faciities next to the Niger River and issued anultimatum to clean up their operations within three months or face closure (O'Connor, 1988).

Obstacles to Selecting Priority Actions

3.28 Despite the importance of defining priority actions in environmental strategies and action plans,less than half of the NEAPs reviewed ranked their actions. Even among these not all have husked actionsacross sectors and most important, few made the ranking criteria transparent. This suggests that therearetechnical and practical difficulties in prioritizing actions. Some of these difficulties include: unfocusedparticipation, which may make consensus-building difficult; insufficient information and inconsistenciesin national data sets; and excessive autonomy by states relative to the federal government (see chapter2). Additional constraints are that many NEAPs are seen as a means to attract funding, so they tend toidentify as many projects and programs as possible and that competing sectoral and regional interests,particularly in larger countries, often produces inefficient results.

3.29 The final consideration concerns the practical limitations in establishing priorities. Nationalbudget allocations are determined by ministries of planning and finance. Each ministry allocatesresources to the most pressing problems according to its sectoral perspective. Because environmentalproblems cut across multiple sectors, no single agency decides on environmental investnent priorities.Where the relevant agencies do not support or participate in the national environmental planning process,addressing these conflicts requires careful institutional coordination through environmental negotiationand mediation.

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4. Ensuring Effective Implementation

4.1 Preparing environmental strategies based on rigorous analysis and priority setting will notguarantee effective implementation. Experience in both industrial and developing countries demonstratethat environmental improvement generally occurs when there is public pressure for change andgovernments have the necessary commitnent and capacity to respond. To ensure successfulimplementation, it is important for the strategic process to incorporate: participation by key stakeholders,well-functioning institutions, mobilization of financial resources, realistic monitoring and performanceindicators, and integration of environmental concerns with broader development objectives.

Involving Key Stakeholders

4.2 Although implementation experience is still limited, lessons from countries such as Ghana andMadagascar suggest that environmental strategies have a better chance of successful implementation whena wide range of public and private stakeholders participate in preparing them. The strategies will alsobe more realistic and contain a broader base of knowledge, understanding, and commitment from thegroups involved1. As mentioned earlier, key stakeholders in the environmental planning process includethree groups of actors:

* Those who control implementation instruments (govnment).

* Those who cause or are affected by environmental problems (the poor, industry).

* Those who have relevant information and expertise (universities, international and localNGOs, the media).

4.3 Unfortunately, two important groups that are frequently excluded from the planning process arethe ministries of finance and planning as well as those causing environmental degradaion (for example,major industries and other polluters, land users). Due to the critical importance of these actors insupporting environmental improvement, efforts should be made to include them early in the planningprocess.

Benefits of Participation

4.4 Participation is a process through which stakeholders influence and share control overdevelopment initiatives, decisions, and resources which affect them (World Bank 1994). The experienceof a growing number of countries confims the benefits of stakeholder participation. In formulatingenvironmental strategies, participation brings the following benefits:

* A broad base of knowledge and opinion on issues, tradeoffs, and options in the timeavailable.

21 For more guidance on the participatory process, see Carew-Reid et al. (forthcoming). World Bank (1994c),and World Rank (1994d).

20

* Increased debate on and understanding of major issues both within and among differentgroups.

* The tackling of issues that cannot be identified, properly defined, or dealt with by anyother means (for example, changing values, local conditions, rights and claims lifestyles,and issues such as poverty that might otherwise be submerged).

* Practical and realistic objectives, targets, and standards, which are negotiated so that theyare locally acceptable, meaningful, and implementable.

* Ownership of and commitment to the strategy, built up by groups actually working onit

* Greater political credibility than when the strategy was the product of technicians andbureaucrats, as well as greater accountability and transparency (Carew-Reid et al. 1994).

4.5 Although the participation of a wide range of actors can ensure broad-based consensus on nationalenvironmental issues, the participatory approach can be costly - in terms of time, special skllls,communications, and management requirements. For example, formulating policies and plans has taken3 to 6 months for NEAPs with minimal participation, while those with more participatory planningexercises have taken from 18 months to 4 years. Nonetheless, effective participation by key stakeholdersin the early planning stage facilitate agreement in the later phases of planning and implementation. Andas demonstrated by numerous lending operations, participatory planning may raise the cost of projectdesign initially, but the overall time required from identification to the signing of a loan need not besubstantially longer for participatory projects. f

Managing the NEAP Process

4.6 Coordinating the many actors involved in strategic planning can minimize some of the costsassociated with the potentially large number of actors involved. Countries such as The Gambia, Uganda,and Sri Lanka have used such devices as a lead agency, steering committee, and issue-specific workinggroups:

* Lead agency. The agency most often assuming the main coordinadng role is the nationalenvironmental agency or ministry, or equivalent. NEAPs are most effective, however,when preparation involves the ministries responsible for economic as well asenvironmental decisions. In Nicaragua, for example, the involvement of the Ministry of

10/ The benefits of participatory approaches in lending operatins ae most often evidenced as improveamsin the quality, effectiveness, and sustainability of the development efforL lThe Annual Review of Evaluation Results1992, by the Bank's Operations Evaluation Department ;L"ted borrower ownership and beneficiary participation astwo of the most important featres of the 24 lending operdons classified as outstanding. Further, a statisticalanalysis of 121 rural water supply projects in Asia, Africa, and Latin America, identified beneficary participationas the single most important factor in determining overall quality of implementation and the most important factorcontributing to increased access and control over water resources. Participation also resulted in communitymembers acquiring water-related and organizational sldlls and strengthened community organizations, which wenton to undertake other development activities (World Bank 1994c).

* ~~~~~~21

Economy as the lead coordinating agency with technical support from other lineministries raised the political status of the document, which was finally signed by thePresident as the country's official strategy for the environment.

* Steering comminee. Steering committees provide guidance on major policies and issuesto ensure effective coordination among the key players. They usually include relevantnational ministries, NGOs, and representatives from the private sector. In Uganda,NEAP preparation involved a Cabinet-level Steering Committee chaired by the PrimeMinister and 12 Ministers having environmental responsibilities- Representatives fromdonor agencies can also be included in the steering committee if the country intends toseek external funds for project implementation.

* Issue-specific woring groups. In preparing NEAPs for such countries as The Gambia(box 4.1), Nepal, and most of the CEE countries, working groups have been set up tofocus on specific environmental issues (for example, air and water quality, naturalresources, urban environment) to provide inputs to the NEAP. Members of these groupsinclude local consultants, local NGOs, and the academic community.

4.7 Recognizing the need for effective communication in determining the concerns and priorities ofmany stakeholder groups, Guinea launched a priority setting process that involved many local NGOs anda multi-media campaign to mobilize community interest. A communications strategy, therefore, may beneeded to guide participation in strategic planning. The strategy will focus on how to keep participantsinformed, disseminate strategic documents to various stakeholders, solicit feedback, and identify the mostappropriate media for dissemination of information.

Imnroving Institutional Performance

4.8 Without a clear legislative famework and effective institutions, well-conceived policies and otheractions to address priority enviromnental problems cannot be translated into practice. The majority ofnational environmental strategies address three key areas for improving institutional performance: (1)assigning clear institutional responsibilities, (2) establishing consistent and transparent legislation, and (3)ensuring effective implementation capacity.

Clarifying Institutional Responsibilities

4.9 Because environmental problems cut across sectoral boundaries and involve many differentagencies, clearly delineating institutional arrangements is crucial for effective implementation. Therefore,in establishing institutional responsibilities many of the more effective NEAPs highlight the need to:

* Minimize opportunities for conflict. The Nicaragua NEAP demonstrates the importanceof ensuring that regulaory, monitoring, and enforcement responsibilities are not inagencies that have conflicting incentives or objectives. In this case, the Ministry ofEnvironment regulates the fishing industry (m terms of seasons, overall catch, location,and so on), but the Ministry of Economy, whose main responsibility is to generateforeign currency, enforces the fishing regulations. The incentives for the Ministry ofEconomy to overlook any constraining regulations are clear.

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BOX 41: PARTICIPATION IN NATIONAL ENVIRONMENTAL PLANNING

TH GAMBIA: Aconsultativeandparticipatoryapproach was usedinpreparingTheGambiaEnvironmentalAction Plan (GEAP). The process began with a consulttive tedcnical workshop that focused at pmvidinginformation an the environment and identi1ying solutions to critical envinmentl problemsl The workshopwas attended by govermment officials, nongovemment agencies, community representatives, donor agencies,and representatives of the private sector. Two woddg groups were formed to consolidate the findings of thisworkshop. After the working gps completed their tasks, a second workshop was held to hiaronize.theirreports and saut work on priority inteventions and feed into the draft of the GEAP. Another working groupwas formed to .xamine the economic, -policy, -institutionl, aid legal insuments required for theinplementataofthe GEAP, whichlad to a revised GEAP. This dfi was then reviewed by vanousgroupsinluding permnent sties, the ecetary generl, and the head of the civil service. The final draft wasapped. by bthe National Environmental Management Concil and the cabinet

NICARAGUA: In preparing the NEAP, the coordination team based its multi-phase process on cosusbuildingamong key institutionsand socia actors. First, the tean preprd background mmaials using relateddocument, particllarly the National ConservationStSateg for Sustinable Development (NCSSD) and- the-Envrmena Zoning Plan, as weU as the-Cosuk*a Muidpal, a prcesslaunched in 1991 for the ForestryAction Plan. -This consltatio involved more than 1,400 rpresetatives fron municipalities where majorproblemss and environmental priorities had -been identified. -Based on these consltations, a second phaseinvolved preparing 18 thematic reports, which wem thernintegraed mto a document summarizingthe mamicauses and effects of environmental problems.- 18 worshops involving-some 300 -govenment experts,academic institutions, and the private sector were held. Next, lead expertpreparedia policy framework andidentified geogrphical and-action-prioritiesjbloowed-b Selected costi.- Fmally, il proposals wereintegrated The coordination- team organized various intemal wohops-to 1in any gaps,n miimize

-duplications, -and correcinconsise cies between the goals and -ations of the 13 sectoira plans and -5intersectoral plans. This final stage was critical.for establishing and mapping priorityactions-and facilitaingthe neces institutional coordination for-implementaidon.

S;oure:=Njie (1994). andGovement ofNicaagua (1993) '

* Clearly define the status and functions of responsible agencies. In delineatinginstitutional responsibilities, numerous strategies try to find the right balance betweencentral and local responsibility. For example, the establishment of pollution standardsshould probably be established at the national level because the competition among statesor regions in attracting industrial development may lead individual jurisdictions to lowerenvironmental standards. In contrast, the delivery of local environmental services suchas solid waste collection is appropriate to local government. As highlighted in the YemenNEAP and others, however, decentralization of environmental managementresponsibilities must be accompanied by adequate transfers of fuids or powers to raiserevenue to provide these services.

* Ensure effective coordination among government agencies and other actors. Whileindividual agencies should execute their own responsibilities, an organizational structureis needed to ensure necessary coordination. This requires establishing an agency with

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enough political status to coordinate policies and provide technical and political supportto state, local, and sectoral agencies (box 4.2).

BOX 4.2: IMPROVING INSTITUTIOAL COORDINATION

CENTRAL AND EASTERN EUROPE. To increase inrministerial coordination, the Environmental ActionProgrAmme for Central and Eastem Eurpean Countries recommends: (1) creating a Deputy minister orequivalent senior position for environmental policy and regulations to focus on economic policy issues,stategy development, and policy implementation, (2) designg tasl-oriented teams to connect existingdepartments and provide liks between ministries; (3) setting up cabinetlevel commitites bringing togetherthe ministries of environment with-economic and sectona ministries, (4) establishing temporary task forcesof high-level officials to-prepare- the wok for these committees and to provide career and other professionalincentives to encouage participation, (5) designating staff frmm the ministy of environent to participate instrategy development m sectora ministri and mvite sff from those ministries to workng groups in theministry of environment-on reIant issues, and (6) within the ministry of environment, creating capacity forevualating policies and setting long-term anrgets for key enviromental indicators.

THE GAMBIA. The Gambia NEAP recommends upgading the environmental unit from the misty ofNatural Resources into a semiautonomous unit m the office of the PresidenL IThis change will give the unitgreater aitude and responsibility for environmental policy formulation, coordination, monitoring, andregulation.- The recommendation also specifies that dte new unit ivill support tbe sectoral ministries through-technical -working groups and a- technial advisory committee, but will not be responsble for projectfimplemenaion.- -

-BULGAR. To ensure i isl ordination in addressing pollution control the Bulgar NEAPrecommends- establishing a--Suprme Ecological Council of perts. Serving as -an advisor to dte ministry ofenvironment, the council's main functions include review applications for project suppOrt, -and review workin researh and development in pollution abatmnt activities. -

Establish Consistent and Transparent Leisl

4.10 Although the existence of enviromnental legislation does not guarantee successful implementationof environmental strategies, its absence usually results in failure. A critical element in enviro=nentalmanagement, therefore, is to establish consistent and transparent environmental legislation. SeveralNEAPs highlight the need to:

* Promulgate transparent and flexible regulations to implement the laws. Although theexisting legal framework may provide for comprehensive protection, most countries stillneed to establish supporting standards and regulations. And as demonstrated in numerousNEAPs (for example, Poland, Bulgaria) it will be necessary to revise existing standardsand regulations where they are excessively stringent, unclear, or obsolete.

* Ensure the consistency of environmental laws with the laws and incentives of othersectors. Because actors causing environmental degradation tend to respond better toeconomic incentives than to restrictive regulations, environmental laws should avoidconflicting with the incentives in other sectors. For example, the fiscal incentivesprovided by the regional development agency in the Brazilian Amazon to attract

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investments in cattle ranching in the early 1980s encouraged the conversion of virginforests despite laws requiring the preservation of 50 percent of the original forest.

Build Implernentation Capacity

4.11 Most national, state, and local institutions in developing countries lack the necessary resources,incentives, and trained staff to effectively carry out their environmental management functions. To alarge extent, weak institutional perfonnance reflects a lack of political will. To address these concerns,environmental strategies for several countries (for example. Poland, Indonesia) highlight the need to:

* Ensure political will. Political decisions are usually the responsibility of those at thecenter. One way to ensure political will is to empower people at the periphery and tofacilitate their participation through awareness programs and devolution of legislative andadministrative responsibilities. The adoption of transparent procedures, development ofinstitutions at the periphery, legislation to effect devolution, and correspondingadministrative reorganization are essential.

* Match management responsibilities with funding and available expertise.Enviromnental management responsibilities should be assigned only to those agencies thatha;e the necessary funding and technical expertise to execute them. As discussed below,funds are potentially available from the national budget; from earmarked revenues,particularly those related to environmental services; and from extemal sources.

* Create a system of incentives and penalties. Both private and public actors needincentives to induce compliance with enviromnental laws. For private polluters, forexample, the threat of fines and jail terms can be a powerful force in limitingenvironmental damage. Financial measures should also apply to government agencies,who are themselves polluters, when they do not meet their environmental managementresponsibilities. For example, the China NEAP describes incentives for ensuringeffective institutional performance in urban environrnental management (see box 4.3).

BOX 4.3 INCENTIVES FOR EFFECTIVE URBAN_EN :VIRONM1-ENTAL MANAGEM.ENT IN CHINA: . ...

.--.Environmental protctionagencies conductanualin ions of environmental qualiyeineach urbandistrict. .he National Ei 6 Protecon Is eponsiblefor inspecting 37 major cites; other

- cifies are examined-by pncial environmental protection boads (EPBs). The results- of tiie examinations.. re compared, andthe ten best anDdi-ten -worst cities a:e published in the newspar.: The mayors of the top

ten cities each receive anaward, the mayors of the: te worst cities are crticized in n . Prgress.is monitored byAthe EPs The.flocal EPB is-under.the;control of the mayor, but the -mayor must reportto0

the ~ dii6provincial -EPB.-- : -= - : -: - : . :

.. ... .. i - . -. - = . - . . - =- -----5

* Expand opportunities for private sector involvementL The private sector (for example,local community groups, local and international NGOs, private firms, research institutes)can play a key role in planning and implementing an environmental strategy. Communitygroups, for example, are in a unique position to identify the most important localproblems and propose ways of addressing them. And as pointed out in the Madagascarand The Gambia NEAPs, NGOs can play an important role in implementation. They canmonitor performance of govermnent agencies, carry out government tasks when this ischeaper and more efficient, and disseminate information.

* Ensure efrectiveness of the judiciary. Although rarely acknowledged in the NEAPsreviewed, weak enforcement systems motivate polluters and other offenders to delayinvestment in environmental improvement. The strong court system, therefore, can helpensure timely and effective enforcement of environmental laws and regulations.

Mobilizing Financial Resources

4.12 Countries are increasingly aware that significant environmental improvernents can be achievedat little or no cost. For example, certain costless changes in farming practices will increase agriculturalyields and reduce soil erosion. Similarly, relatively inexpensive adjustments in production technologiesmay increase efficiency and minimize energy consumption, thus reducing overall pollution. Such win-winopportunities should be pursued before new investments are undertaken.

4.13 When new investments are necessary, however, their implementation requires the mobilizationof adequate financial resources. Under the "polluter pays principle,' internal funding should come fromthose responsible for the pollution. But because the benefits of environmental improvement often accrueto society at large, particularly the poor, governments may have to contribute to these expendituresthrough general revenues.

4.14 Domestic fiuding for the implementation of national environmental strategies is helped byinvolving central planning and finance ministries, and national development banks in their preparation.In numerous countries (for example, Japan, Indonesia, Korea, Poland, Thailand), governments haveestablished national environmental funds to channel revenues from pollution charges, taxes, and othersources to priority environmental investments (box 4.4).

4.15 Finally, external donors can be an important source of funding. The World Bank itself iscurrently supporting a number of these operations. For example:

* Madagascar. The Bank (through low-interest IDA credits), together with severalbilateral aid agencies and various NGOs, is providing resources to finance the first five-year segment of the national environmental action program. Project components includeprotection and management of biodiversity; soil conservation, agrofbrestry, reforestationand other rural development activities; mapping and establishment of a geographicinformation system; defining clear boundaries for protected areas and land titling;environmental training, education, and awareness; and research on land, coastal, andmarine ecosystems.

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* Ghana. IDA, several bilaterals, and the Global Environment Facility (GEF) aresupporting an Environmental Resource Management Project derived directly fromGhana's NEAP. The primary objective of this project is to strengthen the capacity ofboth the government and the people to better manage environmental resources,particularly improved land and water management, and improved coastal wetlandsmanagement.

* The Gambia. The goal of the IDA-funded Capacity Building for EnvironmentalManagement Project is to strengthen the National Environmental Agency (NEA) andother relevant entities to enable them to implement The Gambia NEAP. Through theproject, these agencies will develop a system for environmental planning and managementto ensure fill integration of environmental concerns into the social and economicdevelopment process.

Integrating Environmental with Broader Development Objectives

4.16 Environmental objectives are frequently regarded as impediments to growth when environmentalagencies establish them without consulting other government agencies or the general public. Forexample, in Poland certain environmental standards were set at more stringent levels than those in theUnited States or Western Europe. Because they are not economically feasible, the otherwise goodintention of the govemment in providing its citizens with a clean environment resulted in noncomplianceand, ultimately, discredit. To avoid such situations, environmental objectives should be realistic andconsistent with the underlying political climate. If a govermment gives priority to maintaining productionand employment, then any environmental objective that threatens these goals will be ignoredL Similarly,environmental objectives should reflect the social and cultural values of the affected population.

Incorporating Environmental Obiectives Into Sectoral Policies

4.17 Environmental concerns are incorporated into project design ffirough the preparation ofenvirommental assessments. Although this practice is common in industrial countries and in manydeveloping countries, sectoral analysis normally overlooks environmental considerations. For sectorssuch as transport, mining, and many others, environmental concerns are taken into account only after keydecisions have already been made.

4.18 Sectoral environmental assessments are one attempt to address this problem. These assessmentsoffer an opportunity for sectorwide environmental analysis before invesunent priorities are determinedand therefore support integration of environmental concerns into long-term development and investmentplanning. Sectoral enviromental assessments are most commonly found in investment programsinvolving multiple subprojects (box 4.5).

Economywide Policies and the Enviroment

4.19 Most developing countries are undergoing a process of economic adjustment that is characterizedby greater reliance on market mechanisms. Because economic adjustment policies affect the use ofnatural resources, it is critical to understand the links between economywide policies and the

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BOX 4A: ENVIRONMENTAL FUNDS

JAPAN. A 1973 law provided for compensation of two classes of victims of pollution-related injuries. ClassI victims are those suffering from illnsses that cannot be related to specific pollution sources and Class Hvictims are those suffering from specific pollution-related illnesses. While Class 11 victims are directlyoompensated by the companies responsible, compensation for Class I is financed from a pollution levy paidinto a fund administered by tde Pollution-Relatd Health Damage Compensation and Prevention Association.The association proved to be highly effective in collecting levies based on sulfur dioxide emissions. Theassociation also administers a USS500 million find to finance air polution initiatives, with polluting industriescontributing 80 percent, and the governentv20 percent of the capital. Revenues are allocated to variousactivities to prevent pollution-relaed health damage (research, trining, medical exams, and grants for-fhcilities designed to minimuze pollution exposure).

KOREA. The Enviromental Pollution Prevention Fund is financed from govemment contnbutions and fromfines (or polution charges) levied on firms found to be exceeding emission standards. The fimd, which wasestablished in 1983, is'adiinistered bythe semipublicEnvironmental Management Corporation Ihe find'sresources are used to provide long-term, low-interest loans for pollution control investnents and to compensate

Cpollution victims.E

THAILAND. In October 1991 Thailand launched an environmental fund with an initial capital contribution:-by thegovement of-about USS200 million lIfa pollution tax is -introduced, it could become a major sourceof additional revenue for the fund. The proeeds are used' to assist smal-scale:enterprises with investmentsin pollutioncontrol technologies.

INDONEI4A. A pollutionabatement fund was established toprovide USS300 millionto banks for on-lendingto companies investing in pollution control equipment or hiring environmental consultants.

POLAND. The national environmental fund finances the-bulk of envirommental investments. Sources ofrevenue for the fund include air pollution charges, water pollution charges, water use charges, and watecharges. The funds are allocated through grant and inter-fre and other soft loans to support air and waterpollution control and other -enviinmental management-related purposes (soil protection, monitoring,education).

Source: O'Coor (1994); Lovei (1994)

environment, and, when appropriate, to promote policies that enhance natural resource conservationy'.

4.20 Available evidence suggests that economic instability is not good for the envirownent because itoften leads to accelerated consumption and thus rapid depletion of natural resources. Stabilization on theother hand, is a necessary but not sufficient condition for the attaimnent of environmental objectives.Because the effects of macroeconomic policies on the environment are generally ambiguous and difficult

Ill Formore comprehensive treatment of this subject, see "Economywide Policies and their Environment EmergingLessons from Experience" (World Bank, 1994a).

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BOX 435: Orissa, India: Water Resources Consolidation Project

A series of water resources consolidation projects (WRCP) being planned by four state govermmentsin India will facilitate efficiency - in existing facilities. A sectorl environmental assessment approachis being used for these projects because they are substantially programmatic and not all activities will be fullydefined at appraisal. The main environmental issues concer monitoring and management rather than impactsfrom new consuction.

The first of these prjects was in Orissa. Preparation of the sectoral environmental assessment wasdivided into two phases. Phase 1, currently underway, focuses on the institutional and legal fiamework ofthe water-sector and includes the following objectives and tisks: (1) to assist in establishing an environmentalgroup within the Orissa Irrigaton Departments central planning unit; (2) to review the status of environmentallegislation and its applicability to the water resource sector in general; (3) to provide guidelines for theapproach to and the pation of required site clearance and environmental clearance documents for variousirrigation projects; (4) to provide -training for the water resource sector and related government staff inenvirmental assesmnt procedures, techniques and analyses; (5) to establish the organtion, staffiiglevels, responsibilities, operating procedures, and budgeting fora proposed environmental sector unit; and (6)to dlineate procedures for interagency liaison.

The total cost of the phase 1 program is estimated at US$446,700, with staff requirements estimatedat 34S person montis. Phase 2. will be based on findings and recommendations of the first phkse.- Thesecond pbase will include- preparation of case studies, long-term training in environmental assessment,preparation of monitoringplans for the irigation sector, and upgrading of environmental monitoring facilities.

to predict, other instruments are better for countering negative environmental effects. For example, ifthere is sufficient evidence that exchange rate devaluation will increase soil erosion because ofoverexploitation of arable land, other more direct policy instruments should be used to promote soilconservation, rather than altering the exchange rate which can have potentially negative side effects.

4.21 Even favorable macroeconomic policy may be environmentally harmfil if relevant market failuresare not addressed. For example, in Thailand a tax on chemical fertilizers, which in most circumstancesis environmentally beneficial by reducing excessive use of chemicals, may have resulted in environmentaldamage because it encouraged extensive rather than intensive farming through forest clearing on landwhere property rights were poorly defined. Although the tax on the chemical fertilizer triggered theenvironmental problem, the cause of the problem was poorly defined property rights.

4.22 In the absence of market and policy failures, therefore, economic adjustment is usually not asignificant factor affecting environmental quality. Nonetheless, because adjustment policies are oftenundertaken in circumstances characterized by considerable market or policy failure, environmentalconsequences can be important. The most important links between certain adjustment policies and theenvironment include the followingL-:

12/ See Nellor (1993) for a more detailed analysis.

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* Exchanee rate policies. The effects of exchange rate policies on the environment tendto be ambiguous. In different contexts both overvaluation and undervaluation can leadto overexploitation of marginal lands. Effects through technological changes andcropping patterns depend on energy use and the mix of labor and capital.

* Monetary policies. Elimination of certain direct credit policies and subsidized interestrates, as well as financial liberalization, are often associated with better environmentalpractices. For example, low-interest loans for cattle ranching in Costa Rica and Brazilencouraged cattle ranching over crop production, leading to the use of unsuitable land.In Thailand, credit policies relying on mandates, quotas, and interest rate ceilingsrestricted access to formal credit and discouraged investment and intensive farming, andpromoted land clearance.

* Fiscal policies. Taxation of natural resources, such as user charges, resource rent taxes,excise taxes on energy and water, and elimination of tax subsidies on natural resource useare part of broad adjustment policies that can have significant positive effects on naturalresource use. For example, fiscal incentives like tax holidays, investment tax credits, andexport tax or import duty exemptions in the Brazilian Amazon contributed to itsoccupation and extensive jungle clearing.

* Public expenditure. Restraints on public expenditure have positive and negative effects.On the positive side, reductions in spending may reduce subsidies for water, energy, andagricultural inputs, and thus induce resource conservation. It also may reduce investmentin new infrastructure that can have negative enviromnental effects (for example, buildingnew roads through virgin lands). But reductions in public expenditure also can havesubstantial negative impacts by providing inadequate supply, operation, and maintenanceof infrastructure services that protect the environment or by providing inadequatemonitoring and enforcement of pollution and land use controls.

* Pricing policies. Appropriate pricing of productive inputs (water, petroleum, chemicalfertlizers, pesticides) reduces excessive use and is good for the environment. In theagricultural sector, however, pricing policies have ambiguous effects. In Sudan, forexample, authorities depressed gum producer prices for several years, causing farmersto sell gum trees for fuelwood. By contrast, lowering conunodity prices can lead to lessintensive land use and thus reduce soil erosion and use of chemical inputs.

* Private sector development. Privatizing state-owned enterprises tends to improveproductivity and efficiency. Environmental improvements are often an added benefit ofthis process, as enterprises seek to minimize energy, water, and other natural resourceinputs. This synergistic effect can disappear, however, when certain inputs aresubsidized or when competition is lacking. For example, it is estimated that countriesin Central and Eastern Europe could cut sulfur air emissions by 60 percent simply byadjusting energy prices to their market value. Privatizing state-owned enterprises couldimprove efficiency even more, but privatization in the absence of subsidy cuts wouldbring only modest gains.

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Global Issues

4.23 Although they are relatively minor contributors to global warming and ozone layer depletion,developing countries house the most extensive sources of biodiversity, occupy the largest land and coastalareas, and contain most of the world's population. Moreover, they are signatories of numerous globalagreements and treaties that protect global and international resources. To the extent possible, therefore,developing countries should integrate national environmental policies with global environmentalinitiatives. Nonetheless, global issues are not national priorities in developing countries. Developingcountries should rightly focus their limited resources on environmental problems that pose the most severethreats to national development. In many cases, however, successfiully tackling domestic problems willalso contribute to solving global problems. For example, arresting deforestation, soil degradation, anddestruction of mangroves and coastal resources - all of vhich have major international and global impacts- are often ranked high on the environmental agendas of developing countries. Similarly, tackling urbanair pollution and designing more energy efficient cities can reduce carbon dioxide emissions and thus slowglobal warming. In cases where global benefits exceed domestic ones, however, international financingshould be requested. The Global Environment Facility is a major source of sucb financing. Bilateralagreements also have a major role to play.

Monitorinr, and Performance Indicators

4.24 National environmental strategies need to be continuously updated and refined to reflect newinformation and changing environmental conditions and priorities. In this way, the planning andimplementation of key actions can be analyzed and adjusted to address emerging issues before they turninto cosdy emergencies. Sound strategies, therefore, must provide for adequate monitoring andevaluation. A key question is how to measure progress in reaching environmental objectives.

4.25 Many countries have developed environmental indicators, such as those describing the state ofthe environment in terms of pollutant concentrations or land area affected by erosion, although theseindicators are not directly linked to policy goals. One recent trend has been the development ofperformance indicators (box 4.6) which can provide essential information on progress in priority sectors.

4.26 To support routine monitoring, countries need to include some provision in their environmentalstrategy for collecting and processing data. Since new data collection can be very time consuming andcostly, most countries initially rely on existing sectoral data, and process it to serve environmentalmanagement needs. As priority data needs are identified during strategy implementation, efforts can bedirected toward expanding the country's data base. Enviromnental data Cincluding information on bothpollution and natural resource issues) forms the basis for monitoring change, creating performanceindicators, and adjusting national income accounts to reflect environmental factors.

4.27 Environmental data can also be used to help link economic and enviromnental issues within thecontext of broader economic policymaking. For example, the depletion of minerals and oil, unsustainableuse of living resources like fisheries and forests, and the erosion and degradation of soils should beviewed as the liquidation of national economic assets. This perspective attracts the attention of ministriesof finance and planning, as well as of environment, and helps connect resource issues to the broadereconomic policy agenda. This link is strengthened by newly developed economic indicators, particularlymeasures of national savings that account for depletion and degradation of environmental resources (e.g.genuine savings). Because sustainability implies keeping total capital intact, when 'green' national

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BOX 3.6: PERFORMANCE INDICATORS

Perfbrmance indicators compare how actual measures of environmental quality, such aslevels of suspended particulates in' ambieitL air, relate to the targets or objectives established instandards set by policymakers. For example, the concentration of suspended particulates can becompared to the levels recommended by World Health Organization guidelines.: Althoughperformance indicators are not routinely used in developing countries, some industrial countries haveincorporated them into their pollution control programs.

-For example, relative to the official goal of 100 for the year 2000, the Dutch performanceindicator for eutrophication shows an improvement from 332 in 1987 to 287 in 1991.; deposition ofacidic compounds. (sulfur dioxide, oxides fd nitrogen, ammonia) fell from 242 to 171 during thesame period. n aggregating performance indicators to derive a composite measu're: of nationalenvironmental quality, the Dutch giveea it-:to each component;* other.countries use-aweighted system to aggregate indicators. For example, using thfe Dutch' metiod,-overallenvironmental pressure fell from 219 to 195 between 1987 and 1991 (reaching all--goals would putthe -indicator. at 100). -This average amual decline-of nearly 3 percent is'impressive against a'backdrop of real GNP growth averaging'3.8 percent'a- year, but less than the declines ofinearly 7:percent per year required to reach the countrY's national goal for theyear.2000. -

accounts indicate that genuine savings are low or negative, decisiornakers need to reevaluate thosepolicies that encourage the degradation or liquidation of natural capital.

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5. Future Agenda

5.1 National environmental strategies and action plans are increasingly accepted as an integral partof the process of linking environmental management and economic growth. Much has been learned overthe past decade, and the broad outlines of the future agenda are now clearer. The major challenge is tomove from the successful completion of a NEAP or similar strategy to the actual implementation ofrecommendations. What is required is nothing less than 'mainstreaming' environmental considerationsinto the process of national economic development to create true environmentally sustainabledevelopment. China has taken the lead in this process by coordinating various initiatives andinvolving the right actors (box 5.1).

Towards Successful Impnlementation

5.2 With the growing number of new and frequently uncoordinated planning exercises and strategicplanning requirements, available resources of both donor and developing countries are being stretchedto their limits. Future work should focus on improving the efficiency and effectiveness of implementationand on avoiding duplication and inconsistency among the many environmental initiatives. Monitoringactual implementation, and improving coordination, both within the country and between extemal donors,are tWo keys elements of this process.

MonitoringImnlementation

5.3 Many countries have completed the first generation of NEAPs. Although most of these plans arestill in the early stage of implementation, by monitoring progress and identifying lessons governmentscan strengthen NEAP implementation, and revise existing plans as new lessons are learned. Moreover,governments need to strengthen coordination between NEAP implementation and other environmentalinitiatives. While this paper provides guidance to policymakers for improving the formulation of futurenational environmental strategies, additional guidance is needed for designing environmental supportprograms and determining how donors and multilateral agencies can best support the implementation ofthese strategies.

lInroving Coordination

5.4 An increasing number of actors are becoming involved in environmental management: nationalgovernments, bilateral agencies, the multilateral development banks, the UN system, and the privatesector and NGOs. To reduce duplication and inconsistencies, opportunities for country-donor internationalinstitutional collaboration should be e.plored. The collaboration should focus on two key areas:

13( Through UNCED and other initiatives (see annex 3, the international community recognizes the importanceof national plans for sustainable development These plans generally try to integrate economic, social, andenvironmental issues under a consistent fmmework. Although they are much broader in scope than nationalenvironmental stategies, environmental strategies have often been used as a starting point to preparing sustainabledevelopment plans.

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BOX 5.1: ENVIRONMENTAL PLANNING IN CHINA

China has actively embraced environmental planning and has produced both a NEAP and anAgenda 21 Action Plan. The NA? was jointly produced by the National Environmental ProtectionAgency (NEPA) and the Stato Planning CDmmission (SPC), and was reviewed and extensivelydiscussed with all sec4tom ministries, the Chinese Academy of Sciences, and researchers from severalof China's leading universities.- At the political level, the NEAP was finally approved by the StateCouncil. For. the first time all of China's eavironmental issues, objectives, programs, and policieswere laid out in one document, thereby-greatly increasing government and public awareness ofenvironmental issues, and providing monitorable indicators to review progress. The NEAP focuses on:(1) identifying major eavironmental problems and prioritiesin each sector (and the institutionsresponsible for implementation, institution building, taining and public:education); (2) selectingporityareas (for example, urban and water issuies); (3) designating environmental objectives lor the year 2000m selected fields; (4) proposing policies and _mures needed to realize these objectives; (5) esimatingfunding requiremenlts and possible funding sources; and (6) providing a focal point for intemationalcooperation in environmental protection.

II addition to the NEAP, China recently produced an ambitious Agenda 21 Plan, the firstcountry to do s after the UNCED Conference. 'Prtpared by the State Science and TechnologyCommission and SPC, with inputs from other agencies- and fu.nding from UNDP, China's Agenda 21Pla supplements the- NEAP by placing a greater emphasis on integrating environmental sustnabilityconcerns ito economic and social developmnt plans. :

Both documents were prepared by involving a large number of Chinese organiations, largelygovernmental but also. involving some non-governmental groups. One positive result of both plans has-been a substantialincrease in publicity on enviro maters o Chinese radio, television, and inthe press. The plans contain may innovative projects and policy recommendations that, if-.implemented.-can form the basis of moreenvironemntay sustainable economic development in China.

Establishing a donor coordinating mechanism. A mechanism is needed to reachagreement on broad guidelines (prepared by one or more agencies) and to implementcollaborative measures once agreement is reached. One approach would be to form a"learniing group' in a small consortium of intemational agencies, major donors, recipientcountries, and NGOs. The main purpose of this group would be to exchange informationabout various environmental or sustainable development planning initiatives and to serveas an informal clearinghouse for coordination, collaboration, and information gatheringand dissemination.

Increasing donor assistance for NEAP implementation. A clear priority is to increasedonor assistance for environmental projects and other enviromnental improvementsrecommended in the NEAPs. In financing these initiatives, donors and lenders shouldensure that the projects are consistent with the plan, do not duplicate the investments ofothers, and have monitoring and evaluation systems with clear performance indicators,adequate support for supervision, provisions for incorporating lessons learned, andsupport for periodic workshops to review issues and provide feedback to the planningteam.

34

The Future of Environmental Planning

5.5 The primary focus up to now has been the national level, as typified in the HEAP process. Manyof the processes and methodologies by which national environmental strategies are prepared or revisedare reflected in the analytical approaches and methods discussed in this paper. The use of benefit-costanalysis where possible, and cost-effectiveness analysis when benefit estimates are not available,strengthen the analytical process. As more is learned about environmental planning and its effectiveimplementation, the emphasis at the national level will increasingly be to integrate the environmentaldimension into the process of economic growth and development. Formal NEAPs may no longer berequired if these concerns are integrated into secoral planning: the growing ability to estimate themonetary benefits and costs associated with enviromnental impacts will facilitate their inclusion in thenormal process of national development planning. In the future, enviromnental planning will include awider array of issues and will increasingly be done at two levels: the local, and the regional orinternational.

Local and Regional Environmental Strategies

5.6 As the process of national enviromnental planning is increasingly accepted, the new frontier isat both the international and the local level. Local level environmental planning, strengthened byextensive public participation, is playing an increasingly important role. It is recognized that for manycountries, especialy larger ones such as Brazil, China, India, Indonesia and Russia, national levelplanning, while usefil in indicating major environmena] problems and suggested actions, is poorly suitedto addressing the problems found at the provincial or state level. This is not surprising when oneconsiders that there is tremendous natural diversity in larger countries, and a 'local' area may have 30to 50 million or more people, comparable in complexity to the major couctries of Europe. Indeed, in anumber of countries urban environmental problems are being addressed through municipal environmentalstrategies.

5.7 At the other extreme, there is a growing awareness of the need for regional environmentalanalyses covering a number of countries, both to identify major international issues, and to raiseawareness of environmental problems as regional and international concerns, and ones that are sometimesamenable to intemational solutions. At the very least, regional studies help focus attention on sharedproblems, and promote the exchange of information and potential solutions. For example, within the Banka regional environmental stategy framework was prepared for Asia as well as the Middle East/NorthAfrica regions and these results were shared with the concerned govermments.

Making Development Sustainable

5.8 Although there is no unanimous consensus on what constitues sustainable development, such agoal becomes increasingly possible as a result of our experience with environmental planning. Ashighlighted in this report, a successful environmental strategy is dependent on three key elements:identifying priority problems, defining realistic priority actions, and ensuring effective implementation.When augmented by public awareness and participation, and strong political will, experience has shownthat it is possible to devise policies and strategies that go a long way towards reaching that illusive, butachievable goal of sustainable development.

35

Bibliography

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Bernstein, Janis, 1993. "Alternative Approaches to Pollution Control and Waste Management Regulatoryand Economic Instruments." Urban Management Programme Discussion Paper No. 3, The World Bank,Washington, D.C.

Bernstein, Janis, 1993. "Land Use Considerations in Urban Environmental Management? UrbanManagement Programme Discussion Paper No. 12, The World Bank, Washington, D.C.

Bernstein, Janis, 1995. "Urban Environnnental Problems in National Environmental Action Plans."The World Bank, Washington, D.C.

Buchan, Keith, 1994. "The Singapore Area Licensing Scheme" printed in Organization of EconomicCooperation and Development (OECD) Documents: "Applying Instruments to Enviromnental Policies inQECD and Dynamic Non-Member Economies," OECD, Paris.

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Margulis, Sergio, 1994. "The Use of Economic Instruments in Environmental Policies: The Experiencesof Brazil, Mexico, Chile and Argentina" printed in OECD Documents: "Aonlying Economic Instrumentsto Environmental Policies in OECD and Dynamic Non-Member Economies", OECD, Paris.

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National Environmental Action Plans Reviewed

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Arab Republic of Egypt, Environmental Action Plan, May, 1992.

Bangladesh, National Environmental Management Action Plan, September, 1994.

Benin, Plan D'Action Environnemental, May 1993.

Bhutan, Seventh Five Year Plan, 1992-1997, Vol. I, Main Plan Document.

Botswana, National Consevation Strategy, December 1990.

Bulgaria, Environmental Strategy Study, 1992.

Burkina Faso, National Envirommental Action Plan, August 1991.

China, Environmental Action Plan of China 1991-2000, August 1993.

Cyprus, Environmental Review and Action Plan, March, 1993.

Czech and Slovak Federal Republic, Joint Environmental Study, January, 1992.

Dominican Republic, Environmental Issues Paper, July 1993.

Fiji, The National State of the Environment Report, 1992.

Ghana, National Environmental Action Plan, Vol. I, 1992.

Guinea-Bissau, Towards a Strategic Agenda for Environmental Management, April, 1993.

Honduras, Plan de Accion: Ambiente y Desarollo, June 1993.

Hungary, Environmental Strategy Study, 1992.

India, Environmental Action Programme, 1993.

Lesotho, National Environmental Action Plan, June 1989.

Madagascar, Plan D'Action Environnemental, July 198S.

Maldives, UNCED and 1989 EAP (accepted as EAP)

Mauritius, Economic Development with Environmental Management Strategies for Mauritius, November,1988.

Nepal, Environmental Policy and Action Plan, June 1993.

Nicaragua, Plan de Accion Ambiental, May 1994.

Nigeria, Towards the Development of an EAP for Nigeria, December, 1990.

Pakistan, The Pakistan National Conservation Strategy with Attachments, July 1993.

Philippines, Philippine Strategy for Sustainable Development: A Conceptual Framework, January 1990.

Poland, Enviromnental Strategy, 1992.

Romania, Environmental Strategy Paper, 1992.

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Sierra Leone, Initial Assessment of Environmental Problems, February, 1994.

Sri Lanka, National Environmental Action Plan 1992-1996, October, 1991.

The Gambia, The Gambia Environmental Action Plan 1992-2001, May, 1992.

Tunisia, Country Environmental Study and National Action Plan, 1989.

Yugoslavia, Environmental Strategy Paper, 1991.

ANNEX 1: NATIONAL STRATEGIC PLANNING APPROACHES

In addition to NEAPs, numerous strategic approaches have been advocated by governmentsand international agencies. While some focus mainly on enviromental concerns and their integrationinto the development process, others deal with social and economic issues. These national strategies fallinto two categories: multi-sectoral and sectoral or thematic.

COMPREHENSIVE NATIONAL STRATEGIES

Conventional National Development Plans. These plans are produced by national governments (oftenby the central Ministry of Finance and/or Development Planning). They are usually time-bound (e.g.,rolling 5-year plans) and focus on such issues as fiscal targets and major infrastructure development.

National Conservation Strategies (NCSs). Promoted by IUCN, NCSs are intended to provide acomprehensive, cross-sectoral analysis of conservation and resource management issues to help integrateenvironmental concerns into the development process. They are intended to identify a country's mosturgent environmental problems, stimulate national debate, and raise public consciousness; assist decisionmakers in setting priorities and allocating human and financial resources; and build institutional capacityto handle complex enviromnental issues. NCSs have been strongly process-oriented in that informationhas been obtained and analyzed by cross-sectoral groups. NCSs also seek to develop political consensustirough group interaction.

Green Plans. These plans, produced to date by Canada and the Netherlands, consist of an evolvingprocess of comprehensive national programs for environmental improvement and resource stewardship,with government-wide objectives and commitments.

National Environmental Ma ent Plans. These are currently being developed by many islandcountries of the South Pacific, coordinated by the South Pacific Regional Environment Programme(SPREP) with support from Asian Development Bank, UNDP, and IUCN. The planning process involvesround table discussions and consultations with key decision makers and organizations, leading to adefinition of a policy framework and a portfolio of progrAms and projects for donor support.

National Sustainable Development Strategies (NSDS). Called for by Agenda 21, NSDS is a genericname for a participatory and cyclical process to achieve economic, ecological, and social objectives ina balanced and integrated manner. The process encompasses the definition of policies and action plans,their implementation, monitoring, and regular review. NSDSs may take many forms, and incorporateor build on many of the approaches discussed above.

Provincial Conservation and Sustainable Development Strategies. In federal countries, provincial (orState) strategies are the equivalent of NCSs and NSDSs in countries with unitary systems. Federalgover nents may also undertake national strategies as well.

SECTORAL AND THEMATIC STRATEGIES

Conventional Sectoral Master Plans. These plans are often prepared as part of the Five YearDevelopment Plan and as a means to coordinate donor involvement in a sector. They have been widelyprepared in Asia, sponsored by the Asian Development Bank, for such sectors as forestry, agriculture,and tourism. Although not normally involving a participatory process, sector plans have resulted frommassive research and policy development efforts over many years, and attempt to address inter-sectoral

issues. Although the plans are a source of comprehensive information, some bear little relation to theinstitutional capacity of the sector to implement them.

National Tropical Forestry Action Plans. Sponsored by FAO and promoted under the Tropical ForestryAction Programme (TFAP), national TFAP exercises start with a multi-sectoral review of forest-relatedissues that leads to policy and strategy plans which are then followed by an implementation phase. Theplan seeks to produce informed decisions and action programs with explicit national targets on policiesand practices related to afforestation and forest management, forest conservation and restoration, andintegration with other sectors. Round tables involving governmental bodies, NGOs, donor agencies, andinternational organizations are held at different stages of planning and implementation.

National Plans to Combat Desertification. Sponsored by the Permanent Committee for DroughtControl in the Sahel (CUSS), these plans analyze the socioeconomic and ecological situation, reviewcurrent activities, and discuss policies and actions required to combat drought. They represent nationalanti-desertification plans for a number of Sahelian countries.

In addition, national plans are emerging from the International Climate Change Convention, BiodiversiryConvention, and poverty assessments planned by the World Bank.

DOCUMENTS CONTRIBUTING TO STRATEGIC PROCESS

Country Environmental Profiles and State of the Environment Reports. These are prepared bygovernments, bilateral aid donors, and NGOs. Generally they present information on conditions andtrends; identify and analyze causes, linkages, and constraints; and indicate emerging issues.

UNCED National Reports (1991-92). These are descriptive and analytical documents prepared bynational governments, somedmes with NGO involvement. Although in practice they varied enonnously,UNCED Secretariat guidelines proposed that each report should address: development trends,environmental impacts, and responses to environment and development issues such as principles andgoals, policies, legislation, institutions, programs, and projects as well as international cooperation.Many countries consulted local, regional, and international NGOs, and industry. The reports identifyhow nadonal economic and other activites can be consistent with the need to conserve resources. Someconsider issues of equity and justice; others are intended as the basis for future NSDSs-

Source: Carew-Reid et al. (1994)

ANNEX 2

ENVIRONMENTAL POLICY INSTRUMENTS: ILLUSTRATIVE APPLICATIONS

INSTRUMENT | DESCRIPTION APPLICATION

RegliatoryInstnsmlenL .

Ambient Standard Establishes the highest allowable concentration of Brazil. Ambient water quality standards cover a range of pollutants and characteristics including oil, solids, fecal colifonn,specified pollutants In the ambient air and water dissolved oxygen, and various toxic substances. State government agencies, which have jurisdiction over state waters, designate

the principal uns and of specific segments or streams and water bodies. In some stes (e.g., Rio de Janeiro) supplementalstandards exceed federal mnaximums.

India. A use based classification of river sretches provides the pre-requlsites for etting water quality goals. Any river stretchmay be subjected to one or more uses such as irrigation, drinking, industry, power generation, fisheries, and wildlife propagation.The designated best use, requiring the highest quality of water, is then marked an an oficial water use map with the degree oftreatment required for all discharges.

United States. The states are responsible for establishing ambient water quality standards. The standards are set for designateduses for the water and Identify the maximum concentration of various pollutants that would not interfere with that use.

EMuent Standard, Establishes legal ceiling on the tolal quantity or J_raz. Effluent limitations and equipment requiremenis are negotiated largely on a case-by-case basis between stateEmissions Standard concentration of a pollutant discharged from a environmental agencies and polluters. These emissions limitations and equipment requirements ubsequently become part of

pollution source construction and operating licenses. To reduce automotive air pollution, the vehicle air pollution control pmgram defines phasedand increasingly rigorous emissions limits and standardized emissions testing procedures fnr all new gasoline-alcohol- and diesel-powered enginca in automobiles, trucks and buses. The required reduction of automobile exhaust emissions would occur in threeprogressively stringent sages. As part of the vehicle air pollution conlrol program, state and local governments are aulhorized toImplement inspection and mnaintenance programs to verify the effectiveness of the vehicle emission control devices.

Turkev. The Izmir Water and Sewerage Authority monitors and controls eMuent from about 450 industries which have beenanalyzed and placed into categories according to their respective levels of pollutant dischargers. The discharges must conform tostandards covering such parameter as HOD, COD, ph, temperature and heavy metals. Once violations are detected, IZSUinforms the municipality which can uke legal action to fine or close the plant (a grace period Is allowed if the corpany canprovide evidence of an investment in pro-treatment). The threat of closure, usually brought about under a parallel public healthordinance onen brings rtesults.

United States. All municipal and industrial point sources of pollution are subject to efuent limitations as required by the CleanWater Act. The best practicable technology (BPT) limitations focus on conventional pollutantsfi.e. BOD, dissolved oxygen,suspended solids, metals) and take Into account such factors as age of equipment, facilities involved, process employed, proceuchanges, engineering aspects of control techniques, environmental impact, and the balance between total cost and efuentreduction benefits. The more stringent best available technology (BAT) limitations apply to toxic substances. In addition, EPAIssued water quality critera for over I 15 pollutants which reconmmend ambient levels for pollutant and provides guidance to utaesfor establishing water qualiLy standards. Municipal discharges must comply with secondary treatment requirements. Industrialdischargers must comply with prc-treatment standards for discharging into municipal treatment plants.

Performance Standard Type of eluent standard that defines a United States. New Source Performance Standards (NSPSs) are the most important controls over stationary sources (e.g.,performance measUre (e.g., volume or factories, power plants, refineries). They set maximum emissions for new or extensively modified facilities which are majorconcentration of a pollutant in a discharge, percent polluters with emissions levels delermined by the 'best technical system of continuous emissions reduction.pollution removal to be achieved)

Product Standard Establishes legal ceiling on the total quantily or = Igiu=. Belgium requires the biodegradability of certain agents in detergents to be equal or superior to 90 percent and theconcentration of pollutants that can be discharged sulphur content of ftels not exceed one percent.into environment per unit of product output (e.g.,kg per 1000 kg of product). This type of standard Hons Kon . The use of heavy fuel oil has been banned since July 1990. Consequently sulphur dioxide emissions have beenalso can prohibit the addition of certain substances reduced by 80 percent. Easily enforced, the ban requires only that inspector check a factory's fuel tank; violation carries a threatto products of a aix-month prison term.

Italy. Only those luels whose viscosity and sulfur and volatile substances content fall within certain limits may be used fordomestic heating.

Process Standard Limits the emission of pollutants associated with Japan, Mandatory replacement of mercury cells by diaphragm cells is required to prevent mercury emissions from chlor-alkalispecific manufacluring processes manufacture.

Land Use Regulations PrimarUily local government instruments for Germanv. Land use planning authorities are responsible for supervising and preventing the installation of polluting factories close(zoning, regulating land use. Zoning refers to the division to prolected areas. For over 200 categories of firms, there are minimum distances of new developments of between 50 and 1,500subdivision of a municipality or other judsdiction into districts meters according to their effect on adjacent residential arcas.regulations, (or zones) In which certain ures are permitted andbuilding codes) others are not. Zoning also establishes allowable Guatemala. To protect the historie distriet of Antigua, the governmnt designated the city aS an historic district and esablished

heights of buildings and other structures; height limitations, advertising controls, and other regulations on building material, lighting, and new additions. Despiteminimum lot sizes; minimum setback from the numerous violations, the city has maintained its histodc character largely due to the application of a workable system of permitsstreet or property lines; and density of and building Inspections as well as the avallability of local expertise to assist ownen of hisioric buildings in meeting theirdevelopment. Speciflc types of zoning relevant to requirements.managing scnsitive lands and cultural resourcesinclude: agricultural zoning, floodplain zoning, Korea. Over 20 years ago, the government of Korea established a Green Belt around the Seoul capital region. Its purposes arwetland zoning, historio area zoning, overlay to prevent urban; sprawl, preserve ample space for future uses (for example, environmental protection, preservation of lands forzoning recreational and cultural facilities, protection of water supply sourtce); and to contribute to nalional defense. The Green Belt

encompasses 5,397.1 square kilometers covering 34 cities and 36 counties of 14 major urban areas. Although this contml hasSubdivision regulatidns govem the process of been considered to be effective, its continued application poses several problems. For example, when the Green Belt wasconventing raw land Into building sites by designated, the areas 100 meters above sea level were uniformly selected, with fmny places awkwardly designated. In sonecontrolling physical layout (lot size, width, length extreme cases, the designation boundary line passes through houses and buildings without any changes during the past 20 yean.of streets, adequate space for public services, In addilion, there are 3,346 snall towns and villages where the residents cannot Billy exercise their property rights. In theseetc.). areas, there have been protests from 1,24 million residenis, rerusal to issue new building permits, and overall control without any

consideration of the present situation. Olher problems assciated with the Green Belt is chrnic congetion and high land pricesBuilding codes control the materials used for in the capital region.constructing new buildings and the manner Inwhich they are constructed. United Kindom. Local authorities can designate all or parts of their areas as Smoke Control Areas, in which it is an offens to

emit smoke. In these areas, only authorized fiuels may be burned in exempted appliances capable of buming without smoke.Local authorities also can determine heights of new chimneys or chimneys for extension to existing funace capacities. Further,permission from development orall kinds must bo obtained from local planning authorities.

United States, Some local govemments use planning and/or zoning regulations to protect ground water. Specific instrumentsinclude minimum lot size requirements, rezoning Industrial land to less intense residential use, restrictions on density of septicrequirements, rezoning industrial land to less intense residential use, restrictions on density of septic systems, zoning overlaydistricts which encompass zones of contribution lo existing and future supply wells, and protective zones amund aquifer rechargeor welihead areas wher ground water is most vulnerable to contaminants, som regulatory authorities have designated weliheadprotection zones (i.e., surface and subsurface areas surrounding a drnking water well or wellfield supplying a public watersystem). To ensure that contaminants do not enter these sensitive zones, authorities impost a mix of control mechanisms. Toprotect wetlands, a conservation overlay district can specify minimal protection for various types of wetlands. In North Carolina,for example, New Hanover County's consetvation overlay district esablishes the amount of wetland area that can be developedbased on specific types of wetlands. If a parcel contains a swamp forest of at least 2.5 acres, at least half of the area cannot bedeveloped. Other types of wetlands are assigned 'conservation space factors' (that Is, amount of undevelopable area on aparticular parcel. For example, a fresh marsh area with a minimum area of one acre has a conservation space factor of .8 and anatural pond must be completely preserved (conservation factor of 1 .0). Overlay historic districts can pernit the uses anddensities permitted In the underlying zone, but fequire that structures within the historic distfict be built or maintained Inconformance with regulations to ensure historic compatibility. (Mantell et al. 1990).

Shoreline Exclusion Regulations that prohibit or substantially limit Costa Rica. The jursdictional ama of Costa Rica's shoreline restriction is a 200-meter wide marine and terrcstrial zone dividedor Restrictions certain uses within a strip or ban In the coastal into two components: the *zona publics, which extends inland 50 meters from mean high lide or the inland limit of the wetlands

zone and the upstream limit of the estuaries as defined by alt or tidal innluence, and the zona restringida, which covers therenuining 150 meters inland. The zona publics is devoted to public use and access; commercial development is generallyprohibited (except for spoft fishing installations, port installations, and their Inrrastructure). In the zona resringida, developmentis controlled by a permit and concessions system baued on a detailed reguilaion plan formulated at the local level of government.

Local Ordinance Local regulations directed at specific Chins. The Beijing Government issued a decree banning the constructior of skyscrapers in the city center because they threaten(historic preservation environmental Issues. For example, historic the city's style as well as historic and cultural features. The government also imposed height restrictions on new buildingsordinance, slope- preservation ordinances establish a process for located near ancient buildings and streets. e success of thes cmeasures has encouraged other similar decrees thioughout thedensity) designating historic properties and districts and for courtry.

reviewing altetalions to and the demolilion of,designated hidoric properties. In designated Pakistans The Lahore Development Act of 1975 allows the Lahore Development Authority to declare a controlled area todisiriets, they establish procedures and standards regulale building activity. The Punjab Special Premises Ordinance of 198S allows any premises to be decared governmentto ensure that alterations and new construclion are property if it is of public value (Including historic or cultural value) and requires compensation to the owner. This ordinancecompatible with the historic character of the applies pecifically to the protection of 19th and early 20th century buildings.district

Permit Licenses and permits are issued to apprmved Sri Lanka. To protect coastal areas, the Govemment n4urres a permit for all development activities (that is, any activity likely toracilitles to ensure environmentally safe waste alter the physical nature of the coastal zone in any way and includes the construction of buildings and works, the deposit ofand/or land managermnt practices wastes, or other malerials from outall;, vesels or by other means, the removal of sand, coral, shells, natural vegetation,

seagrass or other substances, dredging and filling, land reclamtaion and mining, or drilling for minerals) within a 300 netercoastal zone.

United Kinedo., The Control of Pollution Act or 1974 authorized a comprehensive licensing system for the disposal of wastesover and above existing planning contrils. The act makes It an offense to deposit houxshold, commercial, or industdal waste onland or to use waste disposal plants unless the land in question is licensed by the waste disposal authority (or explicitly exemnptedform licensing). Site licenses can be issued only if the required planning permission for the site is in fiorce. They can be mnadesubject to conditions as determnined by the waste disposal authority and may covet such items as: duration of the license,supervision by the license holder the kinds and quantities of waste, methods ordealing with waste and the recording ofinformation; precautions to be taken; hours when the waste may be dealt with; and the works to be completd before licensedactivities begin or while they continue.

United Slates. Industrial and municipal dischargers must obtain National Pollution Discharge Elimination System (NPDES)permits in order to discharge into the nation's waters. An NPDES permit requires the discharger to obtain technology-basedefuent limitations (BPI or BAT for industry, secondary treatment for municipalities, or more stringent water quality protection).Permils are isaues for five year periods and must be renewed thereafter to allow continued dischsrge. Dischargers also arerequired la maintain records and carry out emuent monitoring activities. The Resource Conservation and Recovery Act requiresanyone involved in the generation, storage, transportation, treatment, or disposal of hazardous wastes to be licensed by the EPAor an authorized states. Licensed treatment, storage, and disposal facilities must comply with all stndards and technicalrequirements under the Act.

Protected Area Any rrea of land that has legal measurcs limiting hina. Country-wide policies established by regulation for Scenic and Historic Interest Zones include establishment of bufferDesignation human use of the resources (plants, animals, etc.) zones, acetive measures to maintain wildlife habitat and protect forests with ancient and famous treea totally protected and

within that area nmnagement of other areas of roret ubject to consent of the administcring body. Developments for tourism and other purposesmrst be In harmony with the environment and new structures are not penmitted on sites of high value. For example, theregulations for managing the Mi. Taishan area promulgated in 1985 Identified a core area known as the first-class preservationzone and a buffer under the adminrisration of the Taishan Forest Farn. The Administration has power to order the dismantlingof unauthorized buildings or buildings that pollute tho environemnt and to order renovation of buildings that are not harmoniouswith their surroundings. Natural, cultural, and historic features are protected. Quarrying is forbidden in the first-classpreservation zone Other regulations provide controls on feiling or thinning of Irees, collection or firewood, rnedicinal herbs andother forest by-products.

EconomicInstruments

Pollution Tax Fee levied on the basis of quantity and/or quality Brazil. Some states (Rio de laneirm, Sao Paulo, Parana) introduced emuent charges based on pollutant content to cover the consor Charge (efuent of discharge into the environment of public water treatment.charge, emissioncharge) France. A water pollution charge has been levied since 1968 an domestic and non-domestic water discharges. The charge is

based on location wlthin regional water basins and Is calculated on difrerent bases for water pollution from domestic and non-domestic sources

Germanv. The German water effluent charge (originally introduced In 1976) pr;marily promotes compliance to permIt standard.The charge is Implemented by the states. The charge base is a menu of polluting substances, COC, and heavy metals. Thecharge rate is diminished by 75 percent if a source can demonstrate compliance standards are regularly updated to technologicalprogress. Whenever there s an update, the new standards become, for existing plants, obligatory only after a transitional period.If these plants comply with the new standards before they are obliged to do so, they get the 75 percent reduction.

The Netherlands. A surface water pollution tax has been levied since 1969. It applies to the pollution of state waters (state tax),the pollution of non-state waters (ocal tax), and the contribution in respect of direct or indirect connection to a purtification plantoperated by a public body not pursuing an active form of water quality management (local tax). The rate is determined by thequantity and/or naturm of the waste matter, pollutants or noxious matter and the manner In which they are discharged.

Polnd2 Emissions fees are the principal Instrument of air pollution control from stationary sources. polluters are rcquired toobtain a point source emission permit; fees are computed on the basis of kinds and quantities of air pollutants. The fee ratesapply only to emissions not exceeding the permissible point source emission norm. The fees paid by the polluters to thegovemment buy the right to use the environment as a receptor of pollutants, but the polluter Is not relieved of his liability for anydamages and losses than may occur. In practice, the level of roes can be higher or lower than the costs for abatement, Ingeneral, however, it appears that the fee rates provide no real economic incentive for reducing pollution.

Product Charge Fee added to the price of product or product Input Denmar. The Danish system of product charges has shown that a product chargc on glass bottles aimed at increasing thethat causes pollulion (e.g. charge on sulfur content number or trips of botles In the deposit reund system has encouraged wine bottlers to pack their products in cartons which rice ain mineral oil or mineral oil Itself) One form of much lower charge, A high charge on new returnable bottles favors the use of retumed bottles, but also the use of one-wayproduct charge Is tax differentiation leading to containers.more favorable prices for enviEonmentalfriendly' products and vice versa Norway and Sweden, Product charges are applied to non-returnable containers. batteries, lubricating oil, fertilizer, and

pesticides.

The Netherland A carbon tax Is applied on motor fuels and are a small addition to existing motor fuels taxes. The tax isatrictly for the purpose of ralsing revenue with proceeds to be used to fund government environmental investments.

Administrative Chatge Fee paid to authority In return for such services as Notway. Charges are levied to fiance the registration and control activity for fish farming and agricultural pollution, control ofchemical registration or Implementation or emissions from indusitrial sourceg, and for the licensing of chemical products,enforcement of environmental regulations

User Charge Direct payment for the costs or collective or Colombia Sewerage tariffs are set at 60 percent of the waler tariff in Call; 50 percent In Cartegena; and 30 percent in Bogota.public treatment or pollution, oftlen applied to thecollection and treatment of municipal solid was:o Sinsanore The Area Licensing Scheme (ALS), Introduced In 1975, Incorpormtes a license tee to individual automobiles as a partand discharge of wastewater into sewer of a larger package of transport measures aimed altreducing traMc congestion. Motorists arm required to buy special licenses to

enable them to enter a rtearicted zone corresponding to the central business district during moming rush hours. Along with othermeasures the ALS contributed to reducing automotive air pollution. Alihough revenue gencration was not a key motivation forintroducing the scheme, it has a considerable surplus of Income over expenditure ever since it wea implemenied. In addition,public awareness of environmental problems has grown in the island - as exemplified by the recent *Singaporc Grcen PlIn(1992) which sets clear targets for reducing pollutton from road transport.

United States. A limited number or communities have been experimenting with tees for municipal waste services that vary withthe level of refuse discarded. These systems typically lake Iwo forms; tho first requires households to specify a number ofcontainers Irrespective of how full or heavy the containers are. The second form requires that all waste containers for pickup bespecially marked plastic bags or self-provided contailners marked with a sticker or tag. Under this variant the household ischarged a price for the bags which reflects collection and disposal coslas Although both types provide some Incentive to thehousehold to reduce its level of refuse, it also encourmges illegal dumping of refuse to avoid a ree.

Tax Incentive Tax incenlives which can be differentiated by the Korea. Two provlsions under the Tax Exemption and Reduction Control law provide direct and Indirect Incentives ror pollution(accelerated nature of the base for determining the tax benefit, control, First, there is a direct investment tax credit of 3 percent (or t0 percent for equipment made in Korea) of the value of thedepreciation, timing ot the benefits from such incentives, and Investment which are restricted to facilities for Increasing productivity, energy-saving fecilities, anti-pollution facilities, facilitiespatlal expensing, the conditlonality attached to their use for preventing industrial hazards, and other specified facilities. More Indirectly, for persons starting a business using technology,Investment tax credits, there Is a choice between accelerated depreciation of 30 percent (50 percent In the case of machinery manufactured in Korea) oftax exemptlons or the asset's acquisition price In the fiseal year of acquisition or an Investment credit at the rate of ] percent (or 10 percent in thedeferrals) case of machinery made In Korea) of the value of the investment in new assets.

Turkev, The Government provides subsidi7ed credil for relocating polluting Industries to alternative industrial zones. Forexample, leather tanneries relocating to the Maltepe Industrial Zone north of lmlr are entitled to subsidized interest rates of 35percent for general loans and 22 percent for construction and infrastruclure Investment, implying negative real interest rates at an80 percent annual rate of Inflation. This Is a clear Incentive because Interest costs In 1938 and 1989 account forl20 percent oftotal investment expenditures. The govemment als o fiers a 40 percent tax deduction an invesiment fr tanneries relocating toanother Industrial zone during the first two years of estate construction and a seven percent reimbursement on investment fornsmall and medium-scale tanneries.

Subsidies Includes grants and low-interest loans that act as Australia The South Australian Uovemment's Save the Bush Programme Includes not only grantis to private owners of bushlandIncentives to polluters or resource users to change but provides an advisory service on the management of remnant native vegetatIon, In 199.-90, Lhe Australian Govemmenttheir behavior or reduce the costs of pollution announced a grants scheme to save native bush remnants with finding for survey and conservation projects for farming,abatement to be borne by polluters educational, land care, and environmental groups and local govemment,

Taiwan Provides subsidies for eligible activities including construction of solid waste Ireatment plants by locIal authorties;acquisition of land for waste treatment acilitles; and installation of pollution equipment

United States, The National Park Service makes federal fdnds available for surveys, planning, acquisition, and appropriatedevelopment of National Register properties. Similarly, the Coastal Zone Management Act of 1972 authorized funding for statesto develop coastal zone management programs which Includes the establishment of permissible activities within the zone,dealgnation of critical environmental areas, and promulgation of guidelincs on the priory of uses in the zone.

Marketable Permit After responsible authority establishes target level Chile. Air pollution permil trading supplements CAC measures in Santiago, Chile to curb point rsurce emissionsof environmental quality (translated Into totalnumber of allowable emissions), discharge rights Now Zealand. To reduce the amount of a particular species of ish being taken, regulators imposed catch quotas on whichare allocated to firms in the form of permits which fishermen had to pay an annual fee. The revenues for this fee were used to buy out fishermen who were willing to forgo futurecan transferred from one source to another fishing form the endangered species. Each fisherman states the lowest price that he or she would accept for leaving the Industry;

the regulators selected those who could be induced to leave at the lowest price, paid the stipulated amount from the tax revenues,and retired the licenses that had enabled the fishermen to fish for endangered species. In a relatively shod time, a suMclentnumber of licenses had been retired and the fish species was protected.

United States. EPA's Emissions Trading Program allows stationary air pollution sources to undertake Internal and externaltrades, Any source that reduces emissions morc than Is required by the standard can apply to the control authority for anemission reduction credit (ERC), which can be used to aallsfy emission standards at other discharge poinis controlled by the samesource or can be sold to other sources

Deposit-Refund Consumers pay a surcharge (deposit) when United Slates, Al least ton states have implemented nandatory deposits on soft drinks and beer containers; the states with theseSystem purchasing potentially polluting products and deposit-refund systems report that 80 to 95 percent of deposit containers are returned voluntarily for recycling. The economic

receive a refund when they return the product to incentive (S to 10 cent refund per container) is suM'teent to produce the desired behavior.an approved center for recycling or properdisposal. They can be used for beverage Finland. Deposit-refund systems ror beverage containers have been very successful; the percentage of containers relurned Iscontainers, lead acid batteries, automobile bodies, about 90 percent.rubber tires, and objects such as refrigerator shellsand lubricating oils Norwav. A deposit-refund on hulks of passenger cars and vans war Introduced In 1978. Under this system, new car buyers pay

a deposit; when the car Is no longer wanted and retumed to an oflicial recovery site, a larger amount is refunded. Thepercentage of cars retumed is between 90 and 99 percent; the revenues are used for refunds and financial assistance forcullection, transportation, and scrapping facilIiles.

Sweden. Doubling the deposit charge for aluminum beer cans incmraed the percentage of cans retumed from 70% to more than80%. A special reature of the Swedish deposit-rfund system Is that it I. operated by a private company.

Enforcement Non-compliance fees are Imposed when polluters United States, Non-compliance fees apply to facilities that fail to install or properly operation air pollution equipment required byIncentives do not comply with regulations. Performance the Clean Air Act. Detection of violations results in a two-part penalty. The first p,rt Is a mandatory adminllrative fine(non-compliance fees, bonds are payments to authorities In expectation of computed to equal the firm's economic gain after the notification of non-compliance. The second part is a fine of up toperformancebonds) compliancewith regulations; refunds are made US$25,000perday based onjudiclal discretion, forthe period ofviolatlon before detection. In addition, CERCLA requires all

when compliance is achieved 'potentially responsibte partiesa to be held liable for damage due to releases of hazardous wastes Into the environment fromInactive waste sites. The fee levied will be equal to the damage that has occurred; the level of the fee can be deterrnined bysettlements or by court Judgement.

Property Righlt The government establishes a system for clarifying Thalian . A tlexible land titling systom combined with other measures to cut down on land market regulations allowed theland ownership and boundaries and provides country to mainlain land and housing colss that are unusually low relative to household Incomes. Under this system, relevantsecure tenure to land occupants to Illegal infonatlon Is recorded on the land title certificate which is held at the offices of the Lands Depantment and can be used to recordsettlements any subsequent changes of ownership, rights, or obligations, There is no need for title searches or title Insurance. Moreover,

most transactions do not require lawyers because the Lands Department requires the usc of standardized land sales contracts andother documents. Ownership transrers and recording of changes of rights and obligations can be completed quickly.

Education andInforIannion

Environmental A tool for analyzing the potential environmental Sri Lanka. An environmental Impact assensment Is required for all major development and Is an integral part of the country'sAssessment impacts of a proposed project and is alternatives coastal zone management program. 'The director of the CrUst Conservation Deportment has the discretion to require a developer

prior to Implementation so as to ensure that tho to submit an Impact assessment.proposed project or action Is environmentallysound and that any environmental consequences Thalland. The environmental Impact assessment process frequently has been used to mitigate unacceptable degrdation of beachcan he recognized early and taken into account resources and nearshore waters, especially with regard to hotel consruction and operation.during the project design

Environmental Environmental communicalions and publia Baneladesh Irnformation dissemination about the pollution records of large polluter facilitates Information bargaining betweencommunications and patlicipation arc critical for achieving polluters and affected patties.public participation environmental objectilves

Thalland. NO.s have played an Important role In conserving valuable old buildings and In ensuring that new development iscompatible with the historic character In old town center, In Chiang Mal, competitions and other local events have beenorganized to raise awareness of building design Issues, Through these means, communities will support and assist themunicipality In ensuring that conservation and development proceed together,

United States. Public parlicipation in coastal decision making Is one of the priorty objectives of the national Coastal ZoneManagement Program. In each stale participating In the program, the practices and procedures are similar: laws adopted by etchstate are subjected to public hearings and comment prior to enactment; agency adoption of rules, standards, and regulationsrequire public notice of Intent, hearing, and debate before and among members or the coastal zone managing board; extensivepublic meetings In affected areas are required prior to designation of specIally protected areas; permtts for major developmentactivities are reviewed by pemitting agencies and require public comment; when a permit application Is recelved, It is normal forthe permnititng or coastal agency to notify the local goveming board as well as adjacent property owners to solicIt their comments;permits may be appealed by Individuals or organizations who may be affected or who have an Interest In the proposed activity;and citizens are heavily Involved in the coastal zone management process In each state

Geographic Tool for systematically collecting, organizing, Colembia The Puegto Bogota Depadment of Cundinamarca used 01S to identify hazard-free urban areas suitable for theInformalion System combining, modelling, analyzing, and presenting relocation of 34 famille living under high landsilde risk.(GiS) various dala about a geographic area. It can

contain mapped information revealing spatialrelationships between various attributes such ashazardous cvcnts, natural resources, andsocloeconomic conditions, It can be used todetermine likely land use conflicts, predictenvironmental Impacts on a spatial basis, andassist In making resource allocation anddevelopment decisions