ENVIRONMENTAL ACTION PROGRAMME
FOR CENTRAL AND EASTERN EUROPE
SETTING PRIORITIES
1 202%tH
ABRIDGED VERSION OF THE DOCUMENT
ENDORSED BY THE MINISTERIAL CONFERENCE
LUCERNE, SWITZERLAND, 28-30 APRIL 1993
ENVIRONMENTAL ACTION PROGRAMME
FOR
CENTRAL AND EASTERN EUROPE
Setting Priorities
Abridged Version
of the Document endorsed by the
Ministerial Conference
Lucerne, Switzerland
28-30 April, 1993
THE WORLD BANK * WASHINGTON, D.C.
ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT * PARIS
OECD IV
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Library of Congress Cataloging-in-Publication Data
Environmental Action Programme for Central and Eastem Europe.
Environmental Action Programme for Central and Eastern Europe
setting priorities: abridged version of the document endorsed by
the Ministerial Conference, Lucerne, Switzerland, 28-30 April 1993
/ [prepared by a team led by Richard Ackermann (World Bank) . . . et
al.].
p. cm
ISBN 0-8213-3179-5
1. Environmental policy-Europe, Eastern-Congresses.
2. Pollution-Economic aspects-Europe, Eastern-Congresses.
3. Europe, Eastem-Economic aspects-1989- -Congresses.
conditions-1982- 4. Latin America-Social conditions-1982-
I. Ackermann, Richard. II. Ministerial Conference "Environment for
Europe" (1993: Luceme Switzerland) III. World Bank.
IV. Organization for Economic Co-operation and Development.
V. Title.
HC244.Z9E523 1998
363.7'0094-dc2O 96-10238
CIP
Preface to the 1994 Edition
At the Ministerial Conference "Environment for Europe," The innovative conclusions and fundamental recom-
which took place on 28-30 April 1993 in Lucerne, Switzer- mendations would not have been possible without the
land, Ministers "endorsed the broad strategy, with its commitment of countless individuals and generous con-
principles and general priorities, contained in the Environ- tributions by several governments and institutions. The
mental Action Programme for Central and Eastern Europe major studies were funded jointly by the governments of
(EAP) as a basis for action by national and local govern- Denmark, Germany, Italy, The Netherlands, Switzerland,
ments, the Commission of the European Communities and the United Kingdom, and the United States; and by the
by international organisations and financial institutions European Commission, the OECD, and The World Bank.
and private investors active in the region" (Paragraph 6 of The Netherlands Government also financed the editing
the Ministerial Declaration, 30 April 1993). of the Action Programme. Most important of all, how-
This endorsement was the culmination of a two-year ever, was the dedicated effort of a number of the Central
process of discussion and consensus building among rep- and Eastern European countries with whom we embarked
resentatives from about 30 Eastern and Western countries on a journey that is bringing us ever closer together in
and numerous intemational institutions in the framework our joint quest for a better "Environment for Europe."
of the Swiss-led Expert Group established after the Dobris
Conference in June, 1991. From a different perspective, the
endorsement was the beginning of a substantive dialogue
which is based on a much better understanding of how to Ruth Dreifuss
achieve tangible results in a situation where serious envi- Federal Councillor
ronmental problems must compete with many other grave Head of the Federal Department of the Interior
social and economic demands. Government of Switzerland
The great achievement since the Dobris Conference,
however, goes well beyond the preparation of the Action
Programme, for there has been a shift in understanding
of how it might be possible to achieve the greatest pos- Yannis Paleokrassas
sible environmental improvements with the available re- Commissioner
sources. There is now a recognition that improvements Commission of the European Communities
in the environment are rooted in economic and social
change, not in isolated investments. Attendance at the
Lucerne Conference reflected this new paradigm; not only
were environment ministers from 50 countries repre- Jean-Claude Paye
sented, but many senior finance, economic, and sectoral Secretary-General
ministry officials also attended, especially from the 20
participating Central and Eastern European countries. Organisationfor Economic Co-operation
This Action Programme represents a synthesis of sev- and Development
eral major studies. As part of a broad consensus building
process, they were reviewed by various expert panels and
dis- cussed at international meetings prior to the Lucerne
Conference. The work was undertaken by the World Bank Lewis T. Preston
and OECD under the guidance of a Task Force chaired by President
the Commission of the European Communities. The World Bank
iii
This Report has been prepared by a team led by Richard imir Natov, Marek Novakowski, David W. Pearce, Grze-
Ackermann (World Bank) and comprising Gordon Hughes, gorz Peszko, Istvan Pomazi, Tue Rohrsted, Theodore E.
Clyde Hertzman, LTszl6 Somly6dy, Kristalina Georgieva, Russell, Wilhelm Schmid, Karsten Skov, David Stanners,
Wendy Ayres, and Gretta Goldenman. The sections on eco- Daniel Stauffacher, Jernej Stritih, Ulf Svidn, Josue Tanaka,
nomic and environmental polices and on forecstig draw Stisaw Tarkowski, Daniel Thompson, Jan Thompson,
upon the work of Rob Maas,Johannes Bollen and Jean-Paul Istvan Takes, Hubert Menalda van Schouwenburg, Luis
Hettelingh (RVW and Mkhael Toman (RFF). The chapter Veiga da Cunha, Ulla Weigelt, Henry Wyes, Harvey
on expenditure prionties is based on the work of Wynne Yakowitz, Andrd Yatchinovsky, and Anthony Zamparutti.
Jones, Mark Ambler, John Marrow and others working Valuable advice was received from colleagues in the
under a contract with Coopers & Lybrand. The section on World Bank, including especially Wilfried Thalwitz, Anil
lhanboundary and Global Concerns is based on a draft Sood, Marcelo Selowsky, Anand K. Seth, Robin Bates,
from Martin Uppenbrink (UNEP), and benefitted from Kathleen Stephenson, Anders Halldin, Helmut Schreiber,
extensive comments and review by Anton Eliassen, Harald Bilal Rahill, Stephen Linte, Nicole Glineur, Piotr Wilc-
Dovland, Mari Saether (Norway). The sections on biodiver- zynski, Peter Whitford, Mark Kosmo. Laszlo Lovei and
sity and nature conservation are based on contributions David Wheeler were Peer Reviewers.
from Jean-Pierre Ribaut (Council of Europe), Zbigniew Kar- The Action Programme and the many related adminis-
powicz and Liz Hopkins (IUCN). Information on the trative tasks depended critically on the tireless assistance
phaseout of Ozone Depleting Substances was provided by of Lucie A. Albert, Johnson Appavoo, Nathalie Lenoble,
Claus Hvashoj J0rgensen and Ulla Blatt Laursen under a Jennifer Sterling (World Bank), and Anne Cariou and
contract with COWIconsult. The section on Non-Govern- Leonora Lynch (OECD).
mental Organizations includes contributions from John A full draft of this report was discussed with Central and
Hontelez, Mara Silina, Martin Kaspar, and Przem Cza- Eastern European govemments in the course of a series of
jkowski. The principal editor was Frances Cairncross. missions in march/April 1993. These missions were led by
Many others provided helpful comments and contribu- representatives from Austria, Denmark Germany, The
tions. Brendan Gillespie (OECD) and Anna Bramwell (EU Netherlands, Sweden and the United Kingdom.
Commission) provided major inputs; and valuable advice Many thanks go to Jfrgen Gneveckow, Lousewies van
was received from members of the Task Force, Fxpert der Laan, and Bo Libert for their efforts to obtain transla-
Group, and others, in particular Alexander Avertchenkov, tions of the Action Programme; to tanislaw Sitnicki, Alex-
Dan Beardsley, Thomas Becker, Ruth Bell, Quincy ander Juras and Colin Woodard at the Regional Environ-
Berengere, Lars Bjorkbom, Jan Boehringer, Anders Bohe- ment Center for organizing the translation and
man, Philippe Bourdeau, Philippe Bourel de la Ronci0re, dissemination in Eastem Europe, and to all the countries
Ralph Brieskom, Giuseppe Cassini, Guy Clausse, Andrzej and institutions sponsoring the translation and dissemina-
Czyz, Andriy Demydenko, Jeremy Eppel, Hermann tion process. The EAP is being translated into 19 Central
Escher, Andrea Fennesz, Duncan Fisher, Richard Fort, and Eastern European languages.
Alexander Goudyma, Ronald Greenberg, Hugo Haider, The work program and the many studies leading up to
Hans-Joachin Hermann, Theresa Herzog-Zimennann, this Environmental Action Programme for Central and
Paul Hofseth, Adam Isaacs, Oreola Ivanova, Jonathan Eastern Europe (EAP) were first described in a document
KIavens, Miklos Koloszar, Zsuzsa Lehoczki, Kurt Lietz- entitled "Setting Environmental Priorities in Central and
mann, Thomnas H. Litscher, Bill Long, MAns Lonnroth, Eastern Europe." Many of the issues raised in that docu-
Ralph Luken, Sheila McKinley, flmo Mikela, Margita ment are taken up in greater detail in this report and in the
Mastrovic, Alexander Melzer, Brian K. Muehling, Bran- technical reports issued separately.
iv
Table of Contents
Preface iii
Executive Summary (as adopted at the Ministerial Conference) xi
I. Introduction: Why an Environmental Action Programme? 1
Objectives I
The high costs of environmental cleanup 2
International assistance 2
The need to set priorities 2
Why a regional approach? 3
II. How to Set Priorities 5
The costs of environmental damage 5
Environmental damage and human health 6
The main pollution problems 7
Degradation of ecosystems and biodiversity conservation 13
Responding to the problem: Finding a balance between policies and investments 13
III. Policy Reforms 17
The Effects of Economic Change on the Environment 17
Better Environmental Policies 22
Enforcement 28
IV. Building Better Institutions 29
A Commitment to the Environment 29
Legislative and institutional reform 29
Environmental monitoring and information systems 32
Constraints on policy and project implementation 33
Management capacity, training and education 35
Developing new partnerships and involving the private sector 37
V. Priorities for Environmental Expenditure 39
"Win-win" investments and worker training 40
Operation, maintenance and repair (OMR) 41
Immediate priorities for public investment 41
Investments to deal with urgent problems specific to different countries 42
Low-cost measures to address longer term environmental problems 42
Financing environmental investments 44
VI. Transboundary Issues: Regional and Global Concerns 49
Regional Concerns: Air Pollution 49
Regional Concerns: Water Pollution 53
v
Global Issues 56
Management of Toxic Chemicals and Hazardous Wastes 59
Conclusions: The Key Messages 59
VII. Principal Recommendations 61
Priorities in Detail 62
Annexes
1 Summary of human health problems and major industrial plants in pollution "hot-spots" 69
2 Occupational Health 81
3 Modelling the impact of economic reform and industrial restructuring 83
4 Why raise energy prices? 91
5 Environmental Standards 93
6 Priorities for Environmental Expenditure (Details) 95
Boxes
1.1 Environmental Investment Expenditures in Poland 2
1.2 Follow-up of the Lucerne Ministerial Conference 3
2.1 Developing Country-Specific Priorities (Albania) 8
2.2 Portraits of different kinds of "Hot Spots" 8
2.3 Nitrates in drinking water in Romania 12
2.4 Cost savings for one medium-sized town 14
2.5 Airborne Dust or Gases-Which is more important? 16
3.1 Short-term threats to the environment in Russia during the transition 18
3.2 Privatization and Environmental Liability 19
3.3 Reducing emissions from coal-burning 22
3.4 Finding the most efficient way to reduce environmental pollution 24
3.5 Financing environmental protection in the Russian Federation 25
3.6 National environmental funds 26
3.7 Environmental standards in the European Union 27
4.1 Key features of National Environmental Action Plans 29
4.2 The French River Basin Agencies: An example of regional water management 31
4.3 The project cycle under Central Planning 34
4.4 Proposed Project Fact Sheet 35
4.5 Cost-effective wastewater management in a river basin: The Nitra River 36
4.6 The Regional Environmental Center for Central and Eastern Europe (REC) 37
5.1 Dealing with large, old industrial plants 40
5.2 The diversity of pollution problems and remedies-an overview 42
5.3 Checklist for cost-effective municipal wastewater investments 45
5.4 Biodiversity conservation: Short-term investment examples 46
6.1 The environmental damage caused by acid emissions 50
6.2 Low cost options to reduce sulfur dioxide pollution 51
6.3 Black Triangle Environmental Programme 52
6.4 Mechanisms to share the burden of reducing transboundary pollution 54
6.5 Environmental Programs dealing with international waters 55
6.6 Wastewater investments which meet domestic and transboundary objectives 56
6.7 The Polish Debt-for-Environment Swap 56
6.8 ODS Phaseout activities 57
6.9 Global Environment Facility Biodiversity Projects in Central Europe 60
Annex Boxes
A6.1 Environmental improvements in the non-ferrous metals industry 96
A6.2 Environmental investments in the iron and steel sector 99
A6.3 The impact of industrial pollution on municipal wastewater and sludge treatment 100
A6.4 Rural water supplies 101
A6.5 The application of natural treatment systems: Szugy, Hungary 102
A6.6 Different types of wastewater treatment 104
vi
A6.7 Priorities and alternative technologies: Case study of an overloaded treatment plant 105
A6.8 Enviromnental investments in the paper and pulp sector 106
A6.9 Environmental investments in the chemical sector 108
Text Figures
2.1 Fuel use for households, commerce and services (percent shares in 1988) 9
2.2 Fuel use for electricity (percent shares for public supply in 1988) 9
2.3 Number of passenger cars per 1000 persons (1990) 10
2.4 Average annual percentage growth in numbers of cars per 1000 persons (1980-90) 11
6.1 Total emissions of SO2 and NO, from Central and South-Eastern Europe 52
6.2 Total emissions of sulfur dioxide and nitrogen oxides from Russia 53
6.3 Total emissions of SO2 and NO, from other countries of the former Soviet Union 53
6.4 Emissions of carbon dioxide in Central and Eastern Europe 58
6.5 Primary energy use in Central and Eastern Europe 59
Annex Figures
A3.1 Emissions of particulates in Hungary and Russia under alternative reform scenarios 84
A3.2 Emissions of particulates in Romania and Ukraine under alternative env. standards 84
A3.3 Emissions of sulfur dioxide in Hungary and Belarus 85
A3.4 Emissions of NOx in Hungary and Ukraine 85
A3.5 Emissions of lead in Bulgaria and Romania 86
A3.6 Emissions of cadmium in Belarus, Lithuania and Romania 86
A3.7 Emissions of BOD in Russia 87
A3.8 Particulate Emissions in Poland by Type of Source 88
A3.9 SO2 Emissions in Czech & Slovak Republics by Type of Source 89
A3.10 Lead Emissions in Bulgaria by Type of Source 89
Text Tables
2.1 Minimum Damage Costs from pollution emitted by high and low stacks 10
5.1 Priorities for pollution control 43
Annex Tables
A1.1 Major industrial plants located in pollution "hot spots" 73
Maps
1 Concentration of total dust (RIVM/IBRD 25296R)
2 Total deposition of cadmium (RIVM/IBRD 25305R)
3 Concentration of sulfur dioxide (RIVM/IBRD 25297R)
4 Concentration of sulfur dioxide in 2010 (RIVM/IBRD 25298R)
5 Locations of large point sources of SO2 emissions in the CEI region (IISAS)
6 Regional SO2 emissions from all sources in the CEI region (IISAS)
7 Leaching of nitrate in agricultural soils (RIVM/IBRD 25312R)
8 Exceedance of critical loads for acidity (RIVM/IBRD 25300R)
9A Exceedance of critical loads for acidity in 2010, scenario 1 (RIVM/IBRD 25301R)
9B Exceedance of critical loads for acidity in 2010, scenario 2 (RIVM/IBRD 25302R)
10 Aluminium concentrations in acidified soils (RIVM/IBRD 25304R)
Technical Reports (issued separately)
This report represents a synthesis of a two-year process involving numerous studies, detailed technical reports on the most
important topics, joint meetings, workshops and international conferences. Following is a list of the major reports and
conferences:
Environment and Health in Central and Eastern Europe
Monograph evaluating the influence of environmental pollution on human health in comparison with other determinants
of health in 12 Central and Eastern European countries. The document summarizes the current knowledge about locations
vii
in the region where environmental pollution is known to have influenced human health, and identifies the principal types
of environmental exposure which are affecting human health and could be subject to remediation through concerted envi-
ronmental action. A draft of the report, which was prepared for the World Bank, was discussed at a high-level meeting of
health and environment officials sponsored by WHO, UNEP and the World Bank at the WHO Regional Office for Europe
in Copenhagen (Denmark), March, 1993.
Environmental Liability and Privatization in Central and Eastern Europe
Book analyzing the legal and economic issues associated with questions of environmental liability in the privatization pro-
cess. The document, prepared by the World Bank, is based on an international conference on privatization, foreign direct
investment and environmental liability hosted by the Polish Ministry of Environmental Protection, Natural Resources and
Forestry in Warsaw in May, 1992. The Conference, which was organized jointly by The World Bank, OECD and EBRD,
brought together ministers, deputy ministers and other high-level officials responsible for privatization or the environment
in 13 Central and Eastern European countries, as well as representatives from the private sector and the international
community.
Foreign Direct Investment and Environment in Central and Eastern Europe: A Survey
Survey of large European and North American corporations to assess the importance they attach to environmental issues
in deciding whether to invest in Central and Eastern Europe. Preliminary results of the survey, which was carried out by
The World Bank and OECD, were discussed at the Conference on Privatization, Foreign Direct Investment and Environ-
mental Liability in Warsaw (Poland) in May, 1992.
Priorities for Environmental Expenditure in Industry
Extensive report analyzing expenditure options which offer the most cost-effective immediate environmental improve-
ments in particular industrial sectors. The report contains an inventory of polluting plants in 12 Central and Eastern Euro-
pean countries and is based on detailed case studies in the following sectors: Power and district heating, refineries and pet-
rochemicals, inorganic chemicals, organic chemicals, iron and steel, non-ferrous metals, pulp, small boilers and households.
Municipal Wastewater Treatment in Central and Eastern Europe: Present Situation and Cost-Effective Development
Strategies
Report evaluating municipal wastewater treatment in Poland, the Czech Republic, the Slovak Republic, Hungary and Bul-
garia. Data were assembled for 362 municipalities with a total population of 35 million (about half the total population of
the five countries, and 70% of the total urban population). The data cover all towns with populations greater than 25,000
and in Poland some additional towns greater than 10,000. The data from all five countries were assembled into a single
computerized data base which was combined with an analysis of different technologies to evaluate the present status in the
countries and to determine the cost of different approaches to upgrading existing wastewater treatment facilities. The
report was discussed at a workshop at the International Institute for Applied Systems Analysis in Laxenburg (Austria) in
March, 1993, and was attended by experts from the five countries studied.
Scenarios for Economy and Environment in Central and Eastern Europe
Report analyzing five specific scenarios of economic restructuring and the resulting environmental effects. The document
reviews in particular the implications for environmental policy and different requirements for capital renewal, The air pol-
lution emissions of the different scenarios are translated into Europe-wide maps of pollutant concentration and deposition
levels. The report was discussed in detail during a workshop on economic restructuring and environment organized by the
Govemment of Hungary in cooperation with UN/ECE and OECD and with the participation of the World Bank and the
Netherlands Institute of Public Health and the Environment (RIVM) in March, 1993 in Budapest (Hungary). The workshop
was attended by experts from,18 countries.
Energy and Environment in European Economies in Transition-Priorities and Opportunities for Co-operation and
Integration
Proceedings of an OECD/IEA Conference held in June, 1992 in Prague. The Conference report discusses the need for inte-
grated policies for energy and environment that will address the major problems in both sectors effectively and efficiently.
The report describes specific actions for policy integration, including: market-based energy pricing; actions to overcome
barriers to energy efficiency; integrated energy-environment strategy development; inter-ministerial cooperation; and
innovative funding mechanisms. The Conference brought together representatives of Central and Eastern European gov-
viii
ernments, of OECD Member countries and of international organizations, and executives from private companies and
public utilities.
Alternative Policy Instruments for the Control of Air Pollution-Case Study of Poland
Report analyzing the potential effectiveness and efficiency of alternative policy instruments to control air pollution in
Poland. The work was supported by the Polish Ministry of Environmental Protection, Natural Resources and Forestry
(MOSZNiL) and was carried out jointly by Polish and international experts. The analysis focused on the likely gains to be
achieved from applying economic instruments to control emissions of sulfur dioxide, nitrogen oxides, and particulate mat-
ter (i) at a national level, and (ii) in a specific geographical area (the city of Krakow). The results were presented and dis-
cussed at a workshop held in Warsaw in October, 1993. The workshop was organized by MOSZNiL and the World Bank
and was attended by representatives of the environmental offices of most Polish provinces (Wojewodships), by provincial
and national representatives of the state inspectorate of pollution control, as well as by Polish and international experts.
Environmental Information Systems and Indicators: A Review of Selected Central and Eastern European Countries
Report analyzing the collection and use of environmental information in Central and Eastern European countries, based
on case studies carried out in Poland, Hungary, and the former Czech and Slovak Federal Republic. The report also pre-
sents key environmental indicators for these countries in the same comparable framework used by OECD Member coun-
tries. These country case studies and their recommendations were discussed by officials from central and eastern Euro-
pean countries, OECD Member countries, and international organizations at a workshop held at OECD in December 1991.
A similar monograph on environmental information systems and indicators in Belarus is also available.
Taxation and Environment in European Economies in Transition
Report of an OECD workshop that examined the scope for reconciling fiscal and environmental policy objectives in econ-
omies in transition, including the use of taxes and charges on pollution and environmental damage. The report includes
case studies of Estonia, Hungary, Poland, and the Russian Federation. The OECD workshop concluded that, although a
number of Central and Eastern European countries already use environmental taxes, considerable scope remains to adapt
and expand their use in the transition to a market economy.
Economic Reform, Industrial Restructuring and the Environment
This paper, which is being prepared by the World Bank, examines the relative contribution of supply and demand factors
to prospective changes in emissions of key air and water pollutants in Central and Eastern European countries over the
next 10-15 years. It develops a model of industrial growth and structural change to analyze the impact of various environ-
mental policies as well as the environmental implications of broader economic factors including macroeconomic adjust-
ment, market reforms, privatization and trade liberalization.
Agriculture and the Environment in the Transition to a Market Economy
Report based on an OECD Conference held in September 1993 in Vilnius, Lithuania. The Conference brought together both
agriculture and environment officials and experts to discuss environmental problems related to agriculture and to consider
ways for countries in transition to integrate their policies for agriculture, environment, and rural development, based on
recent methods and experiences tried in OECD Member countries.
Further Preparatory Meetings
In addition to the meetings at which the above reports were discussed, a number of other international workshops were
organized to stimulate discussion and to generate consensus on some of the main elements in the Action Programme:
Economic Instruments for Environmental Policies
This meeting discussed the OECD Guidelines and Considerations for the Use of Economic Instruments in Environmental
Policies. The meeting recognized that opportunities existed for the more effective application of economic instruments in
transition countries, and that market-based instruments in combination with regulations could help integrate environmen-
tal considerations into the process of economic restructuring. The workshop was organized by OECD and UN/ECE in
Geneva, December, 1991.
ix
Environmental Policy and the Transition to a Market Economy in the Newly Independent States
This seminar examined four key issues that underlie the Environmental Action Programme for Central and Eastern
Europe: economic restructuring and the environment (focusing on energy issues); privatization, foreign direct investment,
and environmental liability; resource pricing and economic instruments; and low-cost technological improvements in
highly polluting industries. The seminar was held in Minsk (Belarus), December, 1992. It was hosted by the State Com-
mittee for Ecology of the Republic of Belarus and was organized by OECD.
x
Executive Summary
As adopted at the Ministerial Conference*
28 April 1993
Introduction rather than from issues that are specific to particular envi-
ronmental problems or potential solutions. Hence the most
The Environmental Action Programme (EAP) has been urgent problems will only be solved if clear goals are estab-
developed in response to a call by Ministers from east and lished at the outset and the most efficient way to achieve
west at their 1991 Conference, and in the spirit of the each goal is identified. This appraisal of priorities, risks and
United Nations Conference on Environment and Develop- benefits is an essential prerequisite for a sustainable devel-
ment (UNCED). Despite efforts by Central and Eastern opment strategy which identifies investments and policies
European (CEE) countries to tackle environmental prob- in support of a socially and ecologically sound objective,
lems, sometimes with international assistance, there are thus avoiding the need for costly remedies ex post.
still a number of serious environmental problems which Some of the most significant environmental improve-
require immediate and urgent action. ments will be achieved through so-called "win-win" poli-
This Executive Summary presents an overview of the cies and investments: these can be justified entirely on eco-
Action Programme and describes the main features of the nomic grounds, but also entail substantial environmental
broad strategy and action framework that the Programme benefits. Improvements in energy and other resource effi-
represents. This strategy is based on a "three-legged" ciency are good examples.
approach of policy reform, institutional strengthening and
investment. The Action Programme illustrates a range of The major environmental problems-Criteria for
actions that could be taken to implement this strategic setting priorities
approach. The Programme concentrates on short-term,
immediate action, but ensures that these actions are con- Priorities should reflect the urgency and importance of
sistent with longer-term economic, social and environ- environmental concerns. Setting environmental priorities
mental objectives. involves making difficult choices.
The damage to human health caused by poor environ-
Why an Environmental Action Programme? mental quality is the first concern in the region-as was
the case in the West when major environmental health
The resources available for environmental improvement threats were first addressed. Initial evidence suggests that
in the countries of Central and Eastern Europe, including the following types of environmental pollution have
the Former Soviet Union, will be severely constrained affected human health (and also causing economic dam-
over the next 5-10 years. The costs of meeting some envi- age) in particular areas in CEE:
ronmental objectives will, however, be very high. The
Environmental Action Programme provides a framework * Lead in Air and Soil from lead and zinc smelters and
and guide for identifying the highest priority problems; from transport;
and for developing realistic, efficient and cost-effective * Airborne Dust from household furnaces, small-
solutions. It is intended as a basis for each country in Cen- scale enterprises, power and heating plants, metallurgi-
tral and Eastern Europe to set its own national environ- cal and other large plants;
mental priorities, and to improve and promote coopera- * Sulfur Dioxide and other Gases, especially in com-
tion between and among Eastern and Western countries. bination with dust.
The main constraints to implementation arise from a
general lack of financial and above all institutional capacity Other important health impacts arise from:
* The Executive Summary has been left unchanged, whereas the main text has been edited and updated since the Ministerial Conference.
xi
* Nitrates in water from inadequately maintained/ important question that should be asked is: "How much
designed feed lots and agricultural enterprises, inappro- environmental improvement can be achieved at different
priate fertilizer application, and rural septic tanks; costs?" The answer will provide the flexibility to achieve
* Contaminants in food and water, especially where the best result for the available resources.
heavy metals or toxic chemicals threaten drinking water Establishing priorities involves a combination of the
supplies either directly or through poor disposal of haz- following complementary measures:
ardous / nuclear waste.
* better economic and environmental policies;
But human health is not the only criterion to set priorities. * expenditures that are carefully targeted to projects with
In certain areas, the following are of major significance: high benefit to cost ratios; and
* institutional development and capacity building,
* productivity losses caused by damage or destruc- including training, education, and exchange programs.
tion of physical capital and natural resources; and
* the deterioration of or threat of irreversible damage These are described in the following sections.
to biodiversity in general, and in particular to wetlands
(lakes, reservoirs, rivers), grasslands, coastal and marine Policy Reforms
ecosystems, forests and mountain habitats,
Economic Policies
Finally, priority might also be attached to low-cost/
high gain measures to address issues of growing impor- The transition from central planning to a market economy
tance in the medium-to-long term and where there may be should not only improve the countries' economic perfor-
a long lead time to effect changes (e.g., transport). mance in the longer term, but will contribute to environ-
Each CEE country must decide how the resources can be best mental improvements by penalizing the massive waste of
allocated to remedy the problems that it regards as having the resources-and the resulting pollution-which character-
greatest priority, bearing in mind that the above problems ized production in the past. Among the key factors that
have been generally recognized as the most serious con- can bring about economic and environmental improve-
cerns in Central and Eastern Europe. ments are restrictions on access by enterprises to govern-
The scarcity of resources does not just imply that envi- ment money ("hard budget constraint"), and removal of
ronmental investments should be scaled down. Rather, subsidies on natural resources such as energy, minerals, or
the benefits of broad economic policies should be cap- water. Many CEE countries have already made major
tured, and a judicious mix of different technologies, man- strides in reducing energy subsidies. These efforts should
agement, institutions, and policy approaches applied. An be-and are being-continued.
How environmental priorities may evolve over time
The analysis in this report highlights air pollution, especially that caused by particulates, as the highest environmental priority for Cen-
tral and Eastern Europe. However, environmental priorities will change as the policies, structural changes and investments discussed
in this report mitigate some environmental problems and make others worse.
Preliminary analysis suggests that air pollution will dramatically improve as a consequence of higher energy prices, the fall in the
output of the metallurgical sector, and investment in new capital equipment with better environmental controls. For water pollution,
the prospect is much less rosy. Over three quarters of BOD emissions come from municipal (household) sources, so that general
progress in raising the dissolved oxygen level of rivers depends upon better municipal sewage treatment, which will be too costly for
national and local governments to afford for some time to come. Discharges of heavy metals and chemical pollutants are largely an
industrial problem whose solution depends on industrial investments in suitable pre-treatment methods. Such investments will not
necessarily be undertaken in response to simple policy changes such as higher energy prices or even pollution charges.
The projections discussed in this report suggest that the output of the food processing, wood products, paper and chemical indus-
tries-all significant sources of water pollution,-will grow much faster than that of the building materials, metallurgy and electricity
industries. The balance of industrial emissions will, therefore, shift towards water pollution and away from air pollution.
The effects of industrial change on the disposal of solid wastes is mixed, since the total volume of such wastes will decline-primarily
because mining will dechne-but there is likely to be increasing problems in dealing with hazardous wastes unless low waste technol-
ogies are rapidly adopted.
As living standards begin to recover, both the size and use of the automobile fleet are likely to grow quickly. The result will be
increasing photochemical smog and ozone exposure. The volume of municipal waste will also rise rapidly as consumers begin to
expect packaging standards equivalent to those in Western Europe.
The benefits attached to reducing environmental damage will also alter. As the worst of the health problems associated with air pol-
lution are resolved, the amenity benefits of a clean environment will gradually become more important. This will focus attention on
improving water quality for recreational purposes (i.e., sewage treatment) and on better visibility (i.e., vehicle emissions).
These considerations suggest that the primary focus of environmental policy will shift over the next decade from air pollution from
stationary sources towards water pollution from both industrial and municipal sources, vehicle emissions and the management of
solid and hazardous wastes.
In chapters III-VI, the EAP identifies the most appropriate short-term measures in light of expected longer-term developments.
xii
Declining economic activity has brought substantial of sectoral policies is a key factor in environmental
reductions in emissions. Market reforms should allow improvement.
these environmental improvements to be sustained or
extended over the next decade by promoting a shift Environmental Policies
towards less resource-intensive and cleaner activities
and technologies. As the industrial capital stock is Targeted environmental policies, including a judicious
renewed, emissions of most air pollutants-other than mix of regulations and economic instruments, will be
those associated with traffic-can be kept stable or even required to ensure that the potential benefits of economic
reduced until 2010 even with quite rapid economic restructuring are fully realized. For example, while
growth. However, emissions of water pollutants will be removal of energy price subsidies will bring about a
less affected by industrial restructuring because of the reduction in energy use and hence pollution levels, pollu-
dominant contribution of agriculture, households and tion charges can complement these policies by promoting
services, so that the focus of attention will shift from air to the use of cleaner fuels and technologies.
water in the longer term. To achieve the most cost-effective use of resources, eco-
In certain instances, it may be appropriate to provide nomic instruments, such as charges and taxes, should be
incentives for environmental investments by the private applied where appropriate. Existing CEE systems of pol-
sector, such as those that have the greatest potential to lution charges can be developed further to provide an
reduce major threats to human health or natural ecosys- effective incentive for sound environmental practices.
tems. However, environmental investments that are There is scope for large savings in achieving environmen-
made in the industrial and energy sectors should be con- tal objectives by applying simple market type approaches
sistent with least cost planning and policy objectives, which are realistic even in the current economic and insti-
and private sector decision-making. More generally, the tutional situation. There is also considerable scope for rec-
integration of environmental requirements in the design onciling environmental and fiscal policies.
Summary of Principal Recommendations
* Base environmental priorities on a careful comparison of costs and benefits. The resources available for environmental improvements
will be severely constrained in Central and Eastern Europe for the next 5-10 years. It is essential that limited resources be applied to
the most urgent problems first.
* Implement policies and invest in projects which pro vide both economic and environmental benefits. "Win-win" polices include removing
subsidies that encourage the excessive use of fossil fuels and water in industry, agriculture and households. "Win-win" investments
include those in energy and water conservation, low-input and low-waste technologies, and expenditures on "good industrial house-
keeping."
* Harness market forces for pollution control wherever possible. Market-based instruments, such as pollution charges, fuel taxes, and de-
posit refund schemes, can help achieve desired levels of environmental quality at much lower costs than traditional regulatory ap-
proaches. Regulatory instruments will still be needed to control emissions of some micro-pollutants such as heavy metals-particu-
larly lead-and toxic chemicals.
* Concentrate on local problems first. Many people suffer health damage from exposure to lead in air and soil, airborne dust and sul-
fur dioxide, from nitrates in drinking water and from contaminants in water and food. Solving these problems will do the most to
improve health and well-being. Measures to reduce emissions of pollutants in response to local concerns also should contribute to
reducing transboundary and global emissions.
. Donor countries should consider providing funding to accelerate measure to reduce emissions of transboundary and global emissions in coun-
tries of Central and Eastern Europe. Such funding would be particularly appropriate where the marginal costs of reducing emissions are
lower in Central and Eastern Europe. Minimizing the net cost of meeting international agreements is in the interests of individual
countries as a whole. By lowering the net cost of reducing transboundary flows, countries could afford to act earlier or to adopt more
stringent reduction targets.
. Clarify responsibility for past environmental damage. Uncertainty about who will be responsible for past damage can discourage for-
eign and domestic investment and can impede the privatization process. For practical reasons, governments will have to bear most of
the costs of dealing with past emissions. Governments must define clearly the environmental standards that new owners must meet
and the period of adjustment that will be permitted.
* Set standards that are realistic and enforceable. Implement stricter standards over a 10-20 year period, and ensure that industries
comply with interim standards.
. Involve local people in setting priorities and in implementing solutions. Neither governments nor donor institutions are equipped to
judge how local inhabitants value their environment. A participatory approach is essential for the long-run sustainability of environ-
mental improvements.
* More research, training, and exchange of information are needed to help decision-makers set sensible priorities. Research should focus on
the state of the environment in Central and Eastern Europe. Much more information is also needed on low-cost ways to reduce emis-
sions of air and water pollutants from non-ferrous metal smelters, iron and steel plants, chemical plants, paper mills, and wastewater
treatment plants and on ways to conserve biodiversity.
* Finding, implementing, and financing solutions will require building partnerships. Transferring know-how and clean technologies will
require strong cooperations between East and West, between countries of Eastern and Central Europe, and within countries, between
cities, institutions and enterprises.
xiii
Regulatory measures Evidence suggests that the greatest contribution to achiev-
ing a continuous decline in total emissions in the short to
As far as environmental regulations are concerned-for medium term is likely to come from improving the envi-
instance to control emissions of heavy metals and toxic ronmental performance of old plants which continue to
chemicals-CEE govemments should introduce a frame- operate. Moreover, to achieve conditions equivalent to
work of standards and requirements such as, where appro- those in Western Europe, emissions per unit of output
priate, that adopted within the EC or an equivalent phased equivalent to those obtained by applying Best Available
system like those in effect in the United States, Canada, or Technology (BAT) would, for the purpose of immediate
other OECD countries. Many internationally accepted improvement, only be required in some of the worst "hot
standards are being reviewed in light of experience with spots" and only for some pollutants.
the aim of improving their efficiency. The framework of
standards adopted by CEE countries should provide for Privatization
the phased implementation of increasingly stricter emission
limits which, over a 10-20 year period, would approach Ministries of Environment should work with Ministries of
the internationally recognized standards that will be in Finance, Industry and Privatization, as well as Health and
effect at that time. Enterprises should be given a well- Social Security, to ensure that environmental consider-
defined period to comply with new standards which ations are built into decisions about which plants or enter-
should be strictly enforced. For this reason, both economic prises in the public sector should be closed and which
instruments and regulatory measures should be accompa- should be allowed to continue to operate. By affecting the
nied by strong monitoring and institutional enforcement pattern of closures and the conditions which must be met
capacity to ensure their effective implementation. before plants receive assistance to support their continued
Ambient (i.e., immission) standards should be used as operation, the environmental authorities can have a sig-
part of a decision framework to guide policy making at nificant impact on the damage caused by old plants at a
the local level. Appropriately set, ambient standards low cost.
reflect environmental and economic sustainability criteria. Privatization can assist the changes promoted by mar-
In addition, the efforts of several CEE countries to apply ket reform. Govemments can both expedite privatization
biodiversity conservation standards should be recognized and facilitate environmental progress by establishing clear
and expanded. rules assigning liability for past environmental damage,
and by holding the new ownership of enterprises account-
Old and new enterprises able for all current emissions. In many cases, the govern-
ment must be willing to assume responsibility for past
Conflict between economic, social and environmental con- damage, but there are a variety of ways of structuring that
siderations is inevitable, especially when the resources responsibility to provide protection both for the govern-
available to mitigate the social or environmental conse- ment and for the environment. Environmental audits-
quences are so limited. Some old and highly-polluting which can be carried out without causing significant
plants will be allowed to continue operating because of delay-can be conducted to separate past from on-going
the large social costs of closure. Even so, it is possible to pollution. Where privatized enterprises are out of compli-
insist that such plants improve their environmental per- ance, the enforcement of stricter environmental standards
formance without committing any significant amount of should be carefully phased in.
investment. The transition from central planning to markets may
Large gains can often be achieved by simple "good result in irreversible effects on the rich biological and
housekeeping" measures-better maintenance, repairing landscape diversity in part of Central and Eastern Europe.
leaks, installing better controls, insisting on stricter stan- CEE countries could be supported through existing inter-
dards of plant and process management. These are all national conventions and agreements in their efforts to
highly cost-effective "win-win" actions which will identify networks of areas of high natural value, to
improve the economic results of enterprises as well as develop policy for protection and sustainable use within
lessen the environmental damage that they cause. Such the transition process, and to ensure a sustainable, envi-
small-scale actions underpin the environmental improve- ronmentally-sound use of privatized land. Short-term
ments from economic policy transformation. They are assistance in the provision of extension services in agricul-
essential because much of the large-scale introduction of ture and forestry, legislation and integrated planning are
cleaner technologies in different industrial sectors may required to prevent the kinds of developments that have
not occur until new markets for the different products occurred in Western Europe.
have been identified, and the economic viability of specific
enterprises is assured. Immediate investment priorities
Thus, it is crucial that govemments not direct all of their
resources-human as well as financial-towards new In the long term, market reform-especially industrial
investments or enterprises, since remarkable improve- restructuring-in combination with appropriate environ-
ments can be made if the managers of old plants are put mental measures, will take care of a large part of the emis-
under pressure to make continuous improvements and are sions causing health and economic damage in the region.
rewarded appropriately for above average performance. This will occur as alternative sources of employment are
xiv
found for workers in economically inefficient and pollut- priorities should be better dust controls for non-ferrous
ing industries which need to be closed, and as economic (lead, zinc, copper, aluminum) smelters and steel plants,
activity picks up and viable enterprises can afford to and the use of cost-effective cleaner fuels in district heat-
invest in new technology. ing plants and households. With regard to water quality,
In the short term, however, public investment is the priorities are pre-treatment of industrial wastewater,
warranted: where heavy metals or toxic chemicals threaten the qual-
ity of ground or surface waters, and measures to reduce
* to speed up the process of environmental improve- excessive levels of nitrates and microbiological contami-
ment where there are social and economic constraints nation in rural drinking water supplies. For hazardous
(heavily polluting enterprises are not closed, households wastes, the priority must be to ensure that leachates from
cannot quickly respond to increased energy prices and disposal sites do not contaminate ground or surface
cannot easily shift from coal to cleaner energy sources, water sources.
etc.); and * Measures to deal with problems specific to different
* to begin to address environmental problems that countries. These include wastewater treatment to protect
will persist after the transition to a market economy (e.g., valuable coastal, ecological and tourist resources, the
air emissions from mobile sources). phased completion of incomplete wastewater treatment
plants where appropriate and where this will have the most
Environmental investments should only be carried out impact on water quality, and programs to prevent irrevers-
if the following three categories of expenditures are ade- ible damage to and loss of productivity of important eco-
quately addressed: recurrent cost financing for Operation systems at the domestic and transboundary levels.
and maintenance (especially at the municipal level), envi- * Support to reinforce and accelerate environmental
ronmentally beneficial expenditures which can be justified investments by enterprises in response to environmental
on economic grounds, and institution building: policies, such as for the reduction and treatment of saline
water and other discharges by mines, industrial waste-
* OPERATION, MAINTENANCE, REPAIR, AND SELECTED water treatment in pulp, textile, metallurgical and chem-
REHABILITATION OF EXISTING PUBLIC ENVIRONMENTAL ical plants, and for measures to reduce discharges of toxic
SERVICES. Safe drinking water, collection and disposal of materials from chemical and petrochemical plants.
municipal waste, well-functioning public transportation * Low cost measures to address long-term environ-
systems, and the monitoring of the disposal of hazard- mental priorities where prompt action can avoid the need
ous, toxic and nuclear wastes are all vital concerns. to spend much larger sums in the future. Improved trans-
These require funds to cover recurrent costs; but they port management, phasing out leaded gasoline and reduc-
should generally not, in the short run, require major new ing vehicle emissions, formulating and applying practices
capital investments. for sustainable agriculture and tourism, applied research
* 'WIN-WIN" INVESTMENTS. Small investments (often on the protection of threatened species and ecosystems,
less than $0.5 million) in energy and water conserva- and the development of systems to collect, interpret and
tion-metering, reducing leakages-, low-input and disseminate environmental data all fall into this category.
low-waste technologies, and above all expenditures on
"good industrial housekeeping" and minor plant Regional and global concems
improvements which reduce spills, leaks and material
use. These are all investments which are justified on eco- The central element of a strategy to address regional or
nomic and financial grounds alone, but which also have global problems of air and water pollution must be to
major environmental benefits. build, as far as possible, on the overlap between the local
* INSTITUTION BUILDING. Different levels of govern- and the transboundary impacts of measures to reduce
ment need to continue to build up a solid financial and emissions.
tax base to ensure the availability of funds for meeting
recurrent costs; industrial managers should be trained in Transboundary pollution
better management practices; and institutions need to be
developed that can in the future make well-informed AIR. Market reforms and targeted policies or invest-
decisions such as on water-related investments in a river ments to meet domestic environmental goals will lead to
basin framework. Efforts should also continue in pro- large reductions in emissions of regional and global air
moting environmental topics in school education, and in pollutants. In considering further reductions in the CEE
supporting worker training programs. countries to meet regional and global concerns, donors
may wish to contribute towards measures to accelerate the
Environmental Investments necessary reductions. There might be scope for mutually
beneficial agreements which could result in larger reduc-
Once these measures are assured, the priority categories tions in environmental damage than could be obtained by
for short-term domestic environmental investments are: spending the same resources domestically.
* Immediate investments to address the most serious WATER. Maximizing the joint domestic and trans-
health problems. In areas with poor air quality, the initial boundary benefit of improving water quality implies that
xv
resources need to be directed to reducing the flows of est benefits rather than offering pre-packaged recommen-
nutrients and emissions of harmful substances from agri- dations based on conventional Western technologies. In
cultural, domestic and industrial sources (including particular, far more effort should go into project identifica-
dumping sites for radioactive waste) to bring about the tion, rather than project preparation. Substantial local par-
overall reduction of contaminants in coastal and estuarial ticipation is essential both to formulate advice that can be
locations. The Baltic Sea Joint Comprehensive Environ- implemented and to improve local capacity to achieve bet-
mental Action Programme of the Helsinki Commission to ter environmental performance from existing facilities.
a large extent reflects this philosophy. (From a domestic These changes in approach will require much more careful
perspective, wastewater investments should focus on up- attention to the terms of reference for studies to ensure
stream areas.) that the resulting proposals meet clear objectives and
address the financial and institutional constraints.
Global issues
Implementation
CEE countries have committed themselves to addressing
acidification, global warming, the depletion of the ozone The Action Programme establishes a partnership between
layer and other regional and global environmental prob- Eastern and Western countries. While the responsibility
lems in the context of the relevant conventions, protocols for projects, policies and institutional improvements lies
and other forms of international agreements. While action with CEE countries, Western governments and interna-
to meet these commitments will continue well beyond the tional institutions would provide technical assistance to
horizon of the Environmental Action Programme, as part support the policy and institutional reforms, and contrib-
of the EAP's policy reform and institutional and invest- ute toward the implementation of priority projects. The
ment programs, CEE countries may need to take selected various partners must re-examine their policies and pro-
measures which go beyond those they would take as part grams in light of the Action Programme. Governments-
of economic transformation. not just environment ministries-should actively support
With regard to the phaseout of Ozone Depleting Sub- this process. Inter-ministerial task forces may be useful
stances (ODS), they should, for example, focus on the aero- instruments for this purpose.
sol and flexible foam sectors where ODS use can be elimi- One of the principal challenges in implementing the
nated at low cost, and prepare national recovery/ EAP is to find the best ways to channel financial resources
reclamation/recycling strategies. They should review to, and to implement the smaller-scale activities that can
national legislation and strengthen institutional and techni- be carried out in the short term, and to identify viable
cal capacity and measures in light of, for example, the Con- larger projects. There are three elements to this approach.
vention on Biological Diversity and the Basel Convention.
1. A process for identifying priority actions which links the
Institutional prerequisites to support policies and threats from the exposure of populations or ecosystems to
investments pollutants with alternative mitigation strategies and
their costs. National environmental action programs
Experience in Western countries shows that successful will need to identify the problems, their impacts,
environmental policy requires the explicit commitment of and alternative strategies leading to policy, institu-
the whole government, as well as the cooperation of the tional and expenditure actions at specific locations
independent sectors, and an open approach to setting pri- where there is a clear case for urgent environmental
orities and making choices. The enthusiasm and expertise expenditures. The necessary calculations and anal-
of non-governmental organizations should be mobilized yses are not easy, and there are generally no simple
to contribute to the successful implementation of environ- relationships between sources of environmental pol-
mental programs, particularly through close monitoring lution and environmental damage. However, in
of their implementation. deciding on particular environmental actions,
The greatest contribution to improved environmental implicit assumptions are made in any case.
management is likely to come from strengthening local 2. Mechanisms to ensure that actions requiring modest
and regional institutions within countries-in particular, expenditures which can bring substantial environmental
improving their capacity for identifying priorities, devel- improvements are speedily identified and implemented.
oping policy, ensuring environmental compliance, and Some CEE countries have already launched pro-
also for operating financial systems. National environ- grams of rapid environmental reviews, or audits, in
mental authorities should place more emphasis on policy different sectors. Such reviews are essential steps to
coordination and create task-oriented teams to work on develop recommendations for low cost environ-
priority issues. Substantial savings are possible by mak- mental improvements. The small expenditures
ing environmental decisions at the level of river basins or could be financed through national and/or local
air sheds, but this requires institutions that integrate the pollution abatement funds. External agencies could
different local and sectoral interests. contribute to such a fund which would generally
Studies for project preparation and industrial reviews make financing available in the form of loans at nor-
need to be re-thought. They must focus on those areas mal real rates of interest. In addition, grants could
where scarce investment resources can provide the great- be made available separately where "win-win"
xvi
investments are not sufficient to remedy the most Project Preparation Framework
urgent environmental problems. Again, some coun-
tries are already pursuing these ideas in practice. Discussions have been initiated to reinforce the partner-
3. A framework for financing larger investments (typically ship under the Action Programme through a "Project
through loans) which gives particular emphasis to "win- Preparation Framework." This would provide the neces-
win" opportunities but which can be combined with pub- sary initial funding to help identify high priority environ-
licfunding to meet high priority environmentalgoals that mental investments in accordance with the Action Pro-
cannot be justified on economic grounds alone. Larger gramme and to advance such proposals rapidly to the
investments of course require the full application of stage where they can be financed either by CEE countries
the project-based approach with feasibility studies themselves, or through bilateral or multilateral channels.
and other preparatory expenditures. However, good
feasibility studies should address alternative strate-
gies and the phasing of investments.
xvii
ECONOMIC INDICATORS FOR COUNTRIES OF CENTRAL AND EASTERN EUROPE, 1991-94
GDP Industrial production Agricultural production LUnemployment rate (%) Grossforeign debt
(billion US$)
91 92 93 94 91 92 93 94 91 92 93 94 91 92 93 94 91 92 93
Albania -27.1 -9.7 11.0 .. -40.0 -60.0 -10.0 .. .. 18.0 14.4 .. .. .. 18.0 14 7 0.6 0.7 0.83
9;�.','S',,',S,.<'.''^& ...................... ' . 'v ''.... .. . .. ... .: ': '-
"467 57 a, >7 - .~~~1 42 1~
Czech Republic -16.0 -7.0 0.0 3.52 -25.0 -11.0 -5.0 -4.69 -14.0 -12.0 -1.0 4.0 3.0 3.0 3.0' 9.3 9.5 8.7
~~~~~~~~~~~~~~~~~. . ...... . ...... . - ...... ... ..
14S 230 75 - 9& ~~~~~7'284 ~ ~ ~-21,3 ..,......... ..
Hungary -11.9 -4.3 -2.3 -19.1 -9.8 4.0 7.8' -5.0 -23.0 -6.0 .. 8.5 12.2 12.1 11.0 9 22.7 21.4 24.5
3 . ... ;. ....... ...... +
Laosa 35= " Z 0 $ .41.-8 ..4 ~ 00 L2
Lithuania -12.8 37.7 -17.0 .. -1.3 -51.6 -46.0 -8.0 -24.0 -8.0 .. 1.0 1.6 32' 0.1 0.13
76 '~~~4~~5-- ~~ ~~t4Jb 4.2 ~. .9 .... . 10 f ..- ..4 Ti.1 A 9.
m~~~~~~~~~~~~~~~~~~~~~~~~~~~.. . . . .. . . :.::c. . / ^... . .. . . ..........
Romania -13.0 -13.6 1.0 -18.7 -21.8 1.3 -1.8' -5.0 -12.1 14.0 2.9 8.4 10.2 10.8 9 1.9 3.4 4.4
Slovak Republic -16.0 -6.0 -4.0 3.6' -25.0 -13.0 -14.0 30o6 -14.0 -12.0 -7.0 12.0 1.0 14.0 13.9 9.3 9.5 3.4
4 - ow ..-.". ... . .
Ukraine -10.0 -17.0 -14.0 -34.02 -13.0 -15.0 -16.0 -38.04 -4.0 -9.0 -1.0 -5.0' 0.0 0.0 0.3 0.3 2 10
No statistics available
1/ Percentage change over the same period of the previous year.
Latest periodfor which data are available:
2/ January-March 6/ Feb
3/ January-April Z/ April
4/ January-May 8/ May
5. January-June 9/ June
Sources: European Commission, Directorate-General for Economic and Financial Affairs. 1994. Economic Trends, Supplement A (8/9).
Chapter One
Introduction: Why an
Environmental Action Programme?
The resources available for environmental improvement in the countries of Central and Eastern Europe (CEE) will be severely con-
strained over the next 5-10 years. The costs of meeting some environmental objectives will, however, be very high. The Environmental
Action Programme provides a framework for setting national environmental priorities within each country in Central and Eastern
Europe and for cooperation between Eastern and Western countries.
Trhe main constraints on implementation arise from a general lack of financial and above all institutional capacity rather than from
the rsature of particular environmiiental problems or potential soletions. So the most urgeant problems will not be solved unless a clear
goal is established at the outset and the most efficient way to reach that goal is identified.
Objectives assistance to support these reforms, and contribute
toward implementation of projects mutually agreed to be
The Environmental Action Programme (EAP) builds on of high priority. This requires that all partners re-examine
the efforts already being made by countries in Central and their policies and programs in light of the EAP. Working in
Eastern Europe-in some cases together with donors and this way, limited resources can be used most efficiently,
financing institutions-to address environmental prob- and a greater degree of environmental protection secured
lems. The goal is: than otherwise would be the case.
Many CEE countries are actively developing and imple-
* first, to make it easier to reach a consensus within and menting environmental programs and policies, albeit under
between countries of East and West on the most urgent severe constraints. The EAP is aframework document that com-
environmental problems; and plements these activities by proposing ways to establish pri-
* second, to endorse a mix of policies, investments, and orities. As such, it is intended to provide the impetus for dif-
institutional reforms in which all countries and institu- ferent countries to adapt its ideas to their own circumstances
tions involved can play an appropriate part. and to prepare their own action programs. The EAP offers
ways to identify immediate actions, and a broad strategy to
By establishing a consensus within and between coun- build environmental concerns into the economic transforma-
tries of East and West, the EAP provides a basis for an tion of the countries of Central and Eastern Europe. Rather
evolving partnership to tackle the most urgent environ- than prescribe what must be done, the EAP offers decision
mental problems in the CEE region. CEE countries would makers ways of looking at the problems and applying their
undertake essential policy and institutional reforms, and own judgment. It is meant to be a living document: as our
western governments and international institutions understanding of the environmental problems improves and
would make a commitment to provide technical and other changes, the EAP will be reviewed and updated.
1
The High Costs of Environmental Cleanup Box 1.1 Environmental Investment Expenditures
The recent political changes and the transition to a market in Poland
economy involve much economic and social hardship for Expenditures have grown substantially in Poland, corre-
the countries of Central and Eastern Europe. Concern for sponding to the rapid increase in pollution charges and non-
the environment has slipped down on the agenda. Even compliance fees up to 1992. In 1991, US$840 million was spent
now, however, CEE countries continue to spend between on the environment from public and private sources, corre-
0.5% and 1% of GDP on environmental policies. Some sponding to 1% of GDP:
have passed strict new laws and regulations which will
commit them to continued heavy investment. Because of State budget (grants) 5%
the amounts of money at stake, environmental expendi- National Fund (grants+soft loans) 25%
tures ought to be scrutinized in the course of reviews of Regional Environmental funds (grants) 30%
public investment by those making budgetary decisions. Municipalities (budgets+cowmnercial loans) 20%
In Poland, for example, the difference in annual costs International Assistance (grants+loans) 5%
between alternative approaches for reaching air-quality tar-
gets which have already been adopted is more than twice Of the total environmental investment expenditures, 45%
the projected average annual spending in the power sector was spent on water quality, 40% on air quality, and 15% on
over the next 20 years.1 solid waste management.
The costs of meeting Western environmental standards
are high. For example, the total costs in this regard for the
new German LUinder have been estimated to range between more than 5% of all environmental expenditures. This low
DM83 billion and DM321 billion, of which some DM53- figure partly reflects low disbursement levels, which in
150 billion would be required for building municipal turn is an indication of the weak capacity of institutions to
wastewater treatment plants meeting West German stan- absorb international funding.2 In any case, CEE countries
dards. To provide wastewater treatment meeting EU stan- are meeting well over 90% of the costs of environmental
dards to the 300 major municipalities in Poland, the Czech expenditures out of their own resources.
and Slovak Republics, Hungary and Bulgaria would cost The Action Programme recognizes that the bulk of
at least US$50 billion. The cost of applying the 1997 Polish resources for environmental expenditures in Central and
emission standards (which are similar to the relevant cur- Eastem Europe has to be found in those countries them-
rent EU standards) to existing thermal power plants in selves. At the same time, the EAP is intended to provide a
Poland has been estimated to range from US$3 to US$10 consistent framework so that donors can provide urgently
billion, depending on the age of the plants selected. Scal- needed help with specific problems. Special assistance or
ing up this figure implies a cost of at least US$30-35 billion burden-sharing arrangements also may be appropriate
for all of the CEE countries. when dealing with transboundary environmental prob-
In addition, many governments in Central and Eastern lems. The establishment of innovative financing mecha-
Europe have made intemational commitments under glo- nisms in CEE countries as well as between CEE and donor
bal conventions, treaties and other forms of agreements countries merits special examination.
which have substantial financial implications, including
the Montreal Protocol on Substances that Deplete the Ozone The Need to Set Priorities
Layer (1987), the Basel Convention on the Control of Trans-
boundary Movements of Hazardous Waste (1988), and the In view of their significant environmental problems, the
1979 Geneva Convention on Long-range Transboundary Air countries of Central and Eastern Europe are faced with the
Pollution (LRTAP), with its related protocols on emission need to make big environmental expenditures at the very
reductions for sulfur dioxide, nitrogen oxides and volatile time when they are suffering economic hardship that is
organic compounds. Other agreements to reduce land- worse than anything the Westem market economies have
based pollution of the marine environment may also experienced since World War II. They cannot afford to
require substantial commitments over the coming 20-30 waste their scarce resources. Priority setting implies that
years, such as those under the 1974 and 1992 Helsinki Con- there are measures which should not be taken at this time,
ventions on the Protection of the Marine Environment of the just as there are actions which should be taken urgently.
Baltic Sea Area and the Baltic Sea Joint Comprehensive This report offers criteria for choosing priorities, and
Environmental Action Programme, implemented within draws attention to the need to think carefully about prob-
the Helsinki Commission (HELCOM), the 1976 Barcelona lems and solutions. Experience in the wealthiest OECD
Convention for the Protection of the Mediterranean Sea against countries suggests that some "solutions" do not address
Pollution, and the 1992 Bucharest Convention on the Protec- the real problems. What should be the measure of success:
tion of the Black Sea against Pollution (see Chapter VI). the amount of investment in air or water pollution control,
or a cleaner environment? Some of the recommendations
International Assistance in this report therefore apply equally to many Western
countries.
Initial information for Poland and Hungary suggest Of course, many investment decisions are not made
that international assistance in 1991 amounted to slightly purely on the basis of environmental factors. An environ-
2
mental investment is often said to be justified by the avail- Why a Regional Approach?
ability of local or foreign exchange, by the apparent will-
ingness of local institutions to undertake it, by its Each country in Central and Eastern Europe has its own
demonstration value, or various other elements that may specific environmental problems, which reflect historical
contribute to its "implementability" or "bankability." But patterns of development and of the use and misuse of nat-
most of these justifications have nothing to do with the ural resources. However, all share the legacy of former
goal, which is to reduce exposure of humans and ecosys- regimes. These diverse countries face a number of com-
tems to environmental pollution and to enhance the pro- mon problems which have important environmental
ductivity of natural resources.3 Decision makers should implications:
therefore at least be offered a sound analysis which pre-
sents them with consistent options to achieve the principal * Large increases in energy prices, especially for solid
objectives. For example, there is little use in carrying out fuels and for households. These will be accompanied by
studies which recommend the strictest environmental much higher prices for other natural resources including
standards when the funds are not available to carry out mineral ores and quarry products;
the necessary investments. * The gradual imposition of "hard" budget constraints
The key to successful project development is to focus on enterprises, together with a shift in their objectives
first of all on describing the important problems to be solved, from meeting production targets to making profits and
and then identifying creative options and approaches to improving productivity;
addressing those problems in the most effective manner * The progressive replacement of out-dated or out-
with the available resources. This will involve a mixture of worn capital equipment, mostly embodying 1930s or
different instruments, including not only investments but 1950s technologies, by more modern capital typically
also institutional development, economic and environ- found in OECD countries;
mental policies. Similarly, national environmental action * Large changes in the structure of economic activity,
plans should set realistic and monitorable environmental involving a move away from heavy industry towards ser-
quality targets, and propose a range of options covering vices and certain industrial sectors-e.g. food processing,
policy, institutional and expenditure measures to achieve paper and paper products, chemicals and automobiles;
those targets over a specific period. * A shortage of management capacity, although labor
To succeed, priority setting and the development of is well-educated and in some cases exceptionally skilled.
environmental action programs in CEE countries must
involve the public. Non-Govermnental Organizations In the general character of their environmental problems
(NGOs) can help to initiate wider discussion of the EAP, and the direction in which they are likely to change, the
for example, through roundtables involving government, similarities between the countries of Central and Eastern
community and business organizations. In addition, the Europe are stronger than the differences. So, the regional
promotion of public participation would help to facilitate approach adopted by the EAP allows the lessons of experi-
many of the EAP's objectives. ence to be shared in different countries and sectors.
Box 1.2 Follow-up of the Lucerne Ministerial Conference
At the Ministerial Conference 'Environment for Europe", in Lucerne, Switzerland, a Task Force was established with the participation
of Eastern (including FSU) and Western governments and international organizations and financial institutions, to facilitate the imple-
mentation of the EAP, and to provide for effective exchange of experience among CEE countries. The Task Force is co-chaired by a Cen-
tral and Eastern European country on a rotating basis, together with the Commission of the European Union; OECD serves as the sec-
retariat, with the active support of the World Bank and the EBRD. Mechanisms for actively involving the informal sector (NGOs, the
business and academic communities) are being identified. NGOs have already established various working groups and held meetings
with a view towards assisting in the implementation of the EAP
At its first meeting on 27-28 September 1993 the Task Force adopted terms of reference and a work program, and agreed on a sched-
ule for translating the EAP into detailed national action plans. The Work Program consists of four core activities:
(i) channelling assistance to disseminate the EAP approach and enable all CEE countries to develop their own national
Action Programmes;
(ii) running training programs to build up capacity to identify, prepare and manage priority environmental projects;
(iii) engaging the private sector to promote environmental improvements in enterprises; and
(iv) enhancing the management of priority conservation areas.
The Task Force, which will concentrate above all on institutional and policy issues, will liaise with the Project Preparation Committee
which was also established at the Lucerne Ministerial Conference to help with project preparation and investment. Its objectives are to
strengthen the linkage between donors, international financial institutions and Central and Eastern European countries, and to pro-
mote the mobilization of resources for the region. Finally, the Ministerial Conference agreed that all the partners concerned should
undertake to review the implementation of the EAP as appropriate, inter alia through environmental performance reviews. Progress is
to be reviewed at the next ministerial conference which is scheduled toward the end of 1995 in Sofiya, Bulgaria.
3
Notes
1. To achieve the improvements in air pollution emissions cur- 3. Environmental improvement is one of three important objec-
rently mandated by Polish law, and to match the equivalent of tives of economic and social development. The other two objec-
EU standards for vehicle emissions over the next 25 years, will tives, which should be pursued simultaneously wherever possi-
cost an estimated US$1.6 billion per year. A study carried out for ble, are economic efficiency (reduced economic costs) and equity
the EAP has calculated that an approach involving emissions (fair distribution). Where tradeoffs among these objectives are
taxes could reduce the costs of achieving the same target to necessary, they should be clearly spelled out. Financial consid-
US$0.7 billion a year. The potential savingsfor air pollution control erations (e.g., cost recovery) and administrative feasibility are
alone is US$900 million per year. important in deciding how to achieve the objectives in a sustain-
2. At the same time, international assistance to Poland and able manner, not whether to pursue them in the first place.
Hungary has probably been higher (certainly on a per capita
basis) than to most other CEE countries.
4
Chapter Two
How to Set Priorities
Setting priorities basically means ensuring that the policies followed fint will achieve the greatest gain relative to given objectives and
available resources. That involves choices. Thefirst concern in the region is the damaging effects of pollution on huRon health-as it was
in the West before the wont environmental health threats had been addressed. Human health in various parts of the CEE seems to have
been affected by lead in air and soil, by airborne dust, by sulfur dioxide and other gases, especially when combined with dust, by nitrates
in water and by contaminants in food and water. Major expenditures to ensure the proper disposal of waste, especially nuclear waste, and
the safety of nuclear plants, are likely to be worries for the future. For now, good operation and maintenance are paramount requirements.
Apart from human health, environmental policy may also need to take account of economic losses caused by damage or destruction
of physical capital and natural resources, and of threats to coasts, lakes, forests and mountain habitats. It should give priority to mea-
sures that cost little, but are likely to have a big impact on problems which will get worse as time goes by and which may be easiest to
solve if action is taken early.
To set priorities, policymakers need to ask the follow- This chapter first describes some ways to assess the
ing questions: costs of environmental damage. It then uses these meth-
ods to give an initial overview of the most serious types of
* What do people care about? Are they, for instance, problems. The chapter then looks in detail at human
more concerned about dirty rivers, or the conservation of health as a particularly significant short-term worry, and
wildlife, or the environment that will pass to future gener- concludes by making recommendations on the most effi-
ations? The answers involve value judgments; cient ways to achieve environmental objectives.
* In light of these value judgments, what are the most The central message is the need to balance the benefits of
serious environmental problems? This question requires environmental policy against its costs. That will not be easy:
an estimate of the costs of environmental damage (or the people differ in the value judgments they make about vari-
benefits of environmental protection and remediation) ous kinds of environmental damage. But benefit-cost analy-
relative to the gains that policymakers hope to achieve; sis in the broadest sense offers a way to think systematically
and about choices. When money and management capacity are
* What are the most efficient ways to achieve different scarce, as they are in Central and Eastern Europe, that is par-
environmental goals? ticularly important.
Both the costs of environmental damage and the cost- The costs of environmental damage
effectiveness of the solutions will vary considerably over
time, and so will environmental priorities. The economic and social costs of environmental damage
are usually divided into three broad categories:
5
* Health costs. Environmental pollution may lead to Exposure to particulates and acid pollutants may damage
sickness and premature death. Human health may be materials as well as human health. Soil contamination,
harmed by direct exposure to pollution, or indirectly salinization and acidification all cause considerable loss of
through the impact of pollution on the physical environ- agricultural productivity and damage forests and lakes in
ment. To assess the health consequences of environmental some places.
damage in Central and Eastern Europe means relying Little is known about the amenity value of a better
mainly upon epidemiological studies from OECD coun- environment in Central and Eastern Europe. Economic
tries since there are relatively few local investigations difficulties seem to have lessened the importance people
which control adequately for the contributory influences give to environmental problems. Amenity losses may
of factors such as smoking and diet. seem more important once the most severe forms of pollu-
* Productivity costs. Environmental degradation tion are dealt with, but they should not be an immediate
reduces the productivity of natural resources and physical priority for environmental policies, except in the few
capital. It may disrupt the services that nature provides, instances where there are risks of irreversible sacrifices
such as the natural cleansing of water, or the yield from now. When air and water pollution is cleaned up, that will
fisheries. Or pollution may force people to spend more on generally help to maintain healthy and diverse natural
cleaning and maintaining houses and other buildings. ecosystems and landscapes.
* Loss of environmental quality, or amenity costs. A
clear view, a pristine lake, a mature forest, and clean and Environmental damage and human health
quiet neighborhoods all add to the quality of life. People
are willing to forgo expenditure on other goods and ser- Most governments will give the highest priority to dealing
vices in order to protect endangered species and ecosys- with those aspects of environmental damage which affect
tems, and enjoy the benefits of better environmental human health. Indeed, governments involved in the
quality either for themselves or for future generations. preparation of the Environmental Action Programme for
This aspect of environmental quality is hardest to quantify, Central and Eastem Europe have explicitly requested that
but its loss particularly conflicts with the principle of sus- special emphasis be given to human health concerns. In
tainable development, in that current generations do not the past, the links between information on human health
,meet their needs without compromising the ability of and environmental action have been relatively weak in
future generations to meet their own needs."1 most CEE countries. So this section looks in more detail at
the links between pollution and health.
While figures for the total cost of environmental dam- Since the mid-1960s, life expectancy in Western Europe,
age are often quoted for various Central and Eastern Euro- North America and Japan has continued to rise, while in
pean countries (ranging from 2-10% of GDP), these are Central and Eastern Europe, life expectancy has remained
rarely based on a systematic assessment. Estimates which static or has even declined. This gap (of approximately 5
have been produced for Poland suggest that environmen- years) is primarily attributable to relative increases in
tal damage may have cost 3-4% of GDP in the mid-1980s, mortality from chronic diseases in mid-life. However, the
2-3 times as much as comparable costs in Western Euro- reasons for this relative increase are not yet clear. The
pean countries. The most important single component is explanation must involve some combination of factors in
thought to be the damage to human health caused by air the socioeconomic and physical environments, behavior
pollution, especially exposure to high levels of particu- pattems and social habits such as smoking and diet, and
lates (soot and smoke in the air). The next most important shortcomings in health care.
elements are productivity costs imposed by high levels of The relative decline in life expectancy in CEE has taken
water salinity (caused by discharges from coal mines) and place in both heavily polluted and relatively unpolluted
BOD in the country's principal rivers.3 Finally, poor air parts of the region. That suggests the influence of environ-
quality in urban areas also imposes amenity costs. mental factors on health is not paramount. On the other
Similar studies have not been carried out for other Cen- hand, it may be important. Life expectancies in rural areas
tral and Eastern European countries. However, as health in Poland have surpassed those in urban areas in recent
damage is the primary cost of environmental pollution years, a highly unusual demographic trend which may be
even in some of the wealthiest OECD countries, it is prob- associated with the fact that environmental pollution is
ably the largest component of environmental damage in concentrated in urban areas. In the Czech Republic, there
Central and Eastern Europe as well. Health is also an is good evidence that dust and sulfur dioxide pollution
important concern in public perception: According to a increase the risk of infant mortality. Moreover, declines in
recent Gallup survey, 89% of Russians (80% of Poles) life expectancy in the Czech Republic are correlated with
asked indicated they are concerned about the pollution the proportion of people living in regions affected by
effects on personal health. heavy air pollution. Recent evidence from studies done in
The costs of reduced productivity of natural resources the West will allow us to estimate the impact of respirable
and physical assets are much more unevenly distributed. dust on overall mortality in Central and Eastern Europe.
Discharges of saline water from mines are a problem in Preliminary estimates show that the effect is likely to be
Poland and a small part of the Czech Republic. In the min- substantial.
ing areas of Ukraine, the dumping of mine and washery The Action Programme has looked at exposures that
waste and acid mine drainage are serious problems. are not related to occupational health problems.2 Data
6
from ten CEE countries have been used to tentatively industries, power plants, homes and vehicles. At the same
identify locations where people are exposed to specific time, Poland, Ukraine, and especially Russia, contain
health risks from particular kinds of pollution. The spe- some of the world's most extensive areas of virtually
cific locations are described in Annex 1. untouched nature, which are highly sensitive to pollution.
The most common health problems are the result of From a historical perspective, it is worth keeping in
exposures to a fairly narrow range of pollutants. The most mind that some of today's "hot spots" in Central and East-
important are: em Europe have had environmental problems since the
early part of the century. Central planning under the
* Lead in air and soil, which affects especially children former regimes only perpetuated and exacerbated old pat-
whose mental development may be retarded (sources terns of pollution, preventing the changes that occurred in
include lead and zinc smelters, and vehicle exhausts); the market economies. The implication is that the experi-
* airborne dust, which may cause acute and chronic ence in the market economies may be quite useful in help-
respiratory conditions (sources include especially house- ing CEE countries to identify which steps to take and
hold coal burners, power and heat plants, and metallurgi- which to avoid. It should also be clear that it will take
cal industries); and time-even under the best of circumstances-to remedy
* Sulfur dioxide and other gases, especially in combi- the problems of the past.
nation with dust (sources include power and industrial
plants as well as households using high-sulfur coal or Air quality
high-sulfur fuel-oil).
Air pollution is potentially the most serious short-to-
Maps 1-6 give an estimate of the areas where exposure to medium term environmental problem for human health.
these pollutants occurs persistently It is also one that has received relatively little emphasis in
Because of synergistic effects between airborne particu- the environmental expenditure programs of Central and
lates and gases, the places where environmental health Eastern European countries. Polluted air is more difficult
problems are caused by airborne pollutants need to be to avoid than polluted water. Its pervasive effects damage
carefully studied to discover the relative importance of human health, buildings and nature. Treating air pollu-
gaseous exposures and of dust. There is a large and grow- tion should be the top priority for environmental policy.
ing body of scientific evidence that fine particle air pollu- The most serious effects of air pollution are on human
tion causes serious health damage and significantly raises health. Exposure to pollutants will vary greatly from one
the risk of death-even in the most advanced OECD coun- place to another, depending on a number of factors, such
tries. The most recent study, which followed 8,111 adults as geography and weather conditions. Maps 1 and 3 show
for 14-16 years and which adjusted for age, sex, smoking, the places where local exposures to two of the principal air
education level, and occupational health risks, concludes pollutants-particulate matter and sulfur dioxide-
that mortality is most strongly associated with air pollu- exceed annual average ambient standards of the European
tion with fine particulates.4 Union.
Apart from inhaling pollutants, people also eat and Occasional peaks in exposure may do more harm than
drink them. Pollutants in food and water have some effect the average level over the year. In Katowice, Poland, for
on health, but are on average less prevalent and/or less example, maximum 24-hour ambient concentrations of
clearly related to ill health than lead, dust and airborne black smoke in the winter heating season are more than six
gases. Food in several parts of Central and Eastern Europe times the EU standards. A London smog in 1952 (which
is a source of exposure to heavy metals, pesticides, polycy- reportedly cost the lives of almost 4,000 people) exceeded
clic aromatic hydrocarbons, and chlorinated organics such the present EU standard more than ten times; and current
as PCBs. Many of these substances have well-documented EU standards are frequently exceeded in many Western
toxic properties and yet the effects on human health of European cities during peak smog periods, which has led
ingesting largely unknown doses is uncertain. Other pol- to the enactment of special smog-alert and smog-control
lutants are ingested in water contaminated with nitrates or measures. One implication may be that, in the short run,
with a variety of other substances. Arsenic, viruses/bacte- CEE cities need not just general emission controls, but bet-
ria, pesticides, radionuclides, and chlorinated organics ter systems for dealing with air pollution emergencies.
have all been found in drinking water in various places in Air pollution also leads to acid rain, which is caused
Central and Eastern Europe. Nitrate pollution of water is primarily by SO2 and NO, emissions from power plants
widespread in rural areas throughout the region, and can and motor vehicles, and damages forests and lakes. The
be particularly harmful to infants (see Map 7). impact of acid rain, however, is not straightforward, as it
depends on climatic, biological and geological conditions
The main pollution problems which determine patterns of rainfall and the capacity of
the soil to buffer acidity. This may have important impli-
Several parts of Central and Eastern Europe suffer from cations in setting priorities for cleanup of transboundary
particularly serious environmental damage. However, in air pollution. Clearly, in some areas of Europe, acid rain
many respects, Central and Eastern Europe is not so has done serious harm to forests and ecosystems, and
unusual: air (and to a lesser extent water) pollution is rapid action may be warranted. This is particularly true
largely confined to cities where there are concentrations of where soils are less capable of buffering acid depositions.
7
Box 2.1 Developing Country-Specific Priorities
Although all of the Central and Eastern European countries addressed in this Environmental Action Programme face similar types of
problems inherited from the past, the immediate priorities for some countries will be very different than for others. This reinforces
the need for countries to develop their own environmental action programs that reflect their particular circumstances. These country-
specific EAPs should be flexible and regularly up-dated to match the changing economic and environmental conditions.
Albania, for example, is much less industrialized than other countries in the region, and while there are localized air quality prob-
lems near industrial facilities, as a whole the country does not have as serious air pollution problems as its neighbors. Albania's most
serious environmental problems are concentrated in its rural areas and include (i) deforestation because of uncontrolled cutting of
trees for fuelwood and building materials; (ii) soil degradation due to poorly maintained hillside terraces and overgrazing by live-
stock; and (iii) contamination of soil and groundwater supplies used for drinking and irrigation. Over 60 percent of Albania's popu-
lation resides in rural areas and about 50 percent of the country's gross national product is derived from agriculture and forestry, so
these problems affect large numbers of people and have significant economic impacts. The most serious problems affecting cities are
unsafe and unreliable drinking water supplies, which cause health problems and productivity losses for urban residents.
In recent years, air pollution in many areas in CEE has over the past four years. In certain urban areas, pollution
been decreasing. In the former Soviet Union, air pollution levels dropped even more.
in the principal cities is reported to have declined by 10% It is, of course, difficult to identify how far these reduc-
during the 1980s, and the nationwide reduction in emis- tions result from improved pollution controls and/or
sions in Poland has been 20-30%, and 15-45% in Bulgaria long-term economic restructuring, and how far the cause
Box 2.2 Portraits of Different Kinds of "Hot Spots"
Regional Hot Spot: The mining districts of Northern Bohemia
. Mortality rates from respiratory causes among 1-12 month old newborns in the areas of highest ambient dust and sulfur dioxide
levels are 5-8 times higher than in places where air quality meets standards.
* Higher rates of low birth weight and congenital anomalies among newborns.
* Allergies and respiratory diseases are more prevalent among school children than in the rest of the Czech Republic.
* Children temporarily removed from the area to attend "nature school" in an unpolluted area show immediate evidence of im-
proved red blood cell count which reverses when they return home.
* Higher mortality from lung cancer and other causes among both men and women than in the Czech Republic as a whole.
A Town with a limited number of large point sources of pollution: Copsa Mica, Romania
Copsa Mica is home to several poorly maintained industrial facilities, among them two lead smelters. Health problems of particular
interest in the community include respiratory problems from exposure to dusts and gases and neurobehavioral problems due to expo-
sure to lead.
Dust and Gases. One study examining pulmonary function in 371 Copsa Mica children aged 7-11 showed that of the exposed children
30% had reduced lung function measured in terms of "peak expiratory flow" and 18% had reduced lung function in terms of "forced
expiratory capacity", compared with 10% of the control group.
Lead. Psychological testing was carried out on the same sample, as well as on a grup of 12 year-old children. This was done because
high lead exposures affect children's neuro-behavioral responses, including IQ. Approximately 30% of children are expected to test
"weak or very weak," which means below the first standard deviation of the "normal" distribution. Instead, much higher percentages
tested weak or very weak on the tests: 73% on an IQ test; 58% on a concentration test; 52% on a learning test; and 60% on a memory test.
"Bad Town Planning": Dimitrovgrad, Bulgaria
In Dimitrovgrad, thick, acrid smoke containing hydrogen fluoride and hydrogen sulfide comes from a single chimney
at a fertilizer plant. High-rise apartments and other settlements are located at the plant gate, their occupants exposed
to high levels of these emissions. Studies have shown below normal physical development and lung function in chil-
dren from Dimitrovgrad.
* 50% of children from Dimitrovgrad have below normal height, weight, and chest expansion for their age.
* Lung function is poor. By age 14, "forced expiratory volumes" averaged approximately 25% below a control group of children
from an unpolluted town.
* An overall assessment was made of children's developmental status in Dimitrovgrad, compared to the control town. Whereas
72% of control children had normal development in Dimitrovgrad only 18% of children were so classified.
8
alent) show that households and the service sector rely far
Figure 2.1 Fuel Use for Households, more on coal in the CEE than in the West-for example,
Figuere and Services 63% in Poland and 19% in the former USSR, compared
Commerce and Services with less than 5% in Western Germany and Spain.
(% shares in 1988) Not only do the CEE countries use proportionately
% share more coal than Western Europe; more of the coal that is
70 burnt consists of poor quality brown coals and lignites. In
an attempt to achieve greater self-sufficiency, the CEE
countries developed reserves of brown coal and lignite
60 during the 1960s and 1970s when the market economies
were turning away from coal towards first oil and then
gas. As a result, by 1989 brown coal and lignite repre-
sented more than 75% by weight of total solid fuel con-
sumption for Bulgaria, the former CSFR, Hungary, Roma-
40 nia, and the territory of the former Yugoslavia, though the
shares measured in terms of tons of oil-equivalent are, of
30 course, much lower because of the low calorific value of
the solid fuels concerned. Even for Poland and the former
USSR-both countries with large reserves of hard coal-
20 these shares were 32% and 28%, respectively. In contrast,
the highest proportions of brown coal and lignite in total
solid fuel consumption in Western Europe were 58% for
West Germany and 45% for Spain, while for most coun-
tries the share was less than 10%.
0 The smoke from poor-quality coal, especially when
Coal oil Gas Electricity Heat burnt by households and other small users, is especially
harmful to health. This point is demonstrated by the fol-
Fuel lowing figures, which compare the minimum damage
* Bulgaria U CSFR E Hungary U Poland
3 Romania Ui USSR m EC average
Figure 2.2 Fuel Use for Electricity
(% shares for public supply in 1988)
is the temporary decline in production. The discussion in
chapter III sheds more light on this question. % share
CAUSES OF AIR POLLUTION. A principle cause of urban --
air pollution in Central and Eastem Europe is the heavy
reliance of households and small enterprises upon poor-
quality coal. Smoke and soot from low chimneys (or 80
"stacks") are especially harmful to health. In many towns
and cities-especially in coal producing areas-more than
half the population is exposed to high levels of particulate 60
and gas emissions from thousands of small coal stoves
used in homes for domestic heating, and in small- and
medium size enterprises burning coal for space heating
and process heat. 40
Local heating and home furnaces tend not to have any
systems of pollution control, while large factories most
often do, though only for particulates. In Katowice 20
(Poland), for example, 46% of soot and dust emissions
come from low stack emissions of high-ash coal. In the
republics of the former Soviet Union, the availability of *
natural gas has helped to reduce air pollution from small 0 1
stoves in the principal cities, though not in smaller towns Coal Oil Gas Nuclear
in coal producing areas. Fuel
Central and Eastern Europe relies heavily on coal,
which accounts for 75% of total primary energy supply in M Bulgaria U CSFR m2 Hungary U Poland
Poland and 24% in Hungary, compared with 19% in El Romania UE USSR E EC average
OECD Europe. Figures 2.1 and 2.2 (detailing patterns of
fuel consumption by sector calculated in tons of oil-equiv-
9
Table 2.1 Minimum damage costs from pollution emitted by high and low stacks
Sulfur Dioxide Particulate Matter Nitrogen Oxides
Source US$ per ton
High stacks 265 60 180
Low stacks (households) 650 720 460
Source: Environmental Assessment of the Gas Development Plan for Poland (World Bank).
costs from pollution emitted by high and low chimney 80% of carbon monoxide and lead levels, 60% of nitrogen
stacks in Poland (Table 2.1).5 oxides, 75% of hydrocarbons (HC) levels (the precursors
A recent re-calculation of the numbers suggests that to ground-level ozone), and 12% of sulfur dioxide levels.
the damage costs from emissions of particulates may in In most cities in the region however, the contribution of
fact be as much as three times the amounts indicated, i.e. home heating, power generation and industry to air pollu-
US$180 and US$2160 per ton of particulate emissions from tion still outweighs the contribution from traffic. Thus,
high stacks and households, respectively. while countries with reasonable air quality in most towns
The example of West Germany shows that, given and cities should rightly give priority to addressing the
appropriate equipment and good maintenance-neither pollution associated with urban traffic, this would not be
condition being satisfied in most CEE countries-it is pos- appropriate for the majority of CEE countries where the
sible to burn lignite and low grade coal in power stations main threat to health from poor air quality comes from
and some large industrial plants without causing signifi- emissions of particulates and sulfur dioxide from industry
cant pollution problems. However, the only way of con- and home heating.
trolling pollution from burning coal in smaller boilers and
open grates is to require the use of expensive smokeless Water quality
fuels. This undermines the economic attractiveness of
using coal, so that most households and small or medium As in Western Europe, many rivers in Central and Eastern
sized enterprises will prefer to switch to electricity, gas or Europe are seriously polluted downstream of principal
petroleum products if possible. urban areas, especially with organic waste (BOD), and
probably heavy metals and micro-pollutants from the dis-
ENVIRONMENTAL IMPACT OF MOTORIZED TRANSPORT.
With the exception of some large cities, such as Budapest,
Kiev, Kharkov, Krasnodar, Moscow and St Petersburg, air Figure 2.3 Number of Passenger Cars/
pollution from transport is not yet a serious problem. Car 1Fur 2.3 P nu 190 n
ownership is still low compared with Western European 1,000 Persons 1990
countries: in CEE in 1990 the number of passenger cars per
one thousand persons was on average only one-third that Passenger cars/1,000 persons
of Western Europe (Figure 2.3). Growth rates for passen- 350
ger car fleets, however, are among the highest in the
world, and demand for motorized transport is likely to 300
increase as incomes rise and markets are liberalized
(Figure 2.4). In addition, the proportion of freight carried 250
by road (including multi-modal and container transport)
in CEE is still much lower than in Western Europe and is 250
likely to grow rapidly with the development of new
export markets. Thus, as emissions from stationary 200
sources are brought under control, and as vehicle owner-
ship rises, mobile sources will contribute an increasingly
important share of air pollution. 5
In Central and Eastern Europe, mobile sources (mainly
road traffic) are responsible for about 30-60% of emissions 100
of nitrogen oxides, between 40% and 90% of emissions of
carbon monoxide, between 35% and 95% of lead emis- 50
sions, less than 10% of particulate emissions, and less than
5% of sulfur dioxide emissions (vehicles also emit small 0
quantities of a variety of toxins and carcinogens such as
benzene and aldehydes). Those proportions are, of .c* <3 ,t S
course, higher in cities which have little industry and OR
which do not rely upon coal for domestic heating. In
Budapest for example, transport sources contribute about
10
mate as well as the widespread reliance-especially in
Figure 2.4 Average Annual Percentage rural areas-on bottled water.6 There is not yet enough
Growth in Numbers of Cars/1,000 Persons: evidence to be sure how far water in the CEE is polluted
G980-90 with carcinogenic substances (e.g., chlorinated pesticides).
If the combination of inadequate supply and patchy treat-
ment persists, increasing amounts of investment may be
Average annual percentage growth required to ensure the availability of acceptable drinking
10 water.
MUNICIPAL WASTEWATER. In the Central European
8 countries (such as Poland, the Czech and Slovak Repub-
lics, Hungary or Bulgaria), the current state of municipal
water supply and sewage collection is generally adequate.
This is much less the case in some of the republics of the
Former Soviet Union. In the whole region, however, a
substantial fraction of wastewater is discharged with little
or no treatment. The principal types of water pollution in
urban areas are organic wastes, nitrogen and phosphorus
compounds, and suspended solids from municipal sew-
ers, and to a lesser degree chemical wastes from industry.7
2 S _l To the extent that municipal wastewater treatment plants
are available, they tend to be overloaded (more because of
the wasteful use of water than because of the volume of
WA,, g_ _actual wastes), improperly maintained and managed, or
bypassed. All three Baltic countries have had to close
beaches in recent years to prevent inadequate sewage
,> .iks': g- , , C treatment in adjacent settlements causing the spread of
N?S ;S� @ g> 0 infectious diseases.
V + In the past, many large enterprises traditionally pre-
treated the wastewater they discharged into the municipal
wastewater systems. Today, as firms are split up and
charge of industrial and municipal effluent which has privatized, the costs of industrial pre-treatment are felt to
been treated only partially or not at all. However, few of be high, and there is a risk that increasing amounts of
the rivers are biologically "dead" (except for small industrial discharges (heavy metals, chemicals, PCBs, etc.)
streams serving as "sewer canals") and, in general, they will flow directly into municipal sewers which are not
are probably cleaner than rivers passing the main indus- equipped to handle such wastes. The metals content in
trial centers in Western Europe up to 20 or 30 years ago. sludge threatens sludge use for agriculture and other
While attention has been focused on (large) point means of disposal. On the positive side, the increases in
sources of water pollution such as industrial plants water pricing and the collapse or restructuring of industry
(including intensive livestock enterprises) or municipal often diminish the earlier overload of existing facilities.
facilities, it is important to remember that non-point Also, a past tendency to build unnecessarily large treat-
sources-especially storm and agricultural runoff- ment plants means that there is often adequate capacity
account for most discharges of nutrients into rivers and once water consumption is reduced.
lakes (60-70% of nitrogen, 40-50% of phosphorus). Esti-
mates suggest that at least half the pollution in the rivers RURAL WATER SUPPLY AND WASTEWATER, AGRICUL-
draining into the Baltic Sea comes from non-point sources. TURAL AND NON-POINT SOURCE POLLUTION. The prob-
lems in rural areas are quite different and potentially more
MUNICIPAL WATER SUPPLY. In Central and Eastern dangerous to human health. First, less than 10% of the
Europe, water is used much more wastefully than in West- population is served by public water supplies, and there is
ern Europe (partly because it is underpriced) and in a little or no adequate wastewater disposal. Nitrate pollu-
number of countries it is frequently in short supply. This tion, in particular, affects a large part of the rural popula-
problem has often been solved by bringing in additional tion (about 35% of the total population of Poland, Czech
fresh water resources from increasingly greater distances and Slovak Republics, Hungary and Bulgaria). In Borsod
and at growing cost. County, Hungary, for example, nitrate levels are twenty
Standards of treatment for drinking water also tend to times Western standards, and in about ten different
be lower than in Western Europe. In general, municipal regions in Bulgaria, an average of 35-45% of the popula-
water supplies in most CEE countries have been treated tion is exposed to elevated nitrate levels. One of the pri-
adequately to prevent large outbreaks of infectious dis- mary adverse health effects is methemoglobinemia8
ease. This is mostly due to the adequate level of disinfec- ("blue baby syndrome") which is life-threatening for
tion (chlorination), but it also reflects the temperate cli- infants. Recent preliminary evidence suggests that care-
11
less and unsatisfactory disposal of wastewater (e.g., septic provide an incentive to search for low cost solutions.
tank runoff close to village wells) may be contributing sig- Indeed, recently, an increase in pollution charges is
nificantly to the nitrate problem. The next most important reported to have led to an active search by a consortium of
sources of nitrate pollution are agro-industries such as pig mines for investment finance to install desalination equip-
farms and feed lots, and of course the runoff from fertiliz- ment. It is unclear, however, whether all the mines are
ers applied too heavily and frequently at the wrong time of paying the required pollution charges.
year. In all of these cases, the solutions will depend criti- In Ukraine, the iron ore mines of Kryvyi Rih produce
cally on educating and training people, making them almost 50 million m3/year of effluent, which is not only
aware of the effects of their actions. saline but also contaminated with heavy metals and radio-
However, leaching of nitrate in agricultural soils is nuclides from nearby uranium deposits. Though the vol-
much more widespread in Western Europe, as shown in ume of water is much less than that discharged from coal
Map 7. In several countries in Westem Europe, a high con- mines, it is far more toxic in the short term, given the high
centration of cattle and relatively high fertilizer use (on concentration of heavy metals.
average, double the application rates in CEE) has led to
accumulation of nutrients in soil and leaching to ground- Solid and hazardous waste
water that exceeds EU drinking water standards. In CEE,
by contrast, the rural population is more at risk because of Reliable information on the volumes and composition of
the use of heavily contaminated shallow wells for drink- municipal and hazardous wastes in Central and Eastern
ing water. Europe is relatively sparse, especially since it is believed
that a significant proportion of industrial hazardous
SALINE WATER DISCHARGES AND MINE WASTES. The dis- wastes is disposed at municipal landfills. This unsafe co-
charge of highly saline wastewater from a small number of disposal of hazardous and domestic wastes often occurs
coal mines is an important water quality problem which in unlined landfills with inadequate protection against
particularly affects Poland and to some extent the Czech seepage into groundwater. Toxic wastes stored at indus-
Republic and Ukraine. Such water is highly corrosive if trial sites may also contaminate nearby soil and ground-
used for industrial or municipal purposes. Corrosion also water. Finally, because of the growing shortage of
damages infrastructure. In Poland, especially, much available landfill capacity, inadequate enforcement proce-
money has to be spent to treat saline water or to transport dures, and rising disposal costs, illegal dumping of both
safer water. The productivity costs of these discharges hazardous and non-hazardous wastes is increasing
probably account for the largest component of total losses (implying potential additional health costs from ground-
due to water pollution in Poland (0.5-0.8% of GDP). water pollution).
Tackling this problem has a high priority in Poland, but In some sites, mining wastes and ash from thermal
the answer is not obvious. Unfortunately, it is likely to be power generation, sometimes with a high radioactive con-
difficult or expensive to deal with discharges of saline tent, are badly disposed of. Former Soviet military instal-
water from the mines which are responsible. These are lations are also believed to be potentially dangerous
among the most productive mines in Poland, yielding sources of toxic wastes, not only in the newly independent
high quality coal from deep but thick seams. Eliminating republics, but also in Poland, the Czech and Slovak
the discharges altogether would either mean closing cer- Republics, and Hungary. Not surprisingly, little is known
tain mines or require substantial costs to re-inject water about wastes stored at former military sites, but their
into the mines or to desalinize it. New mining techniques implications for environmental quality could be just as
together with better management could reduce the vol- serious as that of conventional hazardous wastes.
ume of water discharged and its impact on the rivers Mining of coal, lignite, and metals such as chromium,
affected, but these are only partial solutions. At present copper, and iron contributes to environmental degradation
the mines have little incentive to find cheaper solutions, in areas near mining operations. In addition, spoil heaps of
since they do not have to bear the costs of the damage tailings from mining operations (and slag from smelting)
caused by the discharges. This is a clear case where appro- contaminate nearby soil. Uranium mining and milling
priate pollution charges can be implemented in order to releases radon and radon daughters which are potential
Box 2.3 Nitrates in Drinking Water in Romania
Elevated nitrate levels have been found in local water supplies in all but 2 of the 41 districts of Romania. According to a 1990 survey
of water supplies in 2,474 places in the countryside, 7% were above 200 mg/l, 10% were between 100-200 mg/I, and a further 19%
were between 45-100 mg/I. In 14 districts (Mehedinti, Dolj, Olt, Teleorman, Calarasi, Constanta and Bucuresti-SAT in the South; Tul-
cea, Braila, Galati, and Vaslui in the east; Botosani and Suceava in the northeast; and Satu Mare in the northwest), more than half of
the water supplies exceed the standard of 45 mg/l. In these districts, up to 13% of the newborns a year were reported to develop
methemoglobinemia.
Reporting of death from methemoglobinemia is patchy, so it is difficult to provide accurate numbers. Some insights into the impact
may be gained from a special study of children in high nitrate areas in the Mehedinti/Dolj area. In 1989, 55% of the children in the
study area had elevated methemoglobin in their blood. In 1991, there were 181 cases of methemoglobinemia, including 35 which
were associated with diarrhea. In total, there were 9 deaths. If this death rate were to apply to other districts where methemoglobin-
emia is a common problem, it would make a significant contribution to infant mortality in those districts.
12
occupational hazards. It also releases process effluent and and forests; wetlands and sensitive marine environments
tailings which may contaminate groundwater. are not as well protected. In most of the countries, envi-
ronmental degradation of protected areas has been quite
Nuclear issues limited. There are some notable exceptions, however. In
the Czech and Slovak Republics, acidic deposition has
Russia, Ukraine, Bulgaria, Lithuania, the Czech and Slovak adversely affected 75% of the protected areas and seri-
Republics, and Hungary are all heavily dependent on ously damaged 25%, with the primary damage being to
nuclear power. However, nuclear plants in the region are of trees, while in Poland 6 out of 18 National Parks are
widely varying quality, in terms of their basic design, of the located in zones designated as "ecological hazard" or
standard of construction and management, and (often most "ecological disaster." Addressing the sources of environ-
important of all) of their operation. Since the accident at mental pollution will therefore reduce costs not just to
Chemobyl in 1986, there has been widespread concern both human health but also to living natural resources.
in Western Europe and in the CEE countries about the safety More importantly, biodiversity conservation involves
of nuclear reactors. However, only Germany has perma- policy on agriculture, forestry and fisheries. The past prac-
nently shut any reactors, at Griefswald. A few others have tices of central planning in CEE countries, ironically, served
been temporarily closed, though not by choice, including traditional biodiversity conservation well. The growing
two in Armenia as a result of earthquake damage. trend toward decentralization, land privatization, and West-
The prospects for closing the most unsafe CEE reactors em-style agricultural policies in Central and Eastern Europe
vary. Several countries are highly dependent on nuclear creates formidable challenges for biodiversity protection,
electricity, and cannot easily switch to alternative sources especially in the face of intense economic pressure to exploit
of fuel. The Bulgarian government has agreed to shut the natural resources beyond carrying capacity at a time when
four oldest reactors at its Kozloduy plant once alternative neither the law nor public money can offer much protection.
sources of electricity have been developed. The speed Biodiversity in CEE countries is richer than in Western
with which CEE countries are likely to shut plants will Europe. It needs to be conserved at least as much to avoid
depend to some extent on future demand for electricity, the productivity costs associated with poorly functioning
and on its price; for the time being, some countries have ecosystems than because of the potential irreversible loss
become more reliant on nuclear power, because fossil fuels of species. Maintaining biodiversity ensures functional
have to be paid for in hard currency. diversity in the environment, which in turn promotes
The priority for both CEE countries and Western resistance to-and resilience from-disturbance (e.g.
donors should therefore be to improve the management of pests), adaptability (e.g. to climate changes), productivity
nuclear plants, and to make low-cost investments that of natural systems, and also serves as a warning indicator
yield high returns in improved safety. CEE countries also of critical changes in the environment.
need to put in place legislation to reassure western compa-
nies on the extent of their legal liability for refurbishment Responding to the problem: Finding a balance between
work done at nuclear plants. The absence of such legisla- policies and investments
tion has been a considerable disincentive to western coun-
tries which want to undertake repairs and improvements This chapter began by suggesting three stages in devising
of nearby CEE plants. In the longer run, proper pricing for environmental policies. First, discover what people care
electricity is essential, as it will allow choices on appropri- about; second, examine the costs of achieving those goals;
ate fuels to be taken in the right context. and third, look for the most cost-effective policies. But it
A further problem is the safe disposal of nuclear has emerged from the chapter that governments face
wastes. Up to now, the former USSR has arranged for the many possible goals, and may find it hard to choose
disposal of radioactive wastes from nuclear reactors in among them. This section offers some thoughts on select-
those Eastern and Central European countries where it ing priorities, and on choosing policy instruments.
provided uranium, or enriched locally produced uranium.
These waste disposal arrangements have been, or will Selecting priorities
shortly be cancelled. Wastes will increasingly have to be
stored and eventually disposed of in their country of ori- A basic rule of thumb is to balance the costs of a policy
gin with the result that many countries in the region must against its likely benefits. Such an approach provides a sim-
now construct or expand waste storage and disposal facil- ple basis for ranking alternative courses of action. The bene-
ities. Nuclear waste disposal involves varying degrees of fits of a measure are equivalent to the amount of environ-
hazard depending on the characteristics of the wastes and mental damage that would occur if the investment or policy
whether or not they are released into the environment. were not implemented.9 This is, of course, quite different
from focusing on financial indicators of profitability, since
Degradation of ecosystems and both the benefits and costs are defined in a much broader
biodiversity conservation sense: sound economic analysis also includes quantification
and where possible valuation of social (equity) and environ-
Protected areas cover about 3-5% of the land area in most mental factors and looks at the costs and benefits of an
of the countries of Central and Eastern Europe. Most are investment or policy to the country as a whole.10
classified as national parks, nature reserves, and specially Benefit-cost analysis offers a method of thinking system-
protected areas. They generally encompass mountains atically about choices. It is a standard-though not always
13
correctly used-approach in market economies, but it has small industries. Similarly, policymakers may argue that
been largely absent in the formerly centrally planned econo- the "solution" to a problem of river pollution is a particular
mies. The fact that benefit-cost analysis has been in use for municipal wastewater investment. But the same money
several decades does not mean, however, that it is easy or might be used upstream-to reduce effluents discharged by
without controversy. It will always be hard to assess the ben- a small group of factories, say,-to make a larger impact on
efits of any given policy because people differ in the value ambient water quality. If policymakers define the "prob-
judgments they make about various forms of environmental lem" as improving ambient water quality rather than
damage. The priorities articulated in this document reflect merely as treating municipal wastewater, they will make a
first of all a general view about the paramount value of wiser decision (see Annex 5). Applying the same way of
human health; beyond this, the priorities are based on what thinking, it may not be necessary to install an expensive
appear to be the value judgments by goverrnments tackling scrubber in a power plant if it is possible to temporarily
environmental problems in most countries-rich and poor. close that power plant (and obtain electricity from other
In principle, cost-benefit analysis means ranking prior- power plants in the grid) when weather conditions create
ities so that the first (or next) $100,000 spent will have the dangerous levels of pollution. There may be many different
greatest impact in bringing about environmental improve- ways to solve a given problem-some of them much less
ment. This process can be continued until the limit of costly than others (see boxes in chapter V and Annex 6).
available resources has been reached. In practice, the These considerations also apply to situations where
approach will inevitably be more complicated. There are inefficient environmental investments are proposed in
many possible projects with similar benefit-to-cost ratios order to deal with an underlying social or political con-
in different sectors. The "pyramid" of priorities is there- cern. Thus, in some countries, high-cost end-of-pipe
fore relatively blunt, and it is clear that many factors will investments in the power sector are proposed in order to
contribute to what kinds of decisions are made. continue using low-quality coal so as not to become
The criteria described here serve as much to identify dependent on other countries for energy sources and in
what should not be done, as what is urgent. For example, order not to close mines employing significant numbers of
even if people set a high value on a particular kind of envi- people. Again, there may be lower-cost approaches to
ronmental damage, it may not be cost-effective to give high obtaining the necessary electricity without causing serious
priority to dealing with it. Attention is bound to focus upon air pollution or jeopardizing energy security, and where
the most dramatic environmental problems, i.e., on cases the economic savings can be more productively used to
where the costs of environmental damage are very high. retrain unemployed mine workers.
However, sometimes the costs of remedying the damage Next, policymakers should look for measures that solve
may also be high. For example, addressing the problems of several problems simultaneously, and avoid transferring
the unsafe disposal of hazardous and toxic wastes or of problems from one environmental medium to another.11
poorly-designed nuclear reactors may be judged to have As several environmental problems are sometimes related
high environmental benefits, but the potential costs of rem- to the same cause (e.g. energy use or the use of certain min-
edying all of the problems that have been identified are also erals), some measures (such as energy conservation or
likely to be very large. In such cases, inexpensive measures introducing more efficient production processes in the
designed to make significant improvements would be more metal industry) will reduce several kinds of pollution at the
appropriate than massive programs of expenditure, most of same time. Often, end-of-pipe measures, such as water
which will have a relatively low benefit-to-cost ratio. purification or installing dust collectors, affect just one
environmental problem; structural changes, such as chang-
What is the problem, and how should it be solved? ing energy use and fuel mix, restructuring industrial pro-
cesses, or improving the quality of products, will influence
Certain principles may assist policy makers in choosing pol- several environmental problems simultaneously. A reduc-
icies. First, the environmental problem should be clearly tion in the use of coal, for example, simultaneously dimin-
defined, for that will largely determine the solution and the ishes the risks to health from dust and SO2, acidification,
way it is implemented. This may seem obvious, but experi- salinization of water and greenhouse warming. Such mea-
ence suggests that environmental solutions are frequently sures should therefore often be given priority. An advan-
offered before the problem to be solved and the options for tage of such structural measures is that they reduce not
solving it are fully assessed. For example, there is a risk that only emissions but also the need for inputs (e.g. of energy
investments are made which later on tum out not to have and materials) and therefore have a financial payback.
solved the real problem. Thus, money may be spent to Another principle that can be used to set priorities is
reduce the pollution from a large power plant, when in fact that prevention always costs less than cleaning up or miti-
most of the serious pollution is caused by home heating and gating environmental problems once they have occurred.
Box 2.4 Cost savings for one medium-sized town
Szeged is a town with a population of 180,000 which currently has no municipal wastewater treatment system. Plans have called for
a technologically advanced treatment plant, with a total investment cost of US$55 million. However, both local and regional water
quality improvements would be small because of the nature of the receiving water. While it may be politically difficult to justify no
investment at all, it is possible to design a sequence of actions that imply capital and operating cost savings of about US$53 million
over the next 20 years (12% discount rate). These are savings for just one medium-sized town.
14
For example, in the long run it is cheaper to prevent soil * Adopt targeted environmental policies which establish
pollution by producing less waste and carefully managing a framework of incentives and environmental institutions:
it than to clean up contaminated soils. Moreover, it is for example, the system of fees and fines can be revised and
hardly sensible to clean up the soil before the waste stream consistently applied; environmental standards can be modi-
is under control. Improving the efficiency of mining and fied to help achieve significant improvements in environ-
industry-and thus reducing losses-and applying mental conditions at least cost; or water management can be
stricter rules in waste management will be more urgent reorganized in river basins to improve the efficiency of plan-
than a general programme to clean up soil. ning for water supply and treatment. Targeted environmen-
Because prevention is much better than cure, it is impor- tal investments should be directed especially to those
tant to ensure that appropriate standards for the future dis- problems which will persist or even deteriorate despite mar-
posal of dangerous wastes or for nuclear safety are intro- ket reform and/or industrial restructuring.
duced and enforced. Moreover, partial solutions which * Concentrate environmental expenditures on those
offer substantial environmental improvements at a modest projects with the highest benefit-to-cost ratios. In the short
cost may be strongly preferred to "permanent" but expen- term this is likely to mean that measures to reduce air pol-
sive measures. In setting objectives for environmental pol- lution take a larger share of spending, but investments
icy it is the incremental benefit-to-cost ratios that matter, with high benefit-cost ratios which deal with water pollu-
since the basis of comparison must be how much environ- tion, land quality and the preservation of biodiversity
mental improvement can be obtained by spending an addi- should also be implemented immediately.
tional $100,000 on one problem rather than on another. * Devote modest resources to programs whose benefit-
cost ratios are expected to be near the top of the ranking in
First look at economic policies future but which have a long lead time from start to com-
pletion, such as certain investments to deal with vehicle
Some economic policies-including market reforms, traffic problems; natural resource and biodiversity conser-
higher energy prices and improvements in industrial effi- vation programs which require additional research and/or
ciency-are "win-win" policies in the sense that they con- data collection; or wastewater management investments
tribute to more rapid economic growth while also improv- which depend on institutional reform.
ing the environment. The costs of achieving the associated
environmental benefits are low (they depend essentially One of the most important goals of the Action Pro-
on the available institutional capacity), so that such poli- gramme is to show that difficult choices have to be made,
cies should obviously be adopted as rapidly as possible. and that resources should be concentrated on those prob-
lems where the greatest environmental benefits can be
Environmental policies and investments achieved relative to the costs.
Targeted environmental policies-such as pollution Notes
charges, regulations which are carefully designed and
enforced, and the establishment of appropriate property 1. The general principle of sustainable development adopted by
rights-are not costless, but their costs are typically low by the World Commission on Environment and Development (Our
comparison with the benefits that are generated by estab- Common Future, 1987). Sustainable development implies that
lishing appropriate incentives and institutions. The devel- the stock of overall capital assets remains constant or rises over
lishig aproprate icentves nd intituions Thetime. These assets include manufactured capital (machines,
opment of appropriate institutions is a lengthy process but roads, and factories), human capital (human health, knowledge
crucial to the success of environmental investments. In the and skills), and environmental capital (forests, air, water and
short run, constraints on institutional capacity may even soil quality). Stated differently, countries can consume up to an
mean that investments which might appear to have a large amount that will not run down the overall stock of capital.
benefit-cost ratio ought to be deferred until they can be 2. The effects of heavy metals and micropollutants are also
implemented most effectively (e.g. in the water sector potentially significant.
through the creation of river basin management). 3. To the extent that polluting industries affect both the health
of the communities in which they are located and, also, the
Conclusions workers who work there, a remediation strategy which targets
environmental health problems will also be effective in captur-
Balancing the many considerations is difficult. It is an art, not ing work places with significant occupational health problems.
a science, since the range of factors that must be taken into The best example of this is lead smelters, where significant com-
munity exposures to children and in-plant exposures to workers
account is large, and the quality of any data is often highly seem to coexist everywhere they have been measured in tandem
suspect. However, the general principles for establishing pri- in Central and Eastern Europe. There are some important excep-
orities can be summarized in the following four guidelines. tions to this general pattern which are discussed in Annex 2.
They are complementary and must be applied simulta- 4. Elevated levels of particulate air pollution have been associ-
neously; all are necessary for environmental improvement. ated with declines in lung function or with increases in respira-
tory symptoms such as cough, shortness of breath, wheezing,
* Support as much as possible those economic policies and asthma attacks. Other studies have found associations
which also have environmental benefits: for example, mar- between particulate air pollution and rates of hospitalization,
ket reform, and especially market pricing of energy, and chronic obstructive pulmonary disease, and restricted activity
economi and industrial restructuring, will bring a steady due to illness. (D.W.Dockery et al., An Association between Air
economlc and industrial restructuring, will bring a steady Pollution and Mortality in six U.S. Cities, New England Journal
renewal of capital stock and better industrial management.
15
of Medicine 1993; 329: 1753-9. This article also refers to 18 ear- 7. Heavy metals and micro-pollutants could represent a serious
lier studies.) problem, too, though they are not usually captured because of
. Assumptions: Most ernissionfromlowstaclimited measurement capability. On the other hand, even in
5.Assumptions: Most emissions from low stacks are in urban thsconretatpsssdvcdisru ns,hresa
areas. About 24% of emissions of SO2 and NO5, and 45% of partic- those countrdes that possess advpla Western experience shows
ulate matter from low stacks are deposited in urban areas. Emis- that it is very difficult and expensive to measure/identify all the
sions from high chimney stacks are assumed to be fully dispersed micro-pollutants and their impact. Micropollutants are best
and so to be either exported or deposited uniformly over the coun- dealt with at the source.
try. In the case of Poland, this implies that about 5% of emissions
from high stacks are deposited in urban areas. Emissions from 8. Methemoglobinemia is a blood disorder; symptoms are blu-
high stacks primarily cause forest and agricultural damage. All ish skin, faintness, and shortness of breath. Severe anemia
damage to health and buildings has been assumed to occur in occurs because the blood loses the capacity to carry oxygen.
urban areas, and all damage to forests and agriculture has been 9. The costs from actual environmental damage and the costs
assumed to occur in rural areas. Monetary damage functions have due to man-made (e.g. nuclear accident or species extinction) or
been assumed to be linear functions of deposition above the critical natural (eg. earthquakes) disasters are captured in the same
load, so that the marginal value of a ton of avoided deposihon is framework. They are both expressed in terms of the willingness
the same wherever the reduced deposition takes place. to pay either to avoid/remedy the damage or to reduce the
6. Nevertheless, drinking water is not always safe. There has probability of an accident.
been an epidemic of waterborne hepatitis A in Riga (Latvia) as a
result of a temporary lack of coagulant to treat drinking water 10t adow" prices ars w reconomic valus of
from the Daugava River. In Jelgava, Latvia, an outbreak of milk- tcosts are not reflected i market prices as a result of various dis-
borne dysentery based on contaminated water has been totios, as asll traenroestri teaes, subsidies. This
repoted.Ther isalsoevidnceof ifectonsfromcontmi- applies as well to environmental "externalities" which only per-
reported. There IS also evidence of infections from contami- sist because of an implicit subsidy to the polluter.
nated water in St Petersburg, Murmansk and Volgograd (in the
Russian Federation, 60% of the population is believed to be 11. For example, scrubbers to reduce air pollution create large
exposed to unsafe drinking water). amounts of solid waste.
Box 2.5 Airborne Dust or Gases-Which is More Important?
The work described in this report has come at a time in which new knowledge is rapidly emerging about the impact of air pollution
on human health. Of particular interest is the role of certain gases and vapors (especially sulfur dioxide, oxides of nitrogen, ozone, and
hydrocarbons) in precipitating acute respiratory episodes and exacerbating chronic bronchitis and asthma. At the same time, the
impact of respirable dust on mortality (in addition to its role in respiratory morbidity) is being recognized from studies of a variety of
large cities in the West with concentrations of ambient dust which are much lower than in many places in Central and Eastern Europe.
The most recent study, by Dockery et al. (1993), which followed 8,111 adults in six U.S. cities for 14-16 years and which adjusted for
age, sex, smoking, education level, and occupational health risks, found that the city with the worst fine particulate air pollution had
a 26% higher mortality rate than the city with the least pollution of this kind.
Thus, from a health perspective, it is difficult to come up with a strong theoretical rationale to concentrate on either dust or gases to
the exclusion of the other. In practice, the list of places in the region where airborne pollution threatens human health include some
where the primary exposure is to dust; some where the primary exposure is to one or more gas or vapor; and many where the problem
is a combination of the two. This same pattern holds true for regional hot spots, areas with a confluence of point sources, and areas
where the "bad town planning" model best applies.
Knowledge of the relative importance of the health impacts of dusts and gases does not give a basis to set environmental action pri-
orities which would target one and neglect the other. However, even if the health impacts of dusts and gases is similar, the cost of
controlling the former is typically much lower. Strategies aimed at controlling dust while incidentally reducing gaseous emissions are
therefore potentially the most cost-effective.
The following table shows typical costs of controlling particulates, S02 and NOx emissions from coal-fired plant in the power and
district heating sectors using pollution abatement devices. The results highlight the relatively low cost of controlling particulates com-
pared with either S02 or NOx emissions.
Typical Costs of controlling emissions from the power and district heating sectors
Abatement cost ($ per annual tonne
Pollutant Abatement technology Remnoval efficiency % emission avoided)
Particulates Electrostatic Precipitators (ESP) 97 - 98 15 - 65
High efficiency ESP 99 - 99.9 20 - 90
Baghouse 99 - 99.9 15 - 65
Mechanical Collector 50-90 10 - 70
SO2 Dry sorbet 50 - 80 400 - 3,500
Semi-dry FGD 80-95 600 - 4,000
Wet FGD 96-98 800 - 5,000
NO5 Low-NO, burners 30- 70 750-7,000
SCR 80 - 90 5,000 - 45,000
Priority should be given to:
* fitting particulate control devices to plants that currently have no such facilities installed; and
* repairing or upgrading existing facilities that are currently not working to design capacity
16
I| Chapter Three
Policy Reforms
The transition from central planning to markets should help to improve not only the countries' economic performance in the longer
term, but their environments. Among the key factors are increases in energy prices, and hard budget constraints on public and private
enterprises. These provide powerful incentives to reduce waste of resources and to improve industrial "housekeeping" in ways that
reduce pollution emissions. Many CEE countries have already made big strides in raising energy prices.
Privatization should assist these changes, provided that liability for past environmental damage is clearly assigned, and enterprises
are held accountable for all current emissions.
Markets are no panacea. Targeted environmental policies will also be required to ensure that the potential benefits of economic
restructuring are fully realized. To achieve the most cost-effective use of resources, the CEE countries should, where possible, rely upon
economic instruments to achieve environmental goals. Existing systems of pollution charges can be developed to provide an effective
incentive for sound environmental practices. Simple market type approaches are not just realistic even in the current economic and
institutional situation; they also provide the scopefor large savings.
Where regulatory policies are more appropriate-especially to control emissions of heavy metals and toxic chemicals-governments
could adopt either the EU framework of standards or an equivalent system which provides a 10-20 year adjustment period. The imple-
mentation of stricter emission standards should be phased, allowing industries an extended but well-defined period to comply with
them. Ambient standards should be used to guide local policy making.
The greatest contribution to achieving a continuing decline in total emissions is likely to come from improving the environmental
performance of old plants which continue to operate in the medium term.
The Effects of Economic Change on the Environment rating new technology As a result, the average amount of
pollution generated per unit of output will decline. These
The shape of environmental policies and investments in structural changes will take time, but they will have a large
Central and Eastem Europe will be determined by the pro- impact on emissions over the next 10-15 years.
found economic changes which are transforming incen- Economic reform will not and need not be justified on
tives, institutional arrangements and the composition of environmental grounds. Still, many (though not all) of the
economic activity. The transition from central planning to policies which make up the typical reform package in Cen-
markets will eventually improve both economic perfor- tral and East European countries-macro-economic stabili-
mance and environmental performance. In the past, pro- zation, pricing reforms, privatization, industrial restructur-
duction involved massive waste of resources. Now, incen- ing and trade liberalization-can be expected to contribute
tives which encourage the more efficient use of energy, to reducing environmental degradation. Environmental
minerals and water will also reduce air and water pollution. considerations simply reinforce the case for implementing
As enterprises have to take account of the true opportunity these reforms as rapidly as is politically possible.
cost of capital, the emphasis will shift from large capital invest- Privatization may contribute towards improving envi-
ments that use the products of heavy industry towards a continu- ronmental quality, provided that clear, credible and
ous process of replacing existing capital equipment and incorpo- enforceable environmental regulations are in place. How-
17
Box 3.1 Short-term threats to the environment in Russia during the transition
In its recent State of the Environment report for 1992, the Russian Government identified the following ways in which the current eco-
nomnic difficulties might threaten the country's environment:
* Inadequate expenditures on maintenance and capital replacement could lead to serious enviromnmental accidents and more routine
spills and wastage.
* A shift to poorer quality raw materials and, with higher prices for exportable oil, to coal may lead to gieater dust emissions and the
creation of more solid waste.
* An increasing risk of illegal logging, more reliance on clear-cutting and poorer forest management could threaten large areas of the
Taiga, especially in Eastern Siberia.
* Weaker enforcement on controls on hunting and fishing plus intrusion into protected areas by poachers may deplete wildlife
stocks, especially of some endangered species. This danger would be exacerbated by a shortage of money to staff the agencies respon-
sible for the management of protected areas.
* The decentralization of government responsibilities might encourage local authorities to assign rights to exploit natural resources
without imposing appropriate requirements to protect the environment and without ensuring that the natural resources are properly
managed.
The Government's primary recommendations concentrate on (i) the need to avoid environinental accidents caused by bad mainte-
nance and management, and (ii) the importance of providing resources and strengthening the institutions concerned with protecting
natural resources such as timber, wildlife and rare habitats.
ever, competition often determines the behavior of enter- ments in environmental improvements which turn out to be
prises as much as the form of ownership. Policies to pro- redundant. An important by-product of economic change
mote competition, including breaking up large mono- will be extensive environmental gain: The environmental
polies, are as important as privatization in obtaining the damage associated with excessive energy use and with
best response to higher energy prices, pollution taxes or some forms of heavy industrial production will fall
regulatory measures. Privatization clarifies the task of sharply. It is therefore important to have a vision of what
management, and allows it to concentrate on operating the economies will look like in 5 or 10 years' time.
efficiently and profitably subject to meeting environmental Some of the short-run effects of economic transition on
constraints. There will, of course, be bargaining over what the environment may be harmful. This has particularly
those constraints should be, but the negotiations will take worried the Russian government that has considered how
place between parties with clearly defined responsibilities. to address these problems (Box 3.1). The concerns Russia
Economic decline in Central and Eastern Europe in the identified are mainly related to weaknesses in the frame-
last three years has already resulted in a reduction in emis- work of environmental policy and under-funding of gov-
sions and this will continue up to at least 1995. However, ernment monitoring and enforcement activities, rather
this decline provides nothing more than a temporary than to the economic transformation itself.
abatement of the pressure on the environment. The critical Broadly, the economic transformation is likely to affect
question is whether emissions can be stabilized or reduced the CEE economies in two ways. First, the structural changes
further as economic activity begins to recover from the will reduce demands on the environment. These changes will be
deep recessions that have accompanied economic transfor- encouraged by the removal of energy subsidies and the
mation. The earlier the initial decline is reversed, the more proper pricing of energy, and by privatization. They will
stringent will have to be the policies that are implemented bring about new investment in less polluting technologies.
to prevent a worsening in environmental conditions. Second, when growth resumes, it will create new environmental
pressures. The rest of this section looks at the way structural
How will the economic transformation of Central and Eastern change will influence the environment, and at the main
Europe affect the environment? findings of the scenarios. These show clearly that economic
reform needs to be backed up with environmental policies.
To answer this question, a number of scenarios have been Later parts of this chapter discuss the range of policies from
prepared for the Action Programme, based on analysis of which CEE governments can choose.
the structural, institutional and microeconomic changes The most important structural influences on environ-
expected to occur in the economies of Central and Eastern mental prospects in the short and medium term are as
Europe over the next two decades. follows:
Forecasting the impact of economic transformation in
Central and Eastern Europe on the environment is fraught * The shares of national income devoted to investment
with difficulty. Even short-term predictions about the have already declined dramatically. Even as the economies
macroeconomic consequences of stabilization programs recover, investment shares, particularly in heavy or basic
or about the behavior of enterprises have proved notably industries, will be much lower than in the past because
hard to get right. Without some idea of the nature of the investment was so inefficient. This implies a permanent
changes that are likely to occur over the next decade, drop in the demand for the output of heavy industry rela-
though, huge amounts of money could be wasted on invest- tive to national income.
18
* The composition of private and public consumption ment by new capital embodyin modem technologies brings
will gradually change in a number of ways. Overall, a an environmental "free lunch." In response to the need to
smaller fraction of income will be spent on industrial goods, meet stricter environmental standards in the West, the
and a higher share on processed foods, paper and chemical designers and manufacturers of capital equipment and plant
products, and transport equipment. Spending on services have developed new processes and machinery which gener-
will also grow rapidly. The implication of these changes is ate much lower emissions than in the past. Even without a
that growth in industrial output will lag far behind aggre- need to meet tighter emission limits, it will be economically
gate economic growth, while, within the industrial sector, efficient for industries such as textiles, paper, chemicals and
there will be a shift from activities which are important metallurgy to invest in capital which will bring substantial
sources of air pollution to those which discharge water pol- reductions in their average levels of emissions per unit of out-
lutants. The growth in private transport and in packaging put. The main scenarios presented below are based on these
will pose new problems for cities and towns in coping with environmental improvements, combined with the assump-
traffic pollution and municipal waste. tion that new plants will be required to meet emission stan-
* The past emphasis on meeting output targets meant dards typical in North America and Western Europe (though
that many industries were notoriously wasteful in their not in West Germany where standards are stricter).
use of materials (including energy), labor and capital. Sim-
ple changes in the organization of production will allow Removing energy subsidies
enterprises to reduce such waste, to eliminate over-man-
ning and to get more output out of the same stock of capi- One of the main forces driving structural change, and one of
tal. The economies will thus be able to produce more final the most painful but essential features of the market reforms
output for the same volume of resources and other inputs, in all countries in Central and Eastern Europe is to raise the
thereby reducing the amount of waste they generate. basic level of energy prices paid by industry to world market
* Economic restructuring will also eventually lead to levels or higher. This can be justified solely on grounds of
new investment. The replacement of old plant and equip- economic efficiency (see Annex 4) but the changes will have
Box 3.2 Privatization and Environmental Liability
Uncertainty about responsibility for past environmental damage is a significant discouragement to foreign investment, especially in
heavy industries. A survey of large North American and European corporations conducted by the World Bank and the OECD found
that companies that had made or considered investments in the region rated environmental risks on a par with many factors usually
considered important in foreign investment decisions, including exchange rate risks and political risks. The companies most con-
cerned about environmental issues were companies in highly polluting industries (mining, chemicals, pulp and paper petroleum
refining, and ferrous and non-ferrous metals), companies with less investment experience in the region, and companies that follow
relatively strict corporate environmental policies.
At the same time, not enough attention has been paid to problems of environmental liability in domestic privatization programs.
Part of the problem is an absence of information about the causes and extent of past damage. In theory with complete information,
the issue is straightforward: either the government accepts responsibility for dealing with the consequences of past damage or the
obligation is transferred along with the assets of the enterprise and reflected in their price. In practice, it is the lack of information
about what has been done in the past that gives rise to the greatest difficulties. It is essential that responsibility for past environmental
problems be decided before privatization, when property relationships are still simple. This requires: (a) clear legal rules-either in
legislation or in specific contracts-defining how any costs will be allocated; (b) where possible, technical information on the extent
of pre-existing contamination and the potential costs of rectifying the damage; and (c) an administrative decision about what remedial
action is required. The extent of past liability should be established as clearly as possible at the time of ownership transfer to avoid the
kind of uncertainty and protracted legal battles that can otherwise be expected in the future.
Ministries of Environment will need to work with the authorities responsible for privatization to negotiate the environmental
aspects of large individual deals and to provide general guidance in the case of medium and small enterprises. Practical consider-
ations imply that, in one form or another, governments will bear the costs of dealing with past pollution. The funds and staff required
to carry out detailed environmental inventories dictate that these should be limited to a small number of the largest enterprises, espe-
cially when foreign investment is involved.
Once an environmental audit has been completed, then the terms of the privatization can specify the environmental clean-up that
is to be undertaken by the new owners and the discount built into the sale price to take account of the costs involved. Both parties
must be realistic in the negotiations. Potential purchasers, especially those from countries with very strict environmental regulations,
may be inclined to allow for a more comprehensive clean-up than the government would choose to undertake. On the other hand, the
new owners will have an incentive to minimize the costs of meeting their clean-up objectives and should be able to act more rapidly.
On isolated sites where the nature of past pollution can be clearly identified, the balance of advantages is likely to lie with accepting
a lower privatization price in return for a commitment to undertake specific remedial actions. Where multiple sources or great uncer-
tainty is involved, governments would be best advised to retain the responsibility for rectifying past damage.
After privatization, enterprises must be fully responsible for the consequences of their emissions. If they inherit old, polluting plant
and equipment which must be modified or replaced to meet current environmental standards, this will be reflected in the value of the
assets. The government for its part must be willing to define the environmental standards that the privatized enterprise is required to
meet and the period of adjustment that will be permitted. To ensure that this means something, Ministries of Environment must set
up monitoring systems to track the performance of newly privatized enterprises as well as those remaining in public ownership.
19
large environmental benefits. The after-tax prices paid by transitional assistance to vulnerable enterprises and house-
industry and households may rise further, to Western Euro- holds which bear the brunt of the adjustment. However,
pean levels, if governments decide to impose taxes on the such assistance should not be tied to current levels of
consumption of energy either to generate revenue to reduce energy consumption so that those concerned have an
fiscal deficits and/or for environmental reasons. The extent incentive to conserve energy wherever that is possible.
of the adjustment in real energy prices will vary greatly
across countries and between industrial and household con- Other sectoral policies
sumers, since households are more dependent on subsidized
energy such as electricity and district heat. A comparison of While energy subsidies stand out for their overall impact
prices paid by industrial users prior to the reforms with those on the environment, many other sectoral policies are both
typical in Westem Europe implies that the range of the neces- economically and environmentally undesirable. In agricul-
sary increases in energy prices relative to the prices of other ture, fertilizer and pesticides subsidies have encouraged
industrial goods varies from less than 25% in Hungary to the careless and excessive use of these inputs with the
over 300% in the former Soviet Union. All countries, includ- result that agricultural run-off has had a serious impact on
ing Russia and other states of the former Soviet Union, have both surface and ground water quality in many CEE coun-
raised real energy prices substantially over the past 2-3 tries. Special assistance for intensive livestock operations
years.2 As a result, the process of adjustment is largely com- has greatly exacerbated this problem in some regions. The
plete in Hungary, is well advanced in the Czech Republic, reduction or removal of these incentives over the last three
and Poland, but has only just started in the Russian Federa- years has led to a marked improvement in rural water
tion and other FSU countries. quality in Poland, Bulgaria and the Baltic states.
Allowing energy prices to rise to market levels will Natural resources used to be underpriced in all of the
have two effects which have a bearing on air pollution: CEE economies. As a result, economic considerations
played little role in decisions about the exploitation of
* It will promote energy conservation, so that the reserves or the use of natural resources as industrial
energy intensity of economic activity is likely to fall in inputs. It was common to mine very low grade reserves,
most countries by one-half over the next decade; and thus causing disproportionate environmental damage
* It will also bring about a shift in the composition of per tonne of concentrate. At the same time, recovery
fuel use. rates were typically low so that the residual metal con-
tents of spoil heaps was high which led to continuing
Historically, governments have encouraged the con- problems of heavy metals leaching into rivers, lakes and
sumption of domestic sources of energy. In most Central groundwater. Similar problems characterized forestry
and South-East European countries this means that coal operations despite the centralized control of State For-
was favored in order to reduce dependence upon estry Services. On the other side, the metallurgical, pulp
imported supplies of oil and gas. In the Russian Federa- and wood processing industries had little incentive to
tion, the preference was for oil and, more recently, for gas economize on their use of raw materials. Many of the
whose environmental effects are more benign. environmental problems associated with these indus-
There will be large relative shifts in the prices of various tries can be traced to the neglect of simple measures
fuels. The prices of coal in Bulgaria, the Czech Republic, designed to reduce the waste of raw materials or of
Hungary, Poland, and Slovakia have to rise much more intermediate products. Audits of large plants in CEE
than either oil or gas prices to come into line with West countries have identified an enormous number of (often
European prices. As a consequence, significant increases in highly) profitable opportunities to reduce losses of
electricity and heat prices will be required (because these inputs or to recover valuable materials from waste
are a function of coal prices). These changes will encourage streams, which will generate significant environmental
substitution towards oil and, especially, gas in all uses benefits provided that natural resources and other
including power stations (because the price of coal will no inputs are efficiently priced.
longer be so attractive), and that in turn will tend to reduce
emissions of most air pollutants. In Russia and other FSU Fiscal policies
countries, the relative price movements will bring less
clear environmental benefits, though they are likely to The transition from central planning has caused a fiscal cri-
encourage the continued substitution of gas for other fuels. sis in most countries as traditional sources of revenue have
The difficulties of making the adjustment should not be collapsed while governments find it difficult to collect new
underestimated. Provided that the long run goal of raising taxes. Government spending on environmental protection
energy prices to market levels is clearly promulgated, it is has come under great pressure. In an attempt to offset any
reasonable to phase the increases over a period that reflects the public expenditure cuts, Ministries of Environment and
economic and social costs of adjustment. Some countries have other environmental groups have sought tax privileges for
felt that their economic situation does not permit a gradual environmental expenditures by enterprises and other pri-
series of price increases, while the circumstances of other vate bodies. Experience suggests that these efforts are likely
countries may be such that concerns about a rapid rise in to be self-defeating. Special tax privileges for one sector
unemployment are more important. The crucial issue is rapidly proliferate, so that their ultimate effect is to encour-
that this progress should be sustained with, if necessary, age rather than discourage activities which cause environ-
20
mental harm. During the transition the prime concern must Projections such as these show what can be achieved,
be to eliminate tax and other incentives which damage the given the technology that is readily available in the West,
environment. Once this has been achieved, the next step is but they do not tell us how it should be done. Emission
to penalize such activities by, for example, imposing standards are only one possible instrument of environmen-
heavier taxes on leaded gasoline rather than on unleaded tal policy. The analysis later in this chapter indicates that
gasoline or on other highly polluting fuels. Such measures other instruments may be preferable on economic or insti-
improve the government's budgetary position while rein- tutional grounds. Further, the fact that emissions could be
forcing the incentives to reduce environmental damage. reduced by the amounts shown does not imply that this
should be the target for environmental policy in all or any
Scenario analysis of the countries. For example, even stricter emission con-
trols via the application of Best Available Control Technol-
Key results from the scenario analysis are shown in Annex ogies (BACT) would reduce average emissions per square
3 and Map 4.3 These are taken from two complementary kilometer in Central and Eastern Europe to a level only
studies carried out by RIVM in the Netherlands4 and by one-fifth of that in Western Europe because of differences
the World Bank.5 The World Bank study, based on a in income per head and population density. A BACT-
detailed industrial model summarized in Annex 3 focused approach would, therefore, make sense only in regional
on the links between the nature of economic and industrial hot spots, even if the goal is to achieve ambient environ-
reform and the environment. On the other hand, the RIVM mental conditions equivalent to those in Western Europe.
study used a slightly different model to focus on the tech- The phasing of stricter environmental controls must be
nical possibilities for reducing emissions and on the spatial considered carefully. To the extent that a country is going
distribution of pollution. This study shows how economic to rely upon the application of stricter controls to new
reform combined with different environmental standards plants, it is essential that appropriate standards or other
affects the average concentrations of key pollutants across instruments should be introduced before investment recov-
the region and provides the basis for identifying how pol- ers after the trough of the economic recession is past. The
icy may alter conditions in environmental hot spots. scenarios suggest that environmental policies and invest-
ments which reduce emissions will reinforce the effects of
AIR POLLUTION. The results of the scenario analysis economic reform and restructuring.
show that the environmental benefits of economic reform Some old and highly-polluting plants will be allowed
can be high. In many countries, total emissions of particu- to continue operating because the social costs of closure
lates and sulfur dioxide decline by 70 percent or more in are too large to be contemplated. Even so, it is possible to
the period 1990-2005, even if their Gross Domestic Prod- insist that such plants improve their environmental per-
uct recovers to pre-reform levels. Declines of 50 percent or formance without committing any significant amount of
more in other air pollutants such as NON, air-borne lead investment. Large gains can be achieved by simple "good
and cadmium are likely. However, in order to sustain housekeeping" measures-better maintenance, mending
these declines over time, and to achieve them in countries leaks, installing better controls, insisting on stricter stan-
where some pollution levels are very high to begin with dards of plant and process management. Indeed, if enter-
(especially in the FSU), policies will be needed to restrict prises improve their environmental performance in these
emissions below the level that can be attained at a negligi- ways, their economic results are also likely to get better
ble cost by modern technology. In particular, emissions of (chapter V provides some specific examples). It is crucial
NOx and lead may grow rapidly in the next century as a that governments should not direct all of their resources-
result of traffic growth unless measures are adopted to human as well as financial-towards new investments or
improve the environmental performance of motor vehi- enterprises, since remarkable improvements can be made
cles and/or to limit their use in polluted urban areas. if the managers of old plants are pressed to make improve-
The crucial question is whether tighter emission stan- ments and rewarded appropriately when they succeed.
dards should be imposed on all plants or only on new or Costs must play a central role in setting emission reduc-
rehabilitated plant and equipment. The scenarios show tion targets. It is much cheaper to install dust collection and
that, for most pollutants, the environmental gains from filtering systems on both new and old plant than to install
imposing EU standards on new capital alone are modest. In some kinds of sulfur or NO, emission controls, and the ben-
order to achieve the very large reductions in emissions efits are likely to be higher (see chapter II). Thus, it is sensi-
that are shown to be possible by 2010, it will be necessary ble to aim for larger reductions in emissions of particulates,
to insist on retrofitting or scrapping old capital which does air-borne lead and heavy metals than of gases. The relation-
not meet these emissions standards. The costs of acceler- ship between the costs of control in new and old plants is
ated capital replacement would partly be covered by the important in deciding how far to go in retrofitting or scrap-
greater efficiency of new capital, but nonetheless the ping old plant, which in turn determines the length of the
financial burden is likely to be large. A program that transitional period that should be allowed and the strin-
requires retrofitting or capital replacement for all plants in hot gency of the intermediate emission standards.
spots but not elsewhere would certainly offer the most cost-effec- The scenarios show that large sources such as power
tive way forward if governments wish to go beyond what and heat plants and heavy industrial plants account in
can be achieved by imposing stricter environmental stan- some countries for nearly 80 percent of dust and sulfur
dards on new or rehabilitated plant and equipment alone. dioxide emissions and 50 percent of lead emissions (Annex
21
3). Thus, applying EU standards (or their equivalent) only should not be neglected on this account. It is therefore
to large sources will achieve almost as much as applying important that Ministries of Environment should work
them to all sources, large or small. That is just as well: in with Ministries of Finance, Industry, Privatization and
general, it is much easier to monitor and enforce environ- Health to ensure that environmental considerations are
mental policies that apply to a small number of large built into decisions about which plants or enterprises in
sources than to many small sources. Some instruments- the public sector should be closed and which should be
e.g. differential fuel taxes, regulations concerning fuel allowed to continue to operate. By affecting the pattern of
specification or vehicle equipment-can be applied uni- closures and the conditions which must be met before
formly to all sources but substantial resources are needed plants receive assistance to support their continued opera-
to ensure that they are not nullified by poor maintenance. tion, the environmental authorities can have a significant
Economies of scale in control technologies combined with impact on the damage caused by old plants.
institutional considerations mean that environmental poli-
cies should focus on large sources initially. This needs to be Better Enviromnental Policies
carefully distinguished from public environmental invest-
ments which may in some cases be more appropriate in the Most Central and Eastern European countries have envi-
household and small-scale industry sector (Box 3.3). ronmental legislation which could be used even now to
To control emissions of NOR, VOCs and lead from vehi- bring about improvements in environmental conditions.
cles will eventually call for the installation of catalytic con- In the past, local and national governments were unwill-
verters on all automobiles. This will take a considerable ing to enforce their own rules because priority was always
period to come into effect. In the short run, product stan- given to maintaining levels of production. As more power
dards can be changed to reduce the lead content of gaso- is given to environmental agencies at a local level and as
line. Indeed, automobiles without catalytic converters can oper- governments disengage from direct involvement in the
ate on unleaded gasoline. Controls on vehicle emissions will ownership and management of industry, it should become
be required in due course because of the expected growth possible to establish an effective system of environmental
in traffic volumes, but these are not an immediate priority regulation. However, the choices will be difficult. With
and could be left until after 2000 which allows time for the falling output and rising unemployment, the authorities
efficiency and cost of control equipment to improve. may be understandably reluctant to enforce strict environ-
mental rules if that means closing down industrial plants.
WATER POLLUTION. The scenarios show that emissions of Once environmental priorities have been drawn up,
BOD and other water pollutants barely decline or rise after policy instruments have to be chosen. The choice is some-
1995, even if large reductions in industrial emissions occur. times posed as one between "command-and-control"
Households and small sources dominate the discharge of (CAC) approaches, which use regulatory instruments
these pollutants and the only effective solution is large scale such as emission permits, and "market-based" (MB)
investment in municipal wastewater treatment. This will approaches which rely on economic incentives such as
take several decades and the effect on water quality will pollution charges or taxes, tradeable discharge permits
vary greatly from place to place. It is thus essential to ensure and deposit-refund schemes. Politicians and industrialists
that scarce resources are allocated to maximize the improve- generally prefer a command-and-control approach,
ment in ambient conditions by choosing the most cost-effec- because regulation offers the prospect of certainty in
tive methods and standards of wastewater treatment. achieving pre-determined emission limits and is generally
regarded as easier to implement.
CONCLUSION. The lesson of the scenarios is that struc- On the other hand, there is overwhelming evidence
tural change alone will not secure long-term environmen- that, in most circumstances, it is much more costly to
tal quality. But governments will not find it easy to phase achieve some level of emission reductions with command
in strong environmental policies while their economies and control rather than market-based instruments. The
are in transition. The costs of environmental damage, espe- reason is that the cost of cleaning up emissions is not the
cially to human health, are as real and as potentially large as the same for all sources. Therefore, the cheapest method of
other social costs of industrial restructuring. They tend to be meeting the reduction target is to encourage those with
less visible and more long term in character, but they the lowest costs of clean-up to reduce their emissions by
Box 3.3 Reducing emissions from coal-burning
1. Over the medium-to-long term, households and other small-scale users of coal ame likely to switch to gas and other fuels. Coal-burn-
ing will therefore become increasingly confined to large users (as in Western Europe);
2. In the short run and during the transition, the damage to the environment and to health from the use of coal by small businesses and
households will continue to be high, partly because these users will not be able to afford to change;
3. It is desirable that the reduction of emissions from low chimney stacks should be faster than that which would occur as a result of
economic forces alone (see 1). It is therefore legitimate for this to be part of a public investment program;
4. At the same time, however, environmental standards and policies should be used to ensure that large coal users reduce their emis-
sions. Enterprises and utilities should be encouraged to internalize the environmental costs of their activities and should generally
finance their own investments (see chapter V).
22
more than those facing higher costs. This may appear to be Detailed assessments are needed of the suitability of
inequitable to the different industries or plants involved, different combinations of instruments for dealing with
but why should different rules apply to responsibility for various environmental problems in Central and Eastern
environmental cleanup than to other aspects of economic Europe. These must focus on practical issues of implemen-
production: industries invest in specific countries and tation as well as an economic assessment of the relative
locations where they have a comparative advantage in costs of the alternative approaches.6 But at this point, it is
terms of the costs of physical inputs, labor and capital. possible to reach some general conclusions:
Similarly, polluters should clean up more where they have
a greater comparative advantage. This is an essential con- * A regulatory approach is usually the right way to deal
dition for economic efficiency. with micro-pollutants such as heavy metals and most toxic
The severe financial constraints in Central and Eastern chemicals. The costs and difficulty of monitoring emis-
Europe suggest that the governments in the region might sions of such pollutants are large, the costs of making mis-
have to give more serious consideration to market-based takes often high, while the range of control costs seems to
instruments than has been usual in Western Europe. be relatively small. Appropriate regulation includes tech-
Moreover, some of the environmental issues which are nology standards which require enterprises to install cer-
receiving attention-such as wastewater treatment or acid tain kinds of process or end-of-pipe controls;
rain-are among those where the costs of relying on CAC * Emission standards or limits may be used either to
approaches are particularly high. mandate use of a specific technology or as instruments to
Even though CEE countries have embryonic markets at achieve a desired level of environmental quality outside
best, the use of MB instruments is not as unrealistic as the plant concerned. The former has been the usual
might seem at first. In several of the countries in the approach in Western Europe while the latter was the inten-
region, there is paradoxically a fairly long tradition of tion of legislation in the former Soviet Union, though it
environmental charges which have been applied with was rarely effective in practice. Since continuous monitor-
varying effect. Moreover, there may be institutional mech- ing of emissions may not be possible or may be prohibi-
anisms (e.g., negotiated emission permits) for simulating tively expensive, it is common to rely upon random spot
the use of market-based instruments, until such time as checks or a regular schedule of intermittent monitoring to
these can be applied directly. It is important to note that enforce the standards.
this is not necessarily a substitute for-but rather a com- * Pollution charges-which have a tradition in a num-
plement to-emission limits, provided these are well ber of CEE countries-can be used in dealing with emis-
enforced and take account of regional variations in ambi- sions from large or medium industrial plants that can be
ent conditions. monitored at reasonable cost. This includes air pollutants
In practice, the choice comes down to some combination such as dust, sulfur dioxide, nitrogen oxides as well as
of the CAC and MB approaches. The key problem is one of water pollutants such as organic material, suspended sol-
information and monitoring. There is little point in relying ids and some heavy metals. Where pollution charges have
upon either emission permits or pollution charges unless been applied in the past in CEE countries, they have usu-
appropriate arrangements can be made to monitor either or ally been set too low to cause any change of behavior
both the volume and concentration of discharges. As past among enterprises;
experience in Central and Eastern Europe shows, mandat- * Tradeable discharge permits have an advantage over
ing particular technologies or controls may be ineffective if pollution charges in that they offer relative certainty about
poor operating and maintenance practices are allowed to the total level of emissions. However, they can offer an
render them partially or wholly ineffective. In all cases effective alternative only if the number of sources within
environmental policy has to rely upon a reasonable degree the area covered by the permits is sufficient to sustain a
of voluntary compliance by enterprises and pollution reasonable level of permit trades without any one source
sources as a purely adversarial relationship is likely to having a disproportionate influence on the market. The
delay the implementation of, or undermine the effective- main experience of using tradeable permits has been in the
ness of both regulatory measures and market incentives. United States. There a scheme for phasing out lead in gas-
For mass pollutants-such as dust, sulfur dioxide, BOD oline was successful, but other schemes have been less so.
and suspended solids-and/or large sources, market- The 1990 Clean Air Act is expected to lead to a large
based approaches are both feasible and attractive, espe- increase in the role of permit trading in meeting overall
cially where there is a range of production processes and targets for reducing emissions of sulfur;
control options or where technology is changing rapidly. * The principal problems in introducing market-based
For micro-pollutants and/or small sources, the problems instruments arise from the distributional consequences of
of monitoring are much more intractable and either spe- alternative levels of charges or permit allocations. It may
cific regulations or indirect market incentives via the cost be necessary to adopt transitional arrangements which
of inputs may be the only effective alternatives. Since there mitigate the immediate impact of the new control system
may be substantial uncertainty about the costs and conse- on existing sources. For instance, pollution charges could
quences of adopting alternative instruments, an important be increased gradually or a substantial share of permits
consideration guiding the choice must be the relative costs could be allocated to existing sources. Such provisions
of making mistakes, that is, of imposing too strict controls may play an important role in ensuring that proposed
or achieving too little reduction in emissions. schemes are politically acceptable. Until recently, environ-
23
Box 3.4 Finding the most efficient way to reduce environmental pollution
Setting a broad environmental quality goal and allowing enterprises to find the most efficient way to meet that goal can be far more
effective than introducing regulations which prescribe specific controls for specific sources of pollution.
A good example is provided by a refinery of a major United States oil company which was forced as a result of narrow regulations
to solve relatively minor pollution threats at major expense while far more important problems were neglected.
Specifically, the oil company was required to spend US$31 million to rebuild the refinery's waste water treatment plant to prevent 3
tons of benzene, a toxic chemical, from evaporating into the air annually. At the same time, 15 tons of benzene pollution annually is
evaporating from a part of the plant not yet addressed by the environmental regulation: the marine terminal on the river where ships
unload oil and load gasoline. Controlling benzene pollution there would have cost only about US$6 million. But oil company officials
will not do anything until the regulations are made final in two or more years. The reason for the reluctance is that the regulations now
are so specific in defining how a company should control pollution that if the equipment did not exactly fit every requirement, it might
have to be dismantled, making the investment a waste.
mental policies in the OECD economies were based prima- by emissions. Reliance upon cost-based fees to finance
rily on CAC approaches, but there is now a significant shift regulatory expenditures are common in Western Europe
towards greater reliance upon market incentives as the and should be regarded as a minimum requirement in the
costs of meeting stricter environmental goals have CEE countries to ensure that the environmental authori-
increased. Countries such as the United States, Nether- ties have sufficient funds to fulfill their basic responsibili-
lands and those in Scandinavia have put tradeable per- ties for monitoring and enforcement. Pollution charges
mits, effluent charges or environmental taxes at the core of generate additional government revenue that can be used
their policies to tackle major environmental problems; for any purpose, though in practice it is usual to use the
* Product charges and deposit refund schemes have been revenue to finance environmental expenditures via an
used with considerable success in many countries to deal Environment Fund or an equivalent arrangement. While
with various types of solid waste and to encourage recy- linking revenues and expenditures is generally not recom-
cling of glass and aluminum. This approach is now being mended-the effect may be to induce inefficient taxation
expanded to control the disposal of hazardous wastes in or spending-the loss of economic efficiency may be a
Thailand and other proposals are under consideration else- political price worth paying in order to introduce an effec-
where. There is considerable scope for introducing similar tive system of pollution charges. So long as cost-based fees
arrangements in Central and Eastern Europe in order to are used to finance the fundamental regulatory functions,
provide appropriate incentives to reduce the generation of it does not matter too much if the rest of the revenue from
waste as well as to ensure that it is properly managed. pollution charges is used solely to finance environmental
improvements. A fall in the amount of revenue collected
Pollution charges would indicate a decline in total emissions and thus in the
clean-up expenditures, so that the arrangement provides a
Several countries in Central and Eastern Europe-includ- greater degree of flexibility in setting expenditure levels
ing Bulgaria, the Czech Republic, Hungary, Poland, Rus- than is typical for most other assigned taxes.
sia, Slovakia and Ukraine-have legislation which allows Poland has raised the level of its pollution charges by
Ministries or provincial governments to impose emission about 10 times in real terms since 1990, providing a genuine
fees and fines on polluters. In many other countries-for incentive to reduce emissions. The revenue collected in this
example, Belarus and Croatia-such legislation has manner goes to national and provincial environment funds
recently been introduced or is being actively considered. and is used to finance various environmental investments.
Such emission fees and fines can form the basis for effi- There have been problems in collecting the revenue from
cient systems of pollution charges. many enterprises whose financial situation was, or was
In most countries, it will be necessary to raise the level of claimed to be, such that they could not make the payments
the charges dramatically and then to enforce payment of for which they were liable. In the Katowice region-one of
the charges levied. This will provide a very powerful incen- Poland's most polluted (but wealthiest) areas-only 26% of
tive to enterprises to find low cost methods of abating their all environmental fees and fines were collected in 1992. The
emissions, even if they cannot afford to make large investments Ministry of Environment announced in late 1992 that pollu-
in new plant and technology Often, good environmental man- tion charges would be reduced temporarily by 90 percent to
agement is just a reflection of good industrial management. allow industries time to adjust. The negative reaction to this
The great merit of pollution charges is that they mobilize decision from enterprises and from environmental groups
the ingenuity and skills of plant managers while they avoid has demonstrated that the pollution charges were having
the danger of enforcing technology standards which may their intended effect of encouraging polluters to invest in
be unnecessarily costly or rapidly outdated (Box 3.4). reducing their emissions (some enterprises had apparently
A clear distinction must be drawn between (a) fees for already started to make investments in response to these
emission permits or pollution charges whose purpose is to changes and perceived the reduction as unfair). Abrupt
cover the administrative and monitoring costs involved in changes in the level of charges disrupt plans based on the
any system of environmental regulation, and (b) pollution assumption that the charges will be much higher than in the
charges which are linked to the amount of damage caused past.
24
Pollution charges are generally set too low. In Poland * Impose a relatively low charge on emissions up to the
the charges for emissions of saline water are not set high level specified in each plant's emission permit but require
enough to force the mines concerned to control their dis- that the full charge should be payable on all emissions
charges (though the sharp increases in charges has above that level. This is equivalent to the original system
prompted the mines to give serious consideration to more of fees (low pollution charges) and fines (full pollution
limited measures designed to reduce emissions). In this case charges) which was or is still operated in several countries.
the government was concerned that charges set high It provides a strong incentive to reduce emissions to the
enough to reflect fully the damage caused by saline water permitted level, but sacrifices some of the efficiency gains
would cause the mines to shut down, destroying jobs and which can be achieved by encouraging plants with low
forcing greater dependence upon imported energy. While control costs to reduce their emissions below the level
this view is understandable, it neglects the fact that the costs specified in their permits. For this reason, the quantity of
of the damage caused by saline water are equally real even emissions subject to the lower charge should be gradually
though they may be not be immediately apparent to the reduced to zero over a period of 3-4 years;
many enterprises and other organizations which have to * Apply a uniform pollution charge to all emissions
bear them. which is gradually increased over a period of years to the
Poland's experience with pollution charges suggests level implied by estimates of the damage caused by emis-
lessons for other countries. Two main issues must be sions. This approach provides less of an incentive to
addressed in implementing any system of charges: reduce emissions immediately, but may be more practical
if emission permits are ambiguous or have not been issued
The relationship between regulations and economic for many sources;
instruments must be carefully considered. In Poland, * Impose the full rate of pollution charges from the
emission standards have not been linked to pollution beginning, but introduce a "banking" scheme under
charges either in the way they operate or in the implied which enterprises can defer payment of the charges in
weight placed on reducing emissions of different pollut- exchange for making larger reductions in emissions or
ants. Enterprises are confused and feel that they are being paying higher emission charges in future. There must be a
unfairly subjected to inconsistent signals; limit on the amount that can be "borrowed" in this way, so
* An efficient system of pollution charges that reflect that the length of time allowed for "paying back" the
the environmental damage caused by emissions will deferred sum of pollution charges must be rather short-
impose a heavy fiscal burden on enterprises that have no more than 4 years. This arrangement reflects the reality
never had to meet strict environmental standards in the that the government is likely to be unwilling in the short
past. Since the financial position of many enterprises is run to bankrupt heavy polluters which are unable to pay
already weak, enforcing payment may lead to bankrupt- their pollution charges. However, it will be credible only if
cies while a failure to levy the charges due will undermine the authorities take steps to make clear that enterprises
the credibility of the system. which fail to "repay their loans" will be closed down in
future. One way of doing this might be to take out a lien
Both of these issues are much more acute during the tran- on the property and other assets of privatized enterprises
sitional period while enterprises adjust to the new policy which defer payment, so that their new owners cannot
regime than they are in the long run. Those regulations which evade the charges by asset-stripping.
are retained can be amended or eliminated to ensure that they
do not undermine the impact of the pollution charges. No system of pollution charges or other economic
Various arrangements can be introduced to cushion instruments can change the underlying political choices. If
transitional difficulties. None is ideal, but countries could governments give priority to maintaining production and
consider one or a combination of the following: employment, then environmental policies which threaten
Box 3.5 Financing Environmental Protection in the Russian Federation
In the last three years, the Russian Federation has been establishing a system for financing environmental improvements which does
not rely upon transfers from the government budget. Ecological Funds have been set up at federal, provincial (oblast), and local levels
to channel resources to programs of environmental protection, nature conservation, scientific studies, technological development and
compensation for the health damage caused by pollution.
These Funds rely primarily upon the revenue generated by pollution charges (both fees and fines), waste disposal fees, and other
payments made to compensate for the environmental consequences of past actions by enterprises and other organizations. They are
empowered to invest in the development of environmentally-sound technologies or in enterprises with appropriate environmental
objectives.
The Ecological Funds were expected to receive at least 80-90 billion rubles from pollution charges in 1993-equivalent to US$85 mil-
lion at an exchange rate of US$1 = 1,000 rubles. This revenue should rise rapidly as pollution charges are increased in real terms,
though the decline in the output of heavy industries such as metallurgy and chemicals will reduce the sums received by the Funds.
The government is also negotiating a loan of US$50 million from the World Bank to establish a National Pollution Abatement Fund
which would finance the foreign exchange cost of projects to reduce losses of raw materials and intermediate products or recover valu-
able materials from waste streams. Finance will be provided in the form of loans which must be repaid in foreign currency and which
will bear a commercial rate of interest.
25
these goals will be set aside in one way or another. Adopt- However, the financial state of the banking system may be
ing policies which are not enforced will just undermine the cred- such that it is unwilling to make medium term loans to
ibility of the environmental authorities and of the government in enterprises, especially those which have not been priva-
general. Thus, the transitional arrangements that are imple- tized, so that government lending or government guaran-
mented must reflect the authorities' willingness to follow tees may be necessary to fill the gap in the range of loan
through on difficult cases in order to achieve their environ- instruments.
mental goals. It is better to accept a lengthy transitional period Most countries in Central and Eastern Europe have
than to set targets which few believe or are able to meet, established Environment Funds to receive and disburse
since deadlines that are always postponed are much worse revenues from pollution charges and other sources. In the
than longer deadlines that are regarded as being firm. short run these offer a mechanism for relaxing the tight
budgetary constraints on government spending. They are
Financing environmental expenditures also a way of lessening opposition to raising pollution
charges if enterprises see that revenue raised from such
In all market economies, the bulk of environmental invest- charges is being used to finance environmental expendi-
ments are financed by enterprises out of their own tures. Unfortunately, both of these aspects have their dis-
resources.7 Environmental expenditures must compete advantages in the longer run. Off-budget funds which
with other claims on investment budgets, so enterprises receive tied revenues such as road funds financed by gas-
have a substantial incentive to improve their operating oline taxes have a very mixed record around the world.
practices or to find other methods of reducing the costs of They tend to distort government spending decisions and,
meeting their environmental obligations. In Central and if they become widespread, they can narrow the scope for
Eastern Europe, however, the philosophy has become fiscal policy to an unacceptable degree. Spending for envi-
deeply ingrained that improvements in environmental ronmental purposes must eventually be evaluated on an
performance depend upon new investment, even though equal footing with other budgetary programs and justi-
much can be achieved at little or no cost by "good house- fied by reference to the benefits that are generated relative
keeping," better maintenance, simple improvements in to the cost of raising revenue or of not spending it to meet
process controls and similar measures. other objectives.
Both economic and environmental considerations dic- Viewing pollution charges as a mechanism for financ-
tate that environmental policies should focus on achieving ing environmental spending has other disadvantages.
the maximum environmental benefits from the removal of Their main purpose is to ensure that enterprises and others
energy and other subsidies and from other opportunities bear the cost of environmental damage that they impose on
to implement "win-win" measures. This will encourage the general community. If effective, polluters will change
enterprises to look beyond investment in end-of-pipe con- their behavior to reduce emissions and, therefore, reve-
trols as the primary method of reducing emissions and nues. Funds which see their role as financing specific types
will accustom them to the need to assess environmental of investment have a tendency to become self-perpetuating
expenditures on a par with other investments or operating bureaucracies and they are likely to set charges at a level
expenses. The government's role in financing such expen- that is too low in order to maximize revenues over the longer
ditures should, as far as possible, be limited to the provi- term. Thus, Environment Funds should be established with
sion of loan finance on quasi-commercial terms. Strictly, a limited mandate which ensures that their performance is
this should not be necessary if appropriate incentives- reviewed at regular intervals and that they cease to operate
higher energy prices, pollution charges, etc.-are correct. after a period of, perhaps, 10 years. Their operational
Box 3.6 National Environmental Funds
The National Environment Funds in Bulgaria, the Czech Republic, Hungary. Poland, and the Slovak Republic together total more than
US$600 million derived from environmental fees, taxes and fines
Key Features Bulgaria Czech Republic Hungary Poland Slovak Republic
In full operation since 1993 1991 1993 1989 1991
Sources of Income:
* Fees,fines x x x x x
* Statebudget x x x x
* Fuel tax x
* Revenues x x
Types of Disbursements:
* Grants x x x x x
* Low-interest loans x x x x x
* Guarantees x
* Portfolio investments x
1993 budget (US$ million) 7 100 45 440 40
Source: The Regional Environmental Center
26
arrangements must take account of the fact that they con- ambient standards which reflect current analytical capacity.
trol public monies and should, therefore, be subject to the This capacity will increase over time, so that ambient stan-
standard rules of public spending covering accountability, dards for other pollutants could be temporarily sus-
management and transparency pended rather than repealed.
The role of Environment Funds in relation to general Countries in the region may decide to adopt stricter
environmental policies must also be carefully defined. In standards, for example ones equivalent to those applied to
general, the disbursement of money from such funds new sources in the European Union today on the grounds
should be linked to implementation of the priorities and that this will accelerate the rate of decline in emissions
measures identified in a National (or Regional) Environ- from the most heavily polluting industries. However,
mental Action Plan. If this is not done, there is a danger there is a familiar dilemma in following this approach. If
that a Fund may undermine the consistency and effective- there are significant costs involved in meeting the stricter
ness of environmental policy by pursuing its own objec- standards, then applying them only to new plants will
tives which will probably be shaped by the ease of dis- have the effect that enterprises will prefer to keep older
bursing funds for investment. plants operating longer so as not to have to make the large
investments in new equipment. The result, at least in the
Environmental standards medium term, may be higher costs and higher pollution.
One way of resolving this dilemma is to require that all
There are three kinds of environmental standards which plants should meet the stricter standard by the end of a
serve quite different purposes in environmental policy: transitional period. This is the approach that is followed
by European Union directives with transitional periods
* Ambient standards set maximum levels of a pollutant that may be as long as 15 years. It involves greater expen-
in the receiving medium (air, water and soil). diture on environmental controls but ensures that there
* Emission standards8 set maximum amounts of a pol- can be no long term disparity between the environmental
lutant that may be given off by a plant or machine. performance of old and new sources.9 The impact of
* New Source Performance Standards (NSPS) are specific applying EU new source emission standards either to new
emission standards-always based on the Best Available sources alone or to all sources by 2010 is illustrated in var-
Control Technology(BACT)-in which the emission stan- ious of the scenarios described in Annex 3.
dard is only applied to new plants. It is crucial to set realistic target dates for the imple-
mentation of stricter emission standards. Several CEE
Annex 5 provides more detail on the role of these different countries have proposed or adopted emission standards
types of environmental standards. that are based on either EU or German precedents. Box 3.7
The first two kinds of standard are often linked. In many shows that the EU framework of standards is much more
regulatory systems, a plant that wants an emission permit complex than is usually understood. In several cases-for
may have to show that emissions will not raise typical concen- example, the Czech Republic and Poland-the period
trations above the level prescribed by the ambient standard. allowed for the implementation of equivalent standards is
Ambient standards for air quahty in most Central and less than 10 years and may be as little as 5 years. While the
Eastern European countries are considerably stricter than reasons for seeking better environmental performance are
EU ambient standards, and the number of pollutants for understandable in the context of long term goals of joining
which ambient standards have been promulgated tends to the EU, experience in Western Europe suggests that such
be greater than is common in EU/OECD countries. But implementation periods are much too short. Industries in
such strict standards may be counterproductive. Given Western Europe have had several decades to adapt and
the limited resources for monitoring, it is difficult or even now there are many plants which have difficulty in
impossible to track all of these pollutants. For all environ- meeting current emission standards. Lengthy adjustment
mental media, it would be better to adopt a simpler set of periods (of up to 25 years) have been provided for new
Box 3.7 Environmental standards in the European Union
The EU framework of environmental standards is more than simply a set of specifications of ambient and emission limits. It involves
targets (some of which are not numerical) which need to be converted to workable objectives to be implemented over specified peri-
ods. To the extent the EU has established specific standards, these are usually associated with a lengthy phasing-in period with inter-
mediate targets. In other words, the EU framework is as much a process as a product. In most EU countries, this process was initiated
in the early 1970s, and it has taken 20 years to achieve compliance with some intermediate targets.
There are few EU emission standards and those that exist are subject to exemptions. For example, lignite-fired plants may exceed
emission limits if it is determined that lignite is an essential fuel and implementation of contrls would entail excessive costs. Such a
provision, applied in CEE, would allow some of the lignite-fired power stations in the region to continue operating. A more impor-
tant exemption is contained in the directive dealing with emissions from industrial plants. This recommends the adoption of BACT
provided that this does not entail excessive economic costs. Some of the richest EU member countries have developed their own
ambitious sets of emissions and ambient standards that allow no such exemptions.
Countries in Central and Eastern Europe which seek to meet EU standards could embark on the process of adopting the framework
now. The main issue then is to determine realistic and appropriate intermediate targets. One of the principal benefits of adopting the
framework of EU standards is that it could replace many existing standards, which are mostly too strict to be enforceable.
27
member states of the EU to come into conformity with EU different emission targets reflecting their control options
emission standards and even then it is likely that deroga- and relative costs. Peer pressure within the industry can
tions from certain standards-especially on water qual- then be quite effective in ensuring and monitoring compli-
ity-will need to be granted.'0 ance with the agreement.
Enforcement Notes
In the past, enforcement was regarded as a marginal activ- 1. If old capital equipment were scrapped at rates typical of
ity. Those responsible for it often found themselves advis- market economies, less than one-half of the existing stock would
ing enterprises how to avoid fines or other penalties rather still be operating in its present manner after 10 years.
than insisting that environmental legislation be properly 2. Average energy prices in Hungary are now at or above West
implemented. But investors (especially foreign investors) European prices. Industrial prices for coal, oil and gas in Bul-
set great store by a predictable regulatory regime with garia, the Czech Republic, Poland, Romania and Slovakia are at
or close to import or export parity prices. After falling during
evenhanded enforcement of national and local standards. the early months of 1992, the real prices of coal, oil and (most
Environmental policy makers should, therefore, regard recently) gas for industrial users in most states of the former
the question of enforcement as a central one. Without ade- Soviet Union have risen substantially above their pre-reform
quate provisions for consistent enforcement, new legisla- levels. Electricity and heat prices have tended to lag behind
tion is not credible and may be seen as unfairly putting other energy prices, as have household prices for coal and gas.
those who choose to comply at a disadvantage.1' However, these account for less than 30 percent of total energy
To minimize costs of monitoring and enforcement, it is consumption in most countries, so that the overall picture is one
of substantial progress in raising energy prices to market levels,
important to rely upon self-monitoring by enterprises thereby encouraging greater efficiency in the use of energy.
combined with sufficient random checks to ensure that
enterprises operate their monitoring systems properly 3. Scenario I refers to the likely outcome if only new installa-
enterprises ~ ~ ~ ~ ~ ~ ~~Y. tions in CEE are equipped with Western European technology
Quite apart from the cost advantages of self-monitoring, it prevailing today.
is an important mechanism for enhancing environmental
isanimportanthec senismfor mnhanaingersandrothertaf 4. Bollen, J., J.-P. Hettelingh and R. Maas, Scenarios for Economy
awareness among the semor managers and other staff. and Environment in Central and Eastern Europe. RIVM (National
Internalizing environmental concerns in this manner will Institute for Public Health and Environmental Protection),
reinforce the philosophy that enterprises should, wher- Bilthoven, The Netherlands, 1994.
ever possible, attempt to avoid causing environmental 5. Hughes, Gordon, Economic Reform, Industrial Restructuring
damage rather than leaving matters until they are obliged and the Environment (Washington, DC: The World Bank, 1994).
to take action by external intervention. Requiring that
informakeationon air axternd ltervpoltion. Remsionse mhad 6. The OECD's Guidelines on the use of economic instruments in envi-
information on air and water pollution emissions be made ronmental policy together with a number of related publications on
public can also serve as a powerful incentive to comply Western experience of the application of economic instruments
with environmental rules. provide valuable guidance on how pollution charges, tradeable
Reliance upon self-monitoring will only be possible if permits and similar instruments might be introduced.
enterprises and other pollution sources have had some 7. In the United States, over 60% of the cost of protecting the
influence in the process by which environmental objec- environment is paid by private facilities to comply with envi-
tives are set, regulations are drafted and other instruments ronmental standards. Local governments assess taxes and user
are introduced. This does not mean that they should have fees to finance an additional 20% of the cost. The remaining
a veto over such policies but it recognizes the reality that expenses are paid by state and federal agencies and are also
governments cannot enforce policies which are widely raised through taxes, user fees, and alternative financing
perceived to be infeasible, inequitable or ill-conceived by sources such as revolving funds.
those whom the policies affect. At best, the outcome will 8. In some CEE countries, the term "emission limits" is used, to
be formal compliance that is effectively undermined by indicate that the emission standards are only in reference to
the exploitation of loopholes or other ways to subvert the physical emissions from the plasnt rgtandards often imply the
goals of the policies. requirement of a type of technology.
Recognizing this, the process of enhancing environ- 9. The process of phased, negotiated compliance at the local
mental performance in most OECD countries has relied level is further elaborated in chapter IV.
heavily upon negotiated agreements between the environ-
mental authorities, specific industries and other interested 10. It is interesting to compare current environmental condi-
mental authorities specificindustriesandotherinteretions in Central and Eastern Europe with those prevailing in the
parties. These agreements are "voluntary" in the sense West 10-20 years ago. For example, a comparison of the Elbe
that those affected had the option to refuse to participate, (former German Democratic Republic) and the Rhein shows
but at the risk that the authorities might have imposed that concentrations of key pollutants were roughly the same in
stricter requirements on them. For the authorities, the 1988 in the Elbe as they were in 1970 in the Rhein.
advantage of such agreements is that (a) they reduce the 11. In the late 1960s, France experimented with a law that
costs of monitoring and enforcement which can be partly required zero discharge and imposed severe penalties for viola-
undertaken by industry bodies, and (b) the overall cost of tions. The law was universally viewed as unreasonable and so
controlling emissions may be reduced by treating an was never enforced. Less control was accomplished under this
industry implicitly as a bubble, with enterprises achieving law than would have been accomplished with a less stringent
law that could have been enforced.
28
Chapter Four
Building Better Institutions
A Cmm tmen 0000000Ett toru0Sj th EnvIironment000 00 Sti X X
Experience in Western countries shows that successful environmental policy requires the explicit commitment of the whole govern-
ment, and an open approach to setting priorities and making choices.
The greatest contribution to improved environmental management is likely to come from strengthening local and regional institu-
tions within countries-in particular, improving their capacity for economic and financial analysis. National environmental authori-
ties should place more emphasis on policy coordination. Substantial savings are possible by making environmental decisions at the level
of river basins or air sheds.
Studies for project preparation and industrial reviews need to be re-thought. They should focus on those areas where scarce invest-
ment resources can provide the greatest benefits rather than offering pre-packaged recommendations based on conventional Western
technologies. Substantial local participation is essential. The terms of reference for studies need to be drawn up to ensuire that the result-
ing proposals meet clear objectives and take account of financial and institutional constraints.
A Commitment to the Environment Legislative and institutional reform
The success of environmental policies depends on the Environmental legislation
explicit commitment of the entire government backed up
by the electorate. But popular commitment, although In the past, all Central and Eastern European countries had
vital, is not enough. The quality of institutions is an developed stringent, but not enforceable environmental leg-
equally important aspect of environmental policy. With- islation. In many of these countries, the new governments
out sound institutions, good intentions will never be face a problem. Some of the legal environmental require-
translated into reality. ments, especially the existing ambient standards for water
A country's environmental performance is not princi- and air pollution, are unrealistically strict. However, to
pally determined by decrees from its environmental downgrade them would cast a better light on the environ-
authority. Rather, the environmental authority mediates, mental performance of the former communist governments.
facilitates, and leads by persuasion.' In industry, better While the CEE countries are reluctant to soften their
management alone would solve many of the most serious environmental standards, most of them do want to rede-
environmental problems. But the CEE countries are hand- sign the system of environmental management, and often
icapped by an imbalance between high technical expertise see the starting point as the passage of comprehensive
and relatively weak management capabilities in their environmental laws. These laws would set the institu-
environmental institutions, a situation that is aggravated tional, regulatory and executive framework. In most cases
by the general lack of incentives for highly qualified indi- the key legal innovations include defining the status and
viduals in government. These are problems to Which there the functions of the central environmental agencies (Min-
are no easy solutions. istries of Environment or their equivalents) and the local
29
Box 4.1 Key features of National Environmental Action Plans
In October 1993, the Government of Canada hosted a meeting organized by OECD to review experience gained throughout the world
with the development and implementation of longer-term environmental plans. Much of this experience is relevant to the preparation
of National Environmental Action Plans in Central and Eastern Europe.
The following were among the major conclusions of the workshop:
. There exists no unique modelbfor a country-based NEAR Each case must be tailored to the particular situation.
. Emphasis should be more on the process of working out a strategy or a plan rather than a plan for its own sake. The process has
a value in itself.
* A good starting point is to determnine and improve the information base.
* Undtue speed to produce a document as a product rather than as a vehicle for achieving more fundamental objectives, would rather
frustrate the process and prevent it from being really country-driven.
* National planning for sustainable development should be seen as flexible in substance, responding to changing needs, and in format.
* Major stakeholders in the society must participate both in the design and the implementation of the plan.
* Determination and perseverance of officials as well as the commitment and leadership of politicians are essential for success.
* A strong monitoring-of-performance capacity should be developed.
. Clear performance goals and (if possible) quantitative targets should be established.
environmental authorities; introducing the polluter-pays- DECENTRALIZATION OF ENVIRONMENTAL MANAGE-
principle; designing specific policy instruments; institut- MENT. At present, local and regional agencies in CEE
ing environmental impact assessments; and opening countries are primarily responsible for implementation,
access to environmental information. monitoring, and enforcement, while national authorities
The social and economic upheavals in the CEE coun- are responsible for coordinating and setting overall envi-
tries impose two constraints on the effectiveness of these ronmental policy and objectives. Regional institutions are
comprehensive laws. The more ambitious they are, and also sometimes charged with environmental management
the tougher the standards they set, the greater the danger which goes beyond local political boundaries, as is the
that the turbulence of transition may make it difficult to case, for example, with River Basin Boards in Poland.
implement them. If, on the other hand, they are written in Decentralization is a mixed blessing for environmental
a flexible manner, their implementation requires a series policy. Local governments throughout the region are
of Ministerial Ordinances or Regulations to specify the acquiring administrative responsibilities from central
general definitions. But continuity in the policy process is governments, usually without adequate powers to raise
vulnerable to changes in government. As a result, enforce- revenue. As central funding has been drastically reduced,
ment is undermined. most local authorities are now dependent on the limited
Besides, when comprehensive environmental laws exist, funds that they can raise locally. At the same time, they
legislators become less interested in integrating environmental have little power to levy their own taxes. In order to com-
concerns in the economic reform laws. A shortage of qualified pensate for the shortfall in revenues, one result can some-
environmental specialists and lawyers, and a lack of tradi- times be unrestrained exploitation of natural resources,
tion of transparent legal processes may lead to the intro- especially of those found in protected areas which are rel-
duction of key economic reform laws with little or no con- atively unexploited. For example, there is a growing num-
sideration of environmental issues. ber of instances, notably in Russia, where logging restric-
CEE countries have an opportunity to learn from mis- tions have been waived over forests both within and
takes in OECD countries and to develop more responsive outside protected areas.
institutions. In practice, this means above all strengthen- Such exploitation is aggravated by the rejection of the
ing the integration of sectoral and environmental institu- concept of planning which is perceived as synonymous
tions responsible for industrial development and energy with centrally planned economies and therefore anathema
on one hand, and agriculture and forestry, land privatiza- to land use strategy. Consequently, development master-
tion, tourism, and transport on the other hand. Environ- plans are drawn up that often ignore any previous concept
mental agencies should avoid becoming over-extended of planned control. Instead, they seek to maximize what
and instead focus their attention on a limited set of objec- potential the locality may offer, in order to raise living con-
tives that can have a significant impact on the policies ditions and maintain an already frayed infrastructure.
implemented by the sectoral ministries. Another consequence of decentralization is the threat
of policy fragmentation. In Hungary, for example, the
Institutional adjustments adoption of a decentralization law doubled the number of
municipalities to 3,200. As a result, the average size and
In all CEE countries, environmental institutions need reform. population of municipalities is tiny. This miniaturization
The top priorities for institutional changes should be: (i) often makes it impossible to take environmental actions
shifting responsibilities for environmental management on the required scale, which is generally larger than the
from central to local authorities; (ii) increasing coordination territory of the municipality Since all connections
among ministries on environmental issues; and (iii) improv- between regions used to formerly be directed through the
ing the functional capacity of the environmental ministries. central government, it is now hard to create joint pro-
30
grams and implement appropriate environmental man- the ministry of agriculture or forestry). However, the central
agement functions. As a consequence, scarce resources are environmental ministries and agencies in Central and East-
used in a less efficient way, without proper coordination em Europe have tended to be ignored by other central
between neighboring regions. authorities. As a result, macroeconomic goals and policies
CEE countries need to create strong local arms for are set with little or no consideration for their potential envi-
national environmental agencies. In particular, they need ronmental impact. It is best to create formal mechanisms for
to create or strengthen the institutions which manage river cooperation between the environmental agencies and other
basins. Many CEE countries have expressed an intent to ministries and agencies. (For example, the U.K. has created
establish river basin management authorities; in some a "Green Ministers" Cabinet Committee.)
countries, these have existed for some time but need to be
strengthened. Financing mechanisms and channels have STRENGTHENING ENVIRONMENT MINISTRIES. Environ-
to be developed, and the responsibility for standard-set- ment ministries need an organizational structure which
ting established. Authorities should ensure-in collabora- emphasizes policy and coordination, rather than implemen-
tion with municipalities-that necessary recurrent costs tation (which is better left to regional and local institutions).
can be met from, among other things, user fees and pollu- One technique is to create a senior position to deal with pol-
tion charges. The French system of river basin agencies icy issues. Some western countries are devising an approach
may provide some interesting lessons to CEE countries to environmental management which considers the effects
developing their own systems (Box 4.2). on all media (air, water, wastes, etc.). In the Netherlands, for
Large-scale investments should await the establish- instance, the Ministry of Environment has created two sets
ment of well functioning river basin authorities which can of staff teams; one orgarized around clusters of issues (acid-
make sound decisions on the best ways to improve water ification, chemical hazards) and the other around target
distribution and quality. Where the development of these groups (refineries, farmers, builders). It is also important to
institutions is delayed, any proposal for substantial build a close working relationship with ministries of health,
investments in the water sector should, at the very least, many of which traditionally have been responsible for ambi-
be evaluated by experts with a brief to examine the impli- ent environmental monitoring. Such a relationship should
cations of the proposal for the river basin. As the example help to establish the vital link between health objectives and
of the Nitra River suggests (Box 4.5), a system-wide anal- environmental policies and investments.
ysis of priorities with regard to wastewater management The following institutional improvements are desirable:
alone has the potential for reducing costs by 80 percent.
Create a First Deputy Minister (or equivalent senior)
INCREASING INTER-MINISTERIAL COORDINATION ON position for Environmental Policy and Regulations to shift
ENVIRONMENT. Effective environmental policy requires attention from technical to economic policy issues, and
commitment to coordinated actions between economic and from day-to-day control to strategy development and pol-
sectoral ministries. Most of the countries of Central and icy implementation.
Eastern Europe have recognized the value of separating reg- * Design task oriented (rather than sector oriented)
ulatory responsibilities for natural resource management teams under the new Deputy, to connect existing depart-
from resource exploitation (e.g., by placing regulatory ments and to provide links between ministries.
responsibilities in a ministry of environment rather than, say * Create positions for financial analysts and econo-
Box 4.2 The French River Basin Agencies: An Example of Regional Water Management
There has recently been an important change in the system of water rights in France. A law of 3 January 1992 considers water as a
common heritage and thus closely associates the users of the country's six river basins in its management. It is based on an integrated
approach with a dual objective: satisfaction of user needs and conservation of the natural environment.
The central Ministry of Environment establishes basic water policy, lays down regulations and organizes overall planning in con-
sultation with, and assisted by, the Interministerial Water Council. Specific aspects of water management are entrusted to technical
ministries. The "Prefets," aided by territorial public services, are responsible for local control of water and fishing. They authorize
uses and discharges, apply legislation specific to pollution or dangerous installations, enforce compliance with ambient water quality
standards and approve project design documents related to water and fishing.
Overall coordination at the level of a large river basin is provided by the Basin Committee and approved by the national authorities.
The Basin Committee organizes meetings of users, local authorities and central government. It defines the policy and management of
the catchment area. It evaluates and judges the charges and programs suggested by its executive agency, the Water Agency. Since
1967, each of the six main river basins of the country has its own Water Agency.
The Water Agencies raise the money to support projects to clean up domestic, industrial and agricultural pollution through levies
collected from users in proportion to the quantity of water abstracted or consumed, and/or the amount of pollution discharged. The
levies are fixed by each Agency in accordance with priorities decided in each catchment area and after consultation with the Basin
Committee. They are redistributed to local councils, enterprises and farmers to support investments in water conservation and pro-
tection. The Water Agencies do not act as project managers for such investments.
Each Agency implements a five-year plan which defines priorities, determines the nature of the work to be carried out, and identi-
fies the amount of financing required. Agencies also collect data on water quality and on human activity in the catchment area, land
use, and other environmental parameters. The Agencies also contribute to research on various environmental issues.
31
mists to develop new mechanisms for environmental cesses. For example, in Poland 90% of environmental data
financing that do not require scarce central government is collected this way, and only 10% by monitoring. Moni-
management resources and that could build, for example, toring networks need to be extended in ways that ensure
on financial and human resources that are becoming avail- the compatibility, comparability and reliability of the data
able in the reforming banking sector.2 collected. The tendency for state-of-the-art technology to
* Develop carefully monitored programs for CEE local "drive" the system should be resisted-equipment should
and ministerial officials to spend time working side-by- be procured strictly to fill the information needs which, in
side with colleagues in Western institutions3, and for mid- turn, should derive from clearly established policy priori-
level officials and business executives from Western insti- ties. Statistical methods will continue to be important and,
tutions to work in CEE ministries and regional offices. in those cases, sample surveys should replace more costly
* Set up cabinet-level committees for environment and census methods.
development, bringing together the ministries of environ- After years of relative isolation, CEE countries need to
ment with economic and sectoral ministries. strengthen the links between their environmental infor-
* Establish temporary task forces of high-level officials mation systems and international arrangements. The need
to prepare the work for these cabinet-level committees, for objective, comparable information at the European
and provide career and other professional incentives to regional level underlies the request by Environment Min-
encourage participation. isters at Dobris for the first pan-European report on the
d Designate staff from the ministry of environment to state of the environment. Some steps have been taken to
participate in strategy development in sectoral ministries, link national and international systems, e.g. UNEP/GEMS
and invite staff from those ministries to Working Groups and UNEP/GRID, as well as UNEP/IRPTC. In the frame-
in the ministry of environment on relevant issues. work of regional agreements such as the Baltic Sea Hels-
* Within the ministry of environment, create capacity inki Convention, some upgrading and harmonization of
for evaluating policies (especially those that affect indus- monitoring systems has been achieved. Work with inter-
try, agriculture and infrastructure) and set long-term tar- national organizations like GEMS, GRID, UN/ECE, Euro-
gets for key environmental indicators. stat and OECD has helped improve the comparability of
environmental information. These efforts should continue
Environmental monitoring and information systems and should receive further impetus from the establish-
ment of the European Environment Agency.
Environmental information and the transition process. A As the role of the state has shifted from architect to reg-
substantial amount of environmental information is avail- ulator of economic activity, the main responsibility for
able in many of the CEE countries. However, much of it is producing environmental information in CEE countries
scattered, is of variable quality and accuracy, was collected has shifted from central statistical offices to environment
for differing purposes and is often not comprehensive in ministries. This has important implications for environ-
coverage or historical record. At the same time, the transi- mental information systems: the objectives they serve,
tion to democratic, market-based societies is fundamen- how information flows and to whom, the methods which
tally altering public and private sector expectations of, are used. Environment ministries must now coordinate
and demands for, such information. flows of information throughout and beyond government,
Environmental information is needed to set priorities; to reach the new users of environmental information. This
to monitor and enforce compliance with regulations; to will mean working with other government departments-
integrate policy; and to inform decision-makers, the pub- especially ministries of health which have traditionally
lic, the private sector, NGOs and interest groups. collected data on ambient environmental quality-and
The challenge is to redesign existing systems, upgrad- with the private sector and NGOs. They must also
ing the quality of existing arrangements where necessary, improve the flows of information between the central and
discarding activities which do not meet users' needs or local/regional levels of government.
which are not cost-effective, and progressively filling in
the most important gaps. One priority should be to DIFFUSION OF ENVIRONMENTAL INFORMATION. One of
strengthen the availability of quality information in those the most powerful forces for environmental improvement
areas with the greatest risks to human health and of irre- in OECD countries over the last 20 years has been
versible environmental change. Another priority is to increased public awareness and pressure. This contrasts
ensure that reliable environmental information is avail- starkly with the situation in CEE where information on
able for foreign and domestic investors on issues such as environmental conditions was often a state secret. When
the environmental conditions at and around sites where data was disseminated publicly, it was sometimes dis-
hazardous substances have been used or discharged. torted and falsified.
It is therefore crucial to improve the diffusion of envi-
TECHNICAL DESIGN OF INFORMATION SYSTEMS. Once ronmental information. In practical terms this may mean
the framework of the environmental information system producing regular state of the environment reports; develop-
has been established, attention should focus on the meth- ing environmental indicators; using multi-media commu-
ods used to collect data. In many CEE countries, much of nication techniques to reach a wide audience range; pre-
the environmental data come from questionnaires and cal- paring "user friendly," summary-type brochures on
culations based on the characteristics of production pro- specific resources and their management; promoting
32
information-sharing arrangements with key groups, such now discovering that after several years of 'studies,"
as professional bodies, business, NGOs and labor unions; financing for tangible projects has fallen far short of expec-
and providing environmental information/fact sheets tar- tations. This is generating increased skepticism about the
geted, for example, on specific regions, investors or man- value of such studies in both donor and CEE countries.
agers in different industrial sectors.4 Given the lack of Part of the problem is that donors do not understand
experience with such approaches in CEE, this is an area how the influence of central planning carries over to
where Westem assistance would be particularly useful. today, and CEE authorities have difficulty comprehending
arcane aspects of financing and procurement common in
POLLUTION MONITORING AND ENFORCEMENT. All of the West. Box 4.3 provides a synopsis of the investment
the countries of Central and Eastern Europe have fairly cycle under central planning. It highlights the fact that
extensive monitoring systems with usually hundreds of decisions on resource allocation tended to be subjective
ambient air and water quality monitoring stations in each and politically motivated, and took little notice of effi-
country. However, their operation is sometimes inefficient ciency and performance quality.6
since measurements are not always taken regularly or sys- Because of the "soft budget" approach and the scarcity
tematically, and monitoring is often carried out by differ- of equipment and materials, the investment pattern was
ent government agencies and scientific research institutes characterized by: (i) easy access to finance; (ii) rapid
and unevenly coordinated. At many monitoring sites for project design (with few studies, typically amounting to
air and water pollution, equipment is either not operating, less than 5% of project costs); and (iii) slow implementa-
is poorly maintained, or is being operated by people with tion. Implementation delays often led to a situation in
inadequate training. Calibration of existing monitoring which incomplete projects were prematurely put into
equipment is also poor, and the use of some manual operation. Subsequent deficiencies in operation and main-
equipment further compromises the consistency and reli- tenance resulted in proposals for new capital investments
ability of monitoring data. as the only solution to the accumulated problems. Fre-
Much can be achieved by promoting self-monitoring of quently, it used to be easier to launch a new capital invest-
continuing compliance5 by enterprises, with random spot- ment cycle than to improve the performance of what
checks by the authorities. As part of this process, the link- already existed.
age between monitoring and enforcement can be tight-
ened. One way that has been recommended in several SIGNIFICANCE FOR CURRENT PRACTICES. The legacy of
countries involves making the future frequency of monitoring past practices influences current investment behavior in
or spot-checks depend on the past record of compliance (e.g., three ways. First, polluters frequently oppose actions
sources found in violation twice in a row could be put on except in cases of emergency.7 Second, they prefer invest-
a watch list for frequent audits). With appropriate penal- ment-intensive solutions to low-cost improvements such
ties for violations, it has been demonstrated that high rates as better housekeeping. Third, the tradition of centralized
of compliance are possible even with tight budgets. investment decision-making on a case-by-case basis
In deciding on the number of monitoring sites and sta- (instead of within a broader national or local strategy)
tions, priority should be given to areas with the highest slows down the transition of responsibilities from the gov-
ambient levels of pollutants which damage human health. It ernrnient to the business community.
is better to have fewer but effective monitoring stations than
many poorly operating ones. This is especially true since The Western approach
these monitoring stations will be collecting the information
upon which future environmental policy, planning, and In contrast, the typical Western approach involves a series
management decisions are based. Successful implementa- of incremental steps over a relatively long period. Often,
tion of pollution charges and fines is predicated upon accu- 20% or more of total project costs are spent on project iden-
rate information and sound monitoring, and eventually tification, preparation, design and appraisal. In the case of
reaching agreements on transboundary pollution issues in an industrial enterprise, the process might work as follows:
the region will also depend on more reliable monitoring.
* review of plant operating procedures and manage-
Constraints on policy and project implementation ment practices, and/or diagnostic environmental audit to
determine the immediate priorities;
The legacy of central planning * "zero-cost" improvements involving management,
maintenance, and "housekeeping" modifications;
Abandoning central planning has proven to be much eas- * concurrently, small capital improvements, intended,
ier than learning to identify, prepare, appraise and imple- for example, to make a product using fewer or less toxic
ment policies in a decentralized but sound manner. For raw materials, or to redesign equipment so that the waste
many officials in Central and Eastern Europe, the routine can be re-used;
of centrally controlled resource allocation is so * at the same time, a detailed environmental audit,
entrenched, that ministries often continue to design examining long-term targets, including projection of likely
investment programs in the hope of obtaining financial changes in laws and regulations;
support from the West. In some cases, Western donors * detailed design study of technological improve-
have tended to reinforce old habits. CEE countries are ments involving control and process changes;
33
Box 4.3 The Project Cycle under Central Planning
Identification. The first phase in the investment process consisted of proving that action was economically feasible and consistent with
the planning priorities. Although the proposals typically originated with a municipality or an enterprise, the project proposals went
back and forth between four key governmental institutions-the Planning Committee, the sectoral ministry, the Ministry of Finance,
and the Ministerial Council-before it was approved.
Design. This phase tended to be short. All parties-the municipality, the sectoral ministry, and the design company-were equally
keen to proceed quickly once the construction project had been approved.
Typically, only 4-5% of total investment costs were allocated to complete the physical design work. This was considered enough
even when specific technical or geological problems arose. The specialists undertaking the design work were normally not expected
to carry out broader analyses involving a determination of least-cost solutions, changes in scale, etc. Outside consultants were used
only on rare occasions. The "economic" analysis tended to be confined to a simple financial statement of construction materials and
equipment. Once the design was completed, the product had to be approved by an investment control office, and by representatives
of the municipality.
Implementation. Although financing was available, projects frequently could not proceed because of shortages of construction materi-
als, qualified labor, necessary equipment, and supporting infrastructure. The consequences were as follows:
* the initial time schedule had to be revised, and a new starting date requested;
. the construction process proceeded in spurts-different tasks were carried out according to the availability of material and equip-
ment (often necessitating design changes);
* changing governrnent priorities resulted in a gradual reallocation of funding towards other projects, and the amount of funding
available fell short of the required amount;
* frequent postponements did serious harm to project quality. Often, the project began operation before construction was finished.
Temporary solutions tended to become permanent. As a result, the original plans became outdated, and part of the completed works
needed repairs;
* because they worked badly, projects could not generate sufficient revenues to pay for operation, repair and maintenance. They
were therefore chronically short of money-especially if they needed harcl currency-and further design changes were often made to
avoid the need to procure parts with foreign exchange.
Operation and maintenance-where practiced-was often unable to make up for the problems that had occurred during construction.
Sooner or later, the only solution to this accumulation of difficulties would appear to be new investments. It was often easier to start
all over again than to improve performance.
* implementation of these investments over a 5-7 year have failed to take account of the particular local circum-
period; and stances, and have been completed with minimal local par-
* extended phasing-in period of the new technology, ticipation. The nature of intemational assistance programs
including staff training and further small-scale investments has frequently tended to reinforce the old central planning
to fine-tune and optimize the new process technologies. habits, by pushing governments to propose specific
projects, at a time when the specific problems were not
In the West, "studies" in a broader sense make up a sig- clearly defined, and it was not clear how they should best
nificant and important aspect of the whole process of envi- be tackled. A large number of consultant studies in CEE start
ronmental improvement. They represent a way for plan- from the assumption that a particular project should be under-
ners, managers, and workers to work with each other to taken without examining possible alternatives that might be
identify and solve the problem. They generally lead to inno- more efficient. Moreover, such studies often ignore the lack
vations which can be justified on economic grounds alone, of institutional capacity and money which are essential if
but which also bring significant environmental benefits. the project is to be implemented.
Much more emphasis must be placed on the crucial
Local participation early steps in designing a project. These are as follows:
Environmental reviews and consultant studies are mean- * from the outset, there should be extensive consulta-
ingless unless they are carried out in close cooperation tion and agreement with the implementing agencies and
with the "clients." This is particularly essential in Central the project beneficiaries what environmental problem is to
and Eastern Europe, where enterprise staff need exposure be solved, and why. Policy reforms or structural changes
to new approaches, where local financial resources are that affect the viability of the proposed project should be
especially scarce, and where pre-packaged recommenda- clearly specified. A useful first step might be to disseminate
tions based on conventional Western technologies may be a standardized "fact sheet" which presents information
quite inappropriate. that is of particular interest to local stakeholders (Box 4.4);
Anecdotal evidence suggests that many of the consult- * feasibility studies should be better designed. The
ant studies that have been carried out in CEE countries terms of reference of such studies should address not only
34
Box 4.4 Proposed Project Fact Sheet
Title and summary
Objectives ('Problem to be solved")
Partners involved in developing project proposal
Donor (if any)
Implementing agency
Type and amount of financing (financial, consultancy, in-kind)
For technical assistance: roles of international and local consultants, and share of work
Progress to date
Future work
Report on assessment by implementing agency and/or involved parties: name of assessor and summary of results
Report on assessment by funding institution (if applicable): name of assessor and summary of results
For studies and technical assistance: steps taken to ensure implementation of recommendations
Source: East West Environment Ltd., Independent Assessment of Environmental Assistance to Central and Eastern Europe, April 1993.
the technical case for investment, but also the financial and of the European Commission specifically promotes links
institutional requirements for implementing the project. between Eastern and Western universities. Educational
International financial institutions could be involved assistance is available through the Regional Environmen-
when preparing terms of reference; tal Center in Budapest (Box 4.6), and through a US-EPA
* the chosen solution should be the most efficient one incentive for developing training courses. UNEP supports
(for such an analysis, see for example Box 4.5 describing Post-Graduate Courses in Environmental Management
wastewater management in the Nitra River Basin), and ide- together with Germany and UNESCO, and a Training Pro-
ally one that pays for itself (for example, by saving energy); gramme in Environmental Management for Industrial
A greater use should be made of local expertise. This Managers from CEE. These initiatives, however, often are
would help to develop local skills, and could provide a not well coordinated either by donors or by recipients.
better understanding of local circumstances and be more The specific type of assistance which is most urgently
cost-effective than using international expertsO To make needed will vary according to the circumstances of indi-
progress in this direction, some donors will have to face up vidual countries. The secondment of CEE country experts
to the problem of tied aid-more grant money should be to westem private and public institutions (and, where
made available for qualified local consultants; appropriate, of western experts to work in Central and
* the following points should be determined in Eastern European Environment Ministries) is one particu-
advance and in detail: how the project will be imple- larly effective mechanism, provided the experts are clearly
mented, which institutions will be responsible for it, how required on return to pass on their experience. Such sec-
it will be financed, what legal impediments may exist, and ondments would be especially useful for cross-sectoral
how the project fits into the existing policy framework. All issues, and for designing effective legislation and imple-
these issues can be dealt with only by the enterprise and/ mentation procedures. Assistance to upgrade economic
or local government involved, if necessary with help from analysis and other techniques to support decision-making
the central ministries. is a priority.
Only after these steps have been taken is it meaningful Environmental education and training faces a number
to proceed to technical feasibility studies. of common problems throughout the region:
Management capacity, training and education * public lack of interest, which results in low sales of
environmental publications and an absence of media cov-
The countries in Central and Eastern Europe have well erage of environmental issues;
developed educational systems and a highly qualified * lack of demand for environmental education and
labor force. For several years, enviromnental education has training (especially on a university level) because of the
been incorporated at all teaching levels, from pre-school to relatively low priority given to environmental issues;
university. However, the emphasis has invariably been on * lack of coordination between various ministries deal-
technical skills, as opposed to management and policy- ing with development of environmental education and
making skills, or general public awareness. Many different training and between educational institutions;
types of training in environmental management are * delays in providing curriculum development, teach-
needed, not only in environment ministries, but also in ing materials, textbooks, teacher-training programs, and
public and private industry. Programs are also needed to other essentials;
teach the public to become more actively involved in mak- * resistance to environmental training by those manag-
ing and implementing environmental policies. ers and government officials who are not involved directly
Western donors are providing some financial and logis- in environmental management, but who have a strong
tical support for environmental education, training and influence over economic reform (e.g. ministry of finance
collaborative East-West research. The TEMPUS program employees, factory managers, municipal authorities); and
35
Box 4.5 Cost-effective Wastewater Management in a River Basin: The Nitra River in the Slovak Republic
The Nitra is a tributary of the Wh River which enters the Danube downstream of Bratislava. Its catchment area covers about 5,000
km2 and includes about 600,000 inhabitants. Its length is about 171 km. The overall BOD discharge to the river system is about 10,000
tons/year, of which approximately 70% is of municipal origin. The water quality in the upstream reaches of the river is high. How-
ever, there is a gradual downstream deterioration due to municipal and industrial discharges. BOD may exceed 30 mg/I, an
extremely high value leading to dissolved oxygen (DO) depletion at times during the summer
The purpose of this example is to illustrate the cost savings of a regional least-cost policy:
Minimum Discharge Policy. The costs from imposing EU emission standards (BAT) on all municipal plants, corresponding to the min-
imum-discharge policy, are very high (capital costs US$64.7 million, and annual operation, maintenance and repair costs over US$14
million). Of course, water quality improves markedly (e.g., minimum DO concentration rises to almost 7 mg/l). This result provides
an upper bound on costs and water quality improvements.
Regional least-cost strategies designed to meet a uniform ambient standard (see table below). (i) Meeting a minimum ambient DO concen-
tration of 4 mg/l at all monitoring points (the limit for second-class water in many European countries), the least-cost policy has cap-
ital costs of US$13.2 million-one fifth that of BAT (a savings of over US$50 million in capital costs). (ii) To achieve a standard of 6
mg/l for dissolved oxygen (limit for first-class water), the least-cost policy implies capital costs of US$25.6 million-almost US$40
million less than the capital costs for BAT. (iii) Finally, if a water-quality goal not deviating more than 20% from the BAT policy is
accepted, the investment cost is still about US$23 million lower (the annual OMR costs are also significantly reduced).
Control technologies. The different policies use alternative mixes of the following six municipal wastewater treatment technologies:
M mechanical only;
CM chemically enhanced mechanical;
B biological;
BC biological with the dosage of chemicals;
BCN biological-chemical with de-nitrification.
Dewatering and anaerobic sludge treatment are assumed for sludge treatment for all alternatives. The example assumes that no sewer
construction is required due to the satisfactory state of the existing system. A cost summary for the different options is provided in a
box in chapter V
The analysis considers 11 major point sources: 8 municipal and 3 industrial. The municipal sources included contribute approxi-
mately 90% of the total municipal BOD load to the river; the industrial source, about 70% of the total industrial load. The remaining
loads are considered to be non-controllable sources.
Ambient Water Capital Cost OMR Cost DO Min TP Max TN Max
Quality Standard Control Policy (US$m) (US$m) (mg/l) (mg/i) (mg/l)
none base case 0 0 0.7 1.8 7.8
none min. discharge (BAT) 64.7 14.4 6.9 0.4 4.1
DO � 4 mg/l least-cost (i) 13.2 2.8 4.0 1.3 7.3
DO � 6 mg/l least-cost (ii) 25.6 6.6 6.0 0.7 6.7
DO26mg/l )
TP �0.5 mg/l least-cost (iii) 41.9 10.2 6.1 0.5 5.8
TN56mg/l
Symbols: DO - Dissolved Oxygen; TP - Total Phosphorus content of water; TN - Total Nitrogen content of water; OMR - Operation,
Maintenance and Repair; BAT - Best Available Technology; mg/l - milligram per liter
* lack of experience in Western practices of managing performance; (ii) review and redesign the teaching pro-
environmental training and research, which leads to what grams at all levels; (iii) develop teaching techniques
Western donors see as an inadequate use of available tech- tailored to the particular audience; and (iv) evaluate
nical and financial assistance, and therefore a reluctance to financial needs, available sources of funds, and the man-
increase support for these purposes. agement of money.
An educational training program should be developed
In order to promote efficient environmental educa- and implemented for high level decision-makers at
tion and training, the countries in Central and Eastern national and local levels. It should be designed in two for-
Europe need to take four steps. They should: (i) survey mats-for top-level ministerial and business staff (minis-
the existing institutions involved in environmental edu- ters and deputy ministers, and managers of big enter-
cation and training, and decide how to improve their prises) in a workshop format, and for middle level staff
36
Box 4.6 The Regional Environmental Center for Central and Eastern Europe (REC)
The REC is an independent, non-profit foundation, established in 1990 by Hungary, the United States, and the Commission of the
European Union. Seven additional donor governments have since joined these sponsors: Austria, Canada, Denmark, Finland, Japan,
The Netherlands, and Norway. Major activities include grants programs, an information exchange program that provides access to
environmental reports and databases, a junior fellowship program, and a REC initiatives program that brings together both Western
and Eastern groups to share their experiences in solving key environmental problems. The REC currently has offices in Bratislava,
Budapest, Bucharest, Sofia, and Warsaw.
(ministerial, municipal and business experts) in formal THE CURRENT IMPORTANCE OF ENVIRONMENTAL NGOS.
training sessions. Particular emphasis should be placed on Environmental NGOs raise public awareness, stimulate
providing training for enterprise managers in business changes in public attitudes and policies, put forward via-
planning, marketing and management skills. Enterprise ble alternatives and often implement them to set an exam-
managers should, at a minimum, understand the opportu- ple. In CEE, the role of NGOs is even more important than
nities for combining better financial performance with in the West, for the following reasons:
energy and water conservation.
Environmental training could be incorporated in all * A strong environmental movement ensures that
technical and financial assistance projects with environ- environmental issues remain on the political agenda;
mental impact. Elements of environmental education * the transition period in principle provides a unique
could also be integrated in training programs in a vari- opportunity to establish the basis for sustainable develop-
ety of subjects, such as in economics and management; ment, by avoiding the mistakes of the West. Environmen-
local government and administration; public finance tal organizations can play an important role in this regard,
and taxation; privatization programs; and economic drawing in part on the information available to them from
restructuring. colleagues in the West;
Increasing public awareness and commitment to active * environmental organizations can contribute substan-
environmental policy should be an important target of tially to strengthening the fabric of society. They can mobi-
education and training. It requires broad involvement of lize the population and motivate people to take on special
professional educators, NGOs and the media. The NGOs responsibilities.
in Central and Eastern Europe could be assisted in devel-
oping core teams for providing leadership, fundraising CONDITIONS FOR A STRONG ENVIRONMENTAL NGO-
capacity and logistical support in this area. SECTOR. Authorities and business need to recognize the
case for encouraging environmental NGOs to be partici-
Developing new partnerships and pants in the public debate about sustainable development
involving the private sector and the development of practical policies. NGOs should
be invited to the relevant advisory boards, delegations,
HISTORICAL ROLE OF ENVIRONMENTAL NGOS. In Cen- negotiations, etc. This should not be restricted to pure
tral and Eastern Europe, nature conservation organiza- environmental and nature conservation issues, but
tions existed for many years, but did not enjoy the lib- extended to all the areas that are related, especially eco-
erty to consider broader environmental issues. In the nomic questions. Western governments, multinational
1980s, environmental pollution and its effects on human institutions and western business should involve CEE
health were increasingly recognized as serious prob- NGOs in regular discussion about their activities in the
lems. People started to set up independent environmen- region.9
tal organizations, initially in Poland and Hungary. In the In particular, CEE governments should provide full
Soviet Union, the Chernobyl disaster caused a sudden access to environmental information and the right to par-
outburst of citizens' initiatives. By the end of the 1980s, ticipate in environmental impact assessments. In the West,
most CEE countries had independent environmental countries differ in the extent to which these rights are
organizations, legally or illegally. In several countries, granted. Environmental NGOs have proposed that U.S. legis-
they acted as a focus of opposition to the old regimes. lation and practice be followed with regard to access to
Many environmentalists played a role in the political information, and Dutch legislation and practice with
transition in 1989. regard to environmental impact assessment. In principle,
As a consequence, environment was high on the political this corresponds quite closely to the public disclosure
agenda of the first democratic governments and in several rules of the European Union.
cases, environmentalists became part of the new administra- The need for support to environmental NGOs in CEE.
tions and/or representative bodies. On the other hand, the Environmental organizations everywhere basically rely
traditional nature conservation organizations in most coun- on volunteers, but the economic situation in CEE has
tries suffered from the transition, which deprived them of made voluntary work difficult. In any case, environmental
their privileged status. As economic and social problems organizations need a professional nucleus and financial
increased, environmental organizations found it hard to resources. They are unlikely, at least in the short term, to
keep people involved. Moreover, the state of the environ- build a strong financial base from membership and indi-
ment could no longer be used to attack the old system. vidual donations. Governments could consider financial
37
support to such NGOs in order to assist them to play the Notes
necessary roles described above (as is being done by some
Western governments in their own countries, as well as by 1. Charles Weiss et al., Patterns of Environmental Management
the European Union). (The World Bank, Washington DC: 1995). This report reviews
In this context, the bilateral and European Union sup- the experience with regard to pollution management in selected
port to institutions like the Regional Environmental Cen- OECD countries.
ter (REC) or the Dutch Foundation for Environmental 2. Poland is experimenting with innovative mechanisms.
Contacts with Central and Eastern Europe should con- 3. Central and local government officials from CEE countries
tinue. These mechanisms are a good way to support envi- that visit Western countries would be required to agree to
ronmental NGOs in the region, and especially those based remain in their government jobs for at least, say, one year upon
on open membership. In addition, a number of Western returning.
and international NGOs have programs in CEE countries 4. A powerful tool used in the United States to raise awareness
that merit financial support. Western governments could by enterprises and the public is the so-called Toxic Release Inven-
consider directing part of their support to CEE through tory: Enterprises are required to publish the types and quantities
NGOs in their own countries Or organizations in CEE of the major toxic pollutants they emit. This has led many enter-
which are runlr own NGosntr. e or orgamzatlons m tprises to voluntarily reduce the amounts of pollution they emit.
5. Continuing compliance is distinguished from initial compliance.
Involving the private sector The latter usually applies to technology standards for which com-
pliance can be inspected before a plant starts operation (see the
discussion of New Source Performance Standards in chapter III).
In the long run, the private sector will play the key role in
Central and Eastern Europe in determining what kind of 6. In Bulgaria, for example, sharp fluctuations in the structure of
environmental capital investments can be observed between 1980
environmental conditions will prevail. The volume of pro- and 1989. The share of air protection investments dropped from
duction and financial commitment by the private sector is almost 29% in 1980 to only 2% in 1985, and then rose to 20% in 1989.
likely to far outstrip that of the public sector within the 7. There are important exceptions. Quite frequently, enterprise
next 20 years. This trend is being reinforced by the growth managers understand that selected process changes would be in
of foreign direct investment. the financial interest of the firm as well as reduce pollution emis-
Over the years, private industries in OECD countries sions. However, shortages and constraints on the availability of
have found it to be in their own interest to pursue environ- foreign exchange have prevented them from taking the desired
mentally sound policies. Indeed, some industries pride action. If (public or private) enterprises are to be responsible for
themselves as being leaders in environmental manage- their operation, they must have equal access to financial
resources-whether foreign exchange or domestic finance-as
ment. In the same spirit, the International Chamber of the government.
Commerce has developed World Guidelines on the Environ-
mentandtheBusnes ChaterforSusainbleDevelopment. 8 hsde o ml htseilpeeec hudb ie
ment and the Busintess Charter for Sustainable Development. to local consultants. If the latter are to meet international stan-
In Western Europe, the chemical, electricity, natural gas, dards, they should, in general, compete with international con-
coal, and petroleum industries have all prepared various sultants. On the other hand, governments and enterprises
codes of conduct. At a conference in Budapest in Novem- should insist much more on joint activities between interna-
ber, 1991, a set of Guiding Principles on the Environment, tional and local consultants, with clear terms of reference based
Industry and Investment Decisions in Central and Eastern on a strategic approach, and with careful supervision.
Europe was put forward by the European Commission as a 9. Participation of NGOs is vital to ensure public knowledge of
basis for further action. issues that are of immediate concern-and the possibility to take
action where needed. The rights of NGOs should not, however,
be confused with the democratic rights of all individuals in soci-
ety, whose interests may not always be represented by NGOs
representing a special interest.
38
Chapter Five
Priorities for Environmental
Expenditure,
While market reforms will eventually take care of a large part of the emissions causing the most serious health and economic damage in
the region, public investments will be needed to speed up the process of environmental improvement. This should be complemented by
two other categories of expenditures required to make best use of the available resources: (i) Funding to cover the operational, mainte-
nance and repair costs of existing public environmental services, especially the treatment of drinking water and sewage, the collection
and disposal of municipal waste, and maintaining inventories of and monitoring the disposal of hazardous, toxic and nuclear wastes;
and (ii) "win-win" investments which can be justified on economic grounds alone but which bring substantial environmental benefits.
Energy conservation, low input and low waste technologies all fall into this category as do expenditures on "good housekeeping" and
minor plant improvements which reduce spills, leaks and material use.
Beyond this, the priority categories for environmental expenditures are:
* Immediate investments to address the health problems identified in Chapter 11. In areas with poor air quality the initial
priorities should be better dust controls for non-ferrous smelters and steel plants and the substitution of gas for coal in district heating
plants and households. With regard to water pollution, pre-treatment of industrial wastewater where heavy metals or toxic chemicals
threaten the quality of ground or surface waters, and measures to reduce excessive levels of nitrates in rural drinking water supplies are
the priorities. For hazardous wastes the priority must be to ensure that leachates from disposal sites do not contaminate ground or sur-
face water sources. Support could be provided to reinforce and accelerate environmental investments by enterprises in response to new
environmental policies such as the reduction of saline water discharges by mines, industrial wastewater treatment in pulp, textile and
chemical plants, and measures to reduce discharges of toxic materials from chemical and petrochemical plants.
* Efficient investments to deal with urgentproblems specific to different countries. These include appropriate wastewater treat-
ment to protect valuable coastal, tourist and ecological resources, the phased completion of incomplete wastewater treatment plants
where this will have the most impact on water quality, and programs to prevent irreversible damage to important ecosystems.
* Low cost measures to address long term environmental priorities where prompt action can avoid the need to spend much larger
sums in future. Phasing out leaded gasoline and reducing vehicle emissions, funding applied research on the conservation of ecosys-
tems, and the development of systems to collect, interpret and disseminate environmental data all fall into this category.
This chapter focuses on environmental expenditures and investments will move up the priority ranking later in this
investments whose primary purpose is to mitigate the envi- decade as the implementation of the Action Programme
ronmental damage caused by past or current practices, reduces the damage associated with the most urgent prob-
though they may bring simultaneous economic or other ben- lems. Thus, the exclusion of particular investments or prob-
efits. Further, it identifies only those expenditures which will lems from the list of priorities discussed below does not
address, over a period of 5-7 years, the urgent environmen- imply that they are unimportant, but rather that they should
tal priorities identified in Chapter H. Other environmental have lower priority in the allocation of scarce resources.
39
As discussed in Chapter III, the process of capital by developing plans based on large investments in new
renewal associated with industrial restructuring and technology and sophisticated controls. However, the
recovery from economic recession will lead to the replace- resources to fund such investments have not been avail-
ment of out-dated and polluting technologies by modern able and it is, in any case, often not clear whether the gen-
industrial processes with much improved environmental eral economic performance of the industries concerned
performance. Pollution charges and stricter environmen- would warrant the commitment of the capital that is envis-
tal regulations will direct private investment towards aged. It would be better to take a number of smaller and
more efficient and less polluting technologies. This will, more manageable steps which might make a substantial
however, take place over a period of 15-20 years because improvement to the environmental performance of heavily
the countries of Central and Eastern Europe cannot afford polluting industries, such as the following:
to replace their capital stock in a much shorter period.
The industrial investments outlined below are * Standard "good housekeeping." Energy and environ-
intended to mitigate the impact of continuing to rely upon mental audits can identify a range of managerial and pro-
old capital equipment in the intervening period and to cess changes which would reduce energy consumption
bring forward investment in less polluting technologies. and emissions at negligible cost. The installation of ther-
Nonetheless, the limited resources available mean that mostats and other simple controls can improve combus-
capital renewal will remain the most powerful agent of tion efficiency, reduce spills, leaks and waste of raw
environmental improvement in the medium and longer materials or heat losses. Increasing energy and raw mate-
run. Effective economic reforms and good economic poli- rial prices or the imposition of pollution charges provides
cies are therefore essential to the health of the environ- a strong incentive for managers to consider the financial
ment, as well as of the economy and society. benefits of such measures and to spend the money on any
The industrial sector in Central and Eastern Europe equipment and training that may be required. These are
uses technologies and produces a composition of output mostly "win-win" investments which can be justified on eco-
that were characteristic of the industrial market economies nomic and even financial grounds alone2 but which bring sub-
30 or more years ago. Over the last 20 years the Western stantial environmental benefits;
countries have invested in capital deepening, adopting more * In-plant improvements of process technology or to con-
energy efficient and less polluting technologies which trol emissions that can achieve a substantial reduction in
make better use both of their capital resources and the the concentration and volume of emissions. Low input
skills of their work forces. On the other hand, the formerly and low waste technologies all fall into this category.
centrally-planned countries concentrated on capital widen- Good examples are found in the area of industrial waste-
ing, achieving higher levels of output by building more water treatment. Simple chemical or biological treatment
and/or larger plants rather than by improving the level may allow a much higher proportion of water to be recy-
and quality of output from existing plants. New technol- cled within the plant-reducing the volume of dis-
ogy was introduced in a discontinuous manner, often by charges-or may cut down the quantity of suspended
licensing or imitating Western know-how, in the form of solids and organic waste that is discharged into rivers.
new plants. There is little evidence of the continuous Recovery techniques can also be applied to solid wastes
growth in factor productivity associated with both learn- from metallurgical plants, power stations and mines;
ing-by-doing and investment in small-scale enhancements
to both physical and human capital that has proved to be * End-of-pipe controls with a modest cost. The standard
the mainspring of economic growth in market economies. example of such measures is the installation of better dust
filters in metallurgy or metal-working plants to reduce the
"Win-win" investments and worker training discharge of metal dusts in flue gases. A range of non-fer-
rous metal smelters in Central and Eastern Europe are
As concern has grown about the damage to human health notorious sources of lead, zinc, nickel, cadmium and other
caused by industrial emissions, industries have responded metal dusts which damage the health of the population liv-
Box 5.1 Dealing with large, old industrial plants
Whether to invest in pollution control in the large old industrial "dinosaurs" depends on economic factors. The choices are (i) to close
down such plants as rapidly as possible; (ii) to permit them to continue to operate for a limited period as in the past; and (iii) to permit
them to continue to operate provided that environmental improvements are implemented. In almost all cases, modest environmental
investments could generate a good return within 2-3 years. For these, the cnucial point is that the choice should be restricted to (i)
and (iii). If the government (or the enterprise) is unwilling to finance such improvements, then this amounts to a decision that the
social benefits of keeping the plant open do not outweigh the costs, and the plant should be closed. If that is politically impossible,
then the government should fix an absolute maximum term for the continued operation of the plant which is substantially less than
the payback period for potential environmental investments.
This approach allows governments to make clear choices about the trade-off between the social costs of unemployment and of con-
tinuing environmental damage. It suggests, further, that all public enterprises should be subject to a gradual tightening of enviTon-
mental conditions for continued operation under which managers are held accountable for making progressive improvements in
environmental performance while they continue to receive government financial assistance.
40
ing in surrounding areas. By contrast, dust filters and other treatment of hazardous, toxic or nuclear wastes is far
controls in lead smelters in the United States are able to beyond the reach of what CEE countries (or, for that matter
ensure that those living no more than 1 km from the source even the wealthiest OECD countries) can afford, but this
do not have significantly higher levels of blood lead than should not preclude carefully monitoring the disposal of
those living at a much greater distance. Similar patterns such wastes, maintainign inventories, and undertaking the
can be found for emissions of benzene and other toxic most urgent remedial measures where human health is at
organic chemicals from oil refineries, petrochemical and immediate risk.
other chemical plants. While it may not be possible to
achieve such high levels of emission reduction without Immediate priorities for public investment
large investments in redesigning plants or processes, sig-
nificant improvements can typically be made at low cost. Analysis of environmental health issues carried out in the
course of preparing the Action Programme, and initial
Thus, new capital investment is only one part of the comparisons of the costs and environmental benefits of
way that economic change will bring about environmental various investment programs, indicate that the following
improvement. Indeed, it may not even be the most impor- sets of measures should receive priority in the allocation
tant part. The case studies reported below and many other of investment resources for environmental improvement
examples consistently emphasize the importance of "good over the next 5-7 years. This is a summary list; the various
housekeeping" and of plant hygiene. This is a manage- issues are described in more detail in Annex 6 of this
ment issue. No amount of investment in better processes report and in the study on Sectoral and Local Environ-
or environmental controls will solve the environmental mental Expenditure Priorities prepared in support of the
problems of Central and East Europe countries unless it is EAP.
backed up by effective supervision and maintenance.
On the other hand, major improvements can be made (a) The installation of dust collection systems and filters
with minimal resources, simply by ensuring that plant to non-ferrous metal smelters which are located within
and equipment is properly maintained, that environmen- 5 km upwind of significant centers of population.
tal controls operate according to specification, and that Priority should, in particular, be given to lead, zinc,
leaks and spills are promptly dealt with. In large part this copper and aluminum plants.
is a matter of commitment to and pride in achieving a bet- (b) The installation of equipment to reduce emissions of
ter environmental record. Trivial but symbolic steps such dust, smoke and soot, and carbon monoxide from
as publicizing the achievement of plants or work groups iron and steel plants, especially those relying upon
which make significant environmental improvements can open hearth furnaces.
produce surprisingly large benefits. It follows that invest- (c) Investments either to replace coal by gas or to permit
ments must be reinforced by expenditures on manage- the burning of smokeless solid fuels in district heat-
ment and worker training and other programs to ensure ing plants, commercial premises and households in
that they bring the best possible returns in terms of those towns and cities where the average concentra-
improvements in environmental quality. tion of particulates during the winter months
exceeds 150 _g/m3.
Operation, maintenance and repair (OMR) (d)The provision of facilities to pre-treat the wastewater
discharged by small and medium-sized industrial planits
It is frequently argued that safe drinking water, well-func- where contamination of groundwater and rivers by
tioning public transportation systems, and collection and heavy metals is a significant problem, for example in
disposal of municipal waste are "basic" rights. At the same towns and cities with a concentration of tanning,
time, the priorities described here give the impression that electro-plating and other metalworking plants.
there should be no investment in these areas. This impres- (e) Assistance to facilitate the proper installation of domes-
sion derives from a confusion between capital investments tic septic tanks and the appropriate disposal of manure
and expenditures to cover ongoing OMR costs. Based on the from intensive livestock operations in rural areas where
general evidence throughout Central and Eastern levels of nitrates in drinking water drawn from shal-
Europe-and accepting that there may be significant low wells typically exceed 10 mg of nitrate-N per
exceptions in different countries-water supply systems in liter.3
urban areas require much better maintenance, but not nec- (f) Measures to ensure that the disposal of domestic, toxic,
essarily new capital investments (water supply in rural nuclear and other hazardous wastes is carefully moni-
areas figures as a high priority in the list below). Similarly, tored and that leachates from disposal sites do not
public transport services should be maintained at an ade- contaminate ground or surface waters, especially
quate level, but the evidence suggests that major new cap- sources used for the abstraction of drinking water
ital investments may not be warranted in the short-to- supplies.
medium term. Municipal waste management is a growing
problem, but expenditures in the short run should proba- Box 5.2 and Table 5.1 provide examples of major
bly focus on better compaction equipment and landfill sources of pollution and identify some of the pollution
management to ensure that existing landfills are used in a control measures which are likely to offer the most cost-
more efficient and safe manner. Finally, the systematic effective opportunities for reducing airborne emissions of
41
Box 5.2 The diversity of pollution problems and remedies
This box draws on selected case studies to illustrate the diversity and site specific nature of pollution problems and their possible rem-
edies in the sectors studied.
The case study at Trebovice power and district heating plant in the Czech Republic revealed that three of the eight boilers at the plant (represent-
ing 65% of total capacity) are only fitted with mechanical collectors. The remaining boilers are fitted with ESPs, some of which have been
operating for 15-20 years and are in poor condition. Parts such as collecting and discharge electrodes are likely to be worn out. Replacement
of existing mechanical collectors and repair and modernization of existing ESPs would substantially reduce particulate emissions.
During the visit to the Kosice iron and steel plant in Slovakia, burnt lime fines were being deposited on the iron ore beds. As a result, the
area around the yard was being covered with dust, despite moderate wind conditions. This material would be better returned to the sinter
plant landing yard which is covered. All four units of the sinter plant have cyclones fitted, while two have ESPs fitted to the sinter breaker
and screening areas but not the sinter exhaust stack. As a result, emissions from the stacks are dirty and will almost certainly contain rel-
atively large amounts of fine oxide dust. The solution to these problems would involve changes in operating practices to improve sinter
quality, and replacement of the ignition and filtration systems. The total cost of these measures is estimated at $12-18 million. The coke
ovens at Kosice display signs of age and need repair. Most of the doors were leaking and there was a constant haze emanating from the
top of the ovens. Detailed studies would be needed to determine the precise measures needed to reduce the emission levels but replace-
ment of rehabilitation of the coke ovens may be necessary in the medium term. This would cost $100 million or more for Kosice.
At the Copsa Mica lead smelter in Romania much of the lead reaching the environment comes from the concentrate stage and handling.
The site needs cleaning to remove deposits of concentrate that have accumulated around the site. Enclosing the storage building and
equipping handling operations with water sprays and filter systems would substantially reduce emissions. These measures would
cost about $0.5 million. Simply closing the side of the existing concentrate building would give a worthwhile impovement at a cost
of less than $20,000. The installation of better process control would improve overall process and energy efficiency, and hence reduce
pollution. Basic instrumentation and control systems would cost about $0.5 million. Other priority actions at Copsa Mica include:
replacement or repair of the ESP fitted to the acid plant which was not operational during the visit and obviously had not been so for
sometime; use of the hoods fitted to lead kettle operation which can be swung into position over the kettles, but which were not being
used during the visit; and replacement of torn filter bags in existing bag houses.
At the PO Kaustik plant at Volgograd in Russia, a new membrane process plant has been delivered to the plant but the funds are not available
for its installation. This plant would replace the existing mercuiy and diaphragm units, thereby eliminating mercury and asbestos pollution.
At the Carom SA organic chemicals plant at Onesti in Romania the SBR plant needs attention to the dryer section which is leaking sty-
rene and butadiene. This could be improved by improved venting and control of vapors. The investment required would only be
about $200,000. Generally, better monitoring at the site would identify leaks and enable appropriate repairs to be made.
The case study at the Plock refinery and petrochemicals plant in Poland identified a number of cost-effective measures to control VOCs.
These include: improved sealing on asphalt oxidation to reduce emissions of polyaromatic hydrocarbons (PAHs) at around $1 million;
modernization of existing equipment to better engineering design, venting of process units to appropriate devices such as flares, float-
ing roof tanks etc for approximately $5-10 million; and improving maximum enclosure and venting of air from around the loading
point to a control device at a cost of around $200,000.
pollutants harmful to health in the major industrial treatment plants either in the upstream sections of
sectors. seriously polluted rivers or where the bacteriologi-
cal quality of water downstream of large towns and
Investments to deal with urgent problems specific to cities is particularly poor or where discharges are
different countries causing an unacceptable decline in the quality of
water in rivers or lakes from which drinking water
The foregoing priorities apply generally to all of the coun- is abstracted.
tries in the region, though the size of each problem differs (i) Implementation of sustainable rural development
from country to country according to their pattems of projects in defined areas of high biodiversity and
industrial production and of fuel consumption. There are, great ecological importance that are under threat.
in addition, other areas for investment which should Such projects should combine better management of
receive priority in individual countries because the envi- protected areas with ecologically benign agricul-
ronmental problems concerned are particularly damaging tural/forestry, tourism and other activities.
in specific circumstances. Among the investments that
might be undertaken on this basis are: Low-cost measures to address longer term
environmental problems
(g) The installation of municipal wastewater treatment
plants in towns and cities close to important tourist To complete this list of short term investment priorities,
or wildlife areas, especially on the Adriatic, Baltic there are certain longer term environmental concerns
and Black Sea coasts, Lake Balaton, the Mazurian whose future cost can be greatly reduced by relatively
Lakes and the Carpathian and Rhodope Mountains. inexpensive measures taken now. The most important of
(h)The completion of partially constructed wastewater these longer term priorities concerns the prospective dete-
42
Table 5.1 Priorities for Pollution Control
Sector Plant Pollutant Technology/Technique
Power and district heating Boilers Particulates ESPs or bag houses
Refineries and petrochemicals Catalytic cracker SO2 de-SOX catalyst
Ethylene VOCs Improved vesting, good housekeeping
BTX VOCs Floating roof tanks
Inorganic chemicals Chlor-alkali Mercury Good housekeeping
N fertilisers Particulates Prill scrubber
Organic chemicals LDPE VOCs Improved venting
EDC/VCM/PVC VOCs VCM stripping columnn, residue incineration
Butadiene VOCs Improved venting
Ethylbenzene VOCs
Styrene VOCs Good housekeeping, residue incineration
Polystyrene VOCs Improved venting, good housekeeping
SBR VOCs Improved venting, good housekeeping
Iron and Steel Raw materials handling and storage Particulates Water sprays, gas collection and cleaning system (bag
house)
Coke ovens Particulates Repair and rehabilitation
Steel making Particulates (stack gases) Gas collection and cleaning system (bag houses or
scrubbers)
Non-feffous metals Raw materials handling and storage Particulates Water sprays
Smelters Particulates Gas collection and cleaning system
Pulp Chemical pulp VOCs Gas collection and cleaning system
H2S Gas collection and cleaning system
Small boilers and households Boilers, coal stoves Particulates, SO2 Basic insulation measures, boiler control, fuel switching
Particulate control devices (boilers), replacement coal
Particulates stoves
rioration of urban air quality caused by the growth in traf- However, there is a case for extending short term govern-
fic that will take place when the economies of Central and ment (or external) support to finance the installation of bet-
Eastern Europe start to grow again. Pollution from mobile ter pollution controls in a number of highly polluting indus-
sources is not currently a primary concern in most towns tries. The question that must be asked for each plant is
and cities because of the high level of exposure to lead, whether the stream of future income from the plant has a
articulates and other air pollutants from stationary positive present value if the value of its existing capital equip-
sources. However, in cities such as Budapest, Moscow ment is treated as a sunk cost.4 If it does, the government
and even Warsaw, traffic is already or will soon be one of could make a contribution to the cost of environmental
the main contributors to the moderate or sometimes high investment, in the form of either grants (based on the reve-
ambient levels of air pollution that they experience. The nue from fees) or (preferably) loans paying realistic real rates
following expenditures would have a high return both by of interest which must be repaid over a period of 5-7 years.
reducing current emissions and avoiding much worse Plants with negative net worth might still be kept open
problems in future: temporarily if a sufficient premium were attached to
maintaining employment or output in the industry or
(j) The establishment of vehicle testing stations com- locality. There would then be a trade-off between the
bined with facilities for better vehicle maintenance amount spent on environmental improvement and the
in order to enforce reasonably strict emission stan- length of time that the plant is permitted to operate. A
dards for the commercial diesel vehicles-buses and simple system of categories could be established which
trucks-which are the principal mobile source of takes account of the damage caused by the plant. Those in
particulate emission; the worst category might be required to close down within
(k) A program to phase out leaded gasoline and to two years, while those causing less damage might be
require that new vehicles (automobiles, buses and allowed to continue to operate until 1996 or 1998. By suit-
trucks) should, from some appropriate future date, able measures, plants could move themselves into a
meet the emission standards laid down by the EU. higher category and thus extend their permitted life, even
Most of the cost of these measures will be borne by if they had no permanent future. Again, government
refineries, automobile manufacturers and their cus- loans can be justified by the various factors which limit
tomers, but resources for technical assistance and to access to capital markets.
deal with special transitional problems would speed The prospective competitiveness of and demand for
up the implementation of these programs; the output of many industrial plants is highly uncertain.
(1) Resources to fund applied research into a number of However, few sectors will experience a medium term
environmental problems for which solutions may be decline in demand of more than one-half, so it is possible
very costly (e.g., treatment of nitrate pollution) or to devise a simple ranking mechanism which could be
where implementation of remedies has been diffi- used to identify those plants which would be eligible for
cult. Such research could focus on ecologically immediate environmental investments. A scheme along
acceptable agriculture and forestry practices-espe- the following lines could easily be introduced:
cially their economic costs and benefits. Funds
could also be given to support specialized research * Establish an Industrial Pollution Fund (IPF) to finance
institutions engaged in important conservation environmental investments in the most polluting indus-
efforts (e.g., botanical gardens); and to undertake trial sectors: metallurgy, chemicals, pulp & paper, non-min-
well-defined studies on the ecological damage eral metal products. The IPF would provide a combination
caused by large-scale development projects such as of grants and loans amounting to not more than, say, $2.5
dams, canals, and large tourism developments; and million to finance high priority environmental invest-
(m)Resources to strengthen the collection and dissemi- ments.5 Most probably, it should operate as a specialized
nation of data on the state of the environment and unit under the National Environmental Fund reporting
natural resources. Particular attention should be jointly to the Ministries of Environment and of Industry;
paid to the forms of environmental damage and * Enterprises should be eligible for assistance from the
related issues which define the main priorities in IFF if they are in the top 50 percent of all enterprises in
this Action Programme. their sector on both of two criteria-their profitability (rev-
enues minus material and labor costs as a proportion of
Financing environmental investments total revenues), and the average youth of their capital
equipment;
As a general principle, governments should contribute to * The IPF should retain consultants who would carry
the cost of environmental investments in enterprises only out a rapid environmental audit of any plant where an
on condition that the enterprise also makes a contribution investment has been proposed by an enterprise satisfying
and if the cost of the investment is judged likely to be the criteria above. The consultants should be asked to
recovered over the remaining economic life of the plant. assess whether the proposed investment will have the
In effect, the latter condition means that investments effect of substantially reducing emissions of pollutants
should not be made in plants which are not viable at which threaten the health of those working in or living
world prices. Such plants should be shut as soon as near to the plant and whether the proposal is a cost-effec-
possible. tive method of reducing such emissions.6 Such an assess-
44
Box 5.3 Checklist for cost-effective municipal wastewater investments
In order for municipal wastewater treatment investments to succeed, it is clear that there must be a sound financing plan, and that the
right institutions must exist to ensure the sustainable operation of the investment.
It does not make sense, however, to invest a large amount of effort in this aspect if the benefits of the underlying investment are
small compared to the costs. For example, if the installation of secondary wastewater treatment would cause little or no improvement
in the ambient water quality, it may be better to defer the investment for the time being or limit it to primary treatment. This would
be much less expensive and would not involve the large operating costs which require complex revenue raising arrangements to
ensure the availability of recurrent financing.
The following is a checklist of factors that should be considered before proceeding with municipal wastewater investments:
I Have measures been taken to reduce domestic and industrial water consumption?
I ] Has industrial wastewater been pre-treated?
I Is it possible to re-use and/or re-cycle water?
I Can the proposed investment be analyzed in a river basin context? If so, have the merits of this investment been compared with
the benefits from different kinds of investments in other parts of the river basin? Note that a least-cost solution to achieve
improved ambient water quality may involve different (or no) technologies at different locations.
I ] Has the most cost-effective technology been used to achieve a desired ambient water quality improvement?
I Has there been an economic analysis to assess the benefits (in terms of ambient water quality) that could be achieved by phas-
ing investments over ten or more years?
ment could be completed within a month and the proposal egory of problems deserving immediate attention. For
should be approved if the report is positive; chemical plants-category (n)-there are real but unquan-
* Enterprises should be required to match finance pro- tified hazards to health. Plant employees are at greatest
vided by the IPF dollar for dollar. Most of the finance risk, but emissions of mercury, VCM (vinyl chloride mono-
should be provided in the form of loans repayable over 5 mer), and BTX (benzene, toluene and xylene) can pose a
years at modest real rates of interest-say 5 percent per significant threat to the health of people living close to
year; chemical plants. The exposure of workers should be cov-
* External donors could contribute to the IPF itself and ered under the normal provisions of occupational health
second staff for periods of at least 6 months to train those and safety legislation, while action under environmental
responsible for carrying out the rapid environmental legislation is required to deal with off-site exposure.
audits and for evaluating the financial status of enterprises. In all cases the implementation of "good housekeep-
ing" procedures will greatly reduce emissions, which tend
In addition to the type of expenditures classified under to originate from leaks and spills that are allowed to per-
(a), (b), and (d), an Industrial Pollution Fund operating in sist. Such procedures will, usually, pay for themselves
this manner might also finance: many times over by reducing losses of raw materials or
products and by lowering the costs of standard opera-
(n)The installation of equipment to reduce leakages of tions.
heavy metals, toxic gases and discharges of toxic The government may need to bear a larger share of the
wastes-to the air, in wastewater or in solid cost of environmental improvements for small industrial
wastes-from petrochemical and other chemical operations than for larger plants. This is because of the
plants, especially those located close to substantial difficulty of monitoring their emissions, which makes the
towns and cities; application of economic incentives or regulations much
(o)The provision of industrial wastewater treatment more difficult. Improvements in environmental perfor-
facilities in plants-for example in the textile and mance may also be less closely linked to general efficiency
pulp and paper industries-which discharge heavy gains, so that the enterprises concerned will be more reluc-
loads of BOD and other pollutants into receiving tant to invest in eliminating or treating their emissions.
waters which are relatively clean and lie upstream of More generally, government investments should be concen-
large centers of population; trated in the medium term on dealing with emissions from small
(p)Investments to mitigate discharges of saline water industrial units, the service sector and households. They must
from mines in countries such as the Czech Republic, be used to discourage coal burning, to encourage domes-
Poland and Ukraine, provided that the costs of such tic energy conservation and to find low cost methods of
investments are recovered over the long run from treating the large volumes of sewage that now pollute riv-
the mines responsible for salt water emissions. ers and groundwater. These are measures which eco-
nomic transformation will not bring about and which typ-
None of the cases under (o) and (p) involves serious and ically require intervention by the public sector.
continuous damage to human health, though the economic Most small scale users of coal are very happy to switch
losses caused by saline water are large. However, in cases to gas, even if it costs more, because of the convenience
(n) and (o) evidence that effluent discharges are contami- and labor-saving that it allows. The principal constraint is
nating drinking water sources with heavy metals or toxic the availability of capacity in local gas distribution net-
chemicals is sufficient reason to move the issue into the cat- works to meet a widespread demand for household heat-
45
Box 5.4 Biodiversity conservation-short-term investment examples
The following sites have been selected on the basis of their regional importance for biological diversity and vulnerability to immediate
threats which would result in irreversible damage. Further, the approach proposed demonstrates the twin advantages of: (i) conser-
vation of the biological and landscape (including cultural) diversity and, (ii) income-earning activities for local people. A mix of inte-
grated activities are required including direct short-term and medium-term investment, technical assistance for policy and institu-
tional support, and training. Negotiations between international donors and a range of national and local government departments
should be able to fashion appropriate financing packages. The projects offer an opportunity to put into practice and test the calls from
UNCED for sustainable development and to apply the principle of cost effective prevention of degradation in Eastern and Central
Europe rather than expensive "cure" as is the case in western Europe.
Albania: Karavastas Lagoon/Dijvaka Pine Zone. This area is located on the coast 100 km south of Tirana. It has world importance
biologically by virtue of a nesting colony of Dalmatian Pelican and is said to have several endemic plant species, including orchids,
but a detailed survey is required to confirm this. The occasional occurrence of the Mediterranean Monk Seal and White Tailed Eagle,
both threatened on a regional scale, have been reported. The site is threatened by inappropriate tourism, agriculture and hunting and
is extremely vulnerable in that there is no effective legal protection or management plan, and the economic plight of the local popu-
lation encourages short-term exploitation above the carrying capacity of the natural systems.
Bulgaria: Strandja Mountain and Adjacent Coastline. The overriding natural value of the area lies in its forests which cover more than
81,000 ha. Eastern Europe contains areas of forests that are now unique in Europe. There are 15 endemic species and Strandja is the
only place in Europe where the wild Medlar tree is found. All five of the reptile species at the site are in the International Red Data Book.
Regeneration of natural forest in the place of plantations depends in part on grazing, yet there is serious decline in the size of the
human population (1.09% a year between 1975 and 1985). The area also has forty historically interesting houses and churches which
have been identified for restoration. The region is suffering from encroachment of ecologically damaging tourism along the coast
(sand dunes have already been destroyed and marshes polluted), inappropriate forestry methods, new land-ownership arrangements
in the absence of land use guidelines and management plans, and water pollution from pig farms. The depressed economic situation
renders the area extremely vulnerable to unsustainable exploitation of the natural resources.
Croatia: Lonjsko Polje Nature Park, Middle Sava Valley. The park covers one of the largest semi-inundated areas left in Europe (50,560
ha). Its regional importance is particularly clear in threatened breeding of migratory bird populations (e.g. spoonbill, white stork) but
also in its otter population and waterplant communities. There are four important, interdependent habitat types: alluvial forests;
open regularly flooded grassland; traditional farmed landscapes and fishponds. The threats include drainage and transformation of
wetlands into arable land; over-intensive use of forests; air and water pollution from nearby industrial plants and intensification of
agriculture; alterations in the hydrology through construction of dikes; and proposed dam construction and transport routes. Main-
tenance of the landscape and biological diversity depends on solving the economic reasons for migration from the region as well as
adjustments in agricultural, industrial and transport policy
Romania: Retezat National Park and Buffer Zone. Of the species identified on the site, 5.2% are endemics and one plant (Draba dorner)
covers just 400 m2. The scientific reserve within the site is considered to be the European genetic center for certain grasses and
spurges. Twelve fish, 32 bird and 22 mammal species are found in the park. Threats include a 2 million cm3 lake and an associated
hydro-electric plant which will eventually generate 348 MW, and which are already nearing completion, tourism development with-
out an overall management plan, and overgrazing. The presence of former state farms in the vicinity of the park (now partially aban-
doned) offers the possibility of providing a model of ecological reconstruction that could be replicated elsewhere.
The Russian Federation: Losiny Ostror (Elk Island) National Park, Moscow. The park is unique in Europe and possibly the world, as
the only natural complex of such size (13,000 ha) partially within the boundaries of a large capital city with, above all, a population of
beavers. Forty-five species of mammal are present including elk; rare birds visit on migration. The park is the only virgin natural area
surviving around Moscow and contains one of a handful of virgin forests outside Zapovedniki in central Russia. Threats include
increases in traffic using the roads across and around the park; air, soil and water pollution; pressure from unregulated visitor num-
bers and illegal encroachment with built structures. A successful project to manage this natural "island" will not only save severely
threatened habitats and species but will also serve as a valuable demonstration for other similar projects on the borders of urban areas.
ing. In Bulgaria, gas supplies were restricted to large As far as possible, such public investments should be
industrial consumers, so a new distribution system will be designed to act as catalysts which stimulate private
required. In Poland, local pipelines were designed to meet responses to the incentives provided by policy reforms
household demand for cooking but not for heating. Thus, and mobilize private investment to bring about economic
a substantial investment program spread over a decade or changes that have environmental benefits. There is also a
more will be needed to develop the infrastructure more traditional role for public investment to finance high
required to enable households to switch away from coal to priority projects in those sectors which require collective
gas. Priority should clearly be given to the distribution of action to provide basic environmental services-for exam-
gas in areas where exposure to particulates and/or sulfur ple, infrastructure services such as waste collection and
dioxide is especially high and the burning of coal makes a disposal, management of water resources as well as nature
large contribution to this air pollution. conservation, information services and research.
46
Notes margin of safety so that a less strict threshold of 20 mg/l of
nitrate-N would prevent almost all cases of methemoglobine-
1. Transboundary and global problems and action required are mia. The EU drinking water standard specifies that nitrates
mostly dealt with in chapter VI. A much more complete discus- should not exceed 50 mg/l of NO3 which is equivalent to 11
sion of some of the issues contained in this chapter and in mg/l of nitrate-N.
Annex 6 is provided in the technical report on Sectoral and Local 4. I.e., the residual capital of the enterprise is considered to have
Environmental Expenditure Priorities prepared as a basis for the no economic value.
EAR
5. If budgetary constraints are severe, then this upper limit
2. Economic justification refers to the benefits accruing to the could be reduced to ensure that no grant or loan exceeds 5-10
country and include social benefits in the broadest sense; finan- percent of the fund's total resources.
cial justification refers to the enterprise. 6. In ecologically sensitive areas the environmental audit could
3. The proposed threshold is based on the standard WHO be extended to cover an assessment of whether the investment
guideline, which is identical to US guidelines for the quality of would contribute to the prevention of irreversible damage to
public drinking water. The threshold allows a considerable local ecosystems.
47
Chapter Six
Transboundary Issues:
Regional and Global Concerns
A strategy to address regional or global problems of air and water pollution must build, as far as possible, on the overlap between the
local and the transboundary impacts of measures to reduce emissions. Market reforms and policies or investments to meet domestic
environmental goals will lead to large reductions in emissions of regional and global air pollutants. If further reductions are required
in the CEE countries to meet regional or global concerns, then donors may wish to consider bilateral or multilateral funding to cover
the net incremental cost of meeting stricter emission targets. Such arrangements would be particularly appropriate where the marginal
costs of reducing emissions vary widely across countries.
Maximizing the joint domestic and transboundary benefits of improving water quality implies that resources should primarily be
directed to the reduction of emissions from coastal or estuarial sources. This will contribute to the preservation of coastal ecosystems as
well as reducing the nitrient flows which are the main source of transboundary damage.
All environmental problems have a local origin, but may cause of damage to health; the effects on health from sul-
affect a much broader area. The solutions to these prob- fur dioxide emissions are less severe. But sulfur dioxide
lems likewise will have implications locally, across bound- emissions, through their effects on acid precipitation, are
aries and globally. For example, emissions from burning of more concern to neighboring countries than suspended
fossil fuel originate at one point and must be controlled particulates. CEE countries therefore are sometimes urged
there. The impact can be local, if soils and air immediately by neighboring countries to give priority to reducing their
surrounding the source of the emissions are contami- contribution to acid rain.
nated; it may be transboundary, if the emissions descend The costs of reducing suspended particulates are much
some way off as acid precipitation; and it may be global, as lower than the costs of addressing sulfur dioxide output
emissions contribute to the cumulative build up of green- (Box 2.5). A recent study of air pollution in the southeast-
house gases. ern Polish town of Tarnobrzeg found that the benefits of
Action to control the broader effects of local problems reducing sulfur dioxide were invariably lower than the
has been taken principally through regional and global costs, while the benefits of reducing suspended particu-
agreements. In this Action Programme, the focus is on lates by up to 70% invariably exceeded the costs. The local
measures which minimize the net costs of complying with balance of costs and benefits, in other words, may differ
international agreements by addressing, as far as possible, substantially from the regional or global balance.
both the domestic and transboundary damage caused by
emissions. Regional Concerns: Air Pollution
However, it is important for individual CEE countries
to be clear about whether the reason for pursuing a partic- Transboundary air pollution in Central and Eastern
ular policy is local or regional. For example, the main Europe is dominated by the problem of acid rain, which is
local effects on air pollution of burning fossil fuel arise in linked to emissions of sulfur dioxide and nitrogen oxides
terms of suspended particulates, which are an important from power stations, large industrial plants, small scale
49
Box 6.1 The environmental damage caused by acid emissions
Sulfur dioxide (SO2) is an irritant which, in high concentrations, can cause acute respiratory conditions. In conjunction with high lev-
els of exposure to particulates it is implicated in the excess mortality observed during severe smogs and it worsens the morbidity asso-
ciated with chronic respiratory problems. Exposure to high levels of nitrogen dioxide can also worsen the health of those with pre-
existing respiratory problems. But it is through its contribution to the generation of photochemical smog and ozone (another respira-
tory irritant that aggravates the condition of people with asthma and heart disease) that NOx emissions have their main effect on
health.
High levels of S02 and NOx emissions can damage buildings and other structures because of relatively high concentrations of acid
and of sulfur particles in rainfall. Much concern has been expressed about damage to cultural artifacts and especially historic build-
ings in cities such as Krak w and Prague. It is, however, difficult to disentangle this damage from that caused by poor maintenance
and mistaken attempts at restoration in the past. While the scale of the damage to materials caused by acid emissions is uncertain,
they undoubtedly give rise to amenity costs because they reduce visibility. The presence of sulfate and nitrate particles plus acid aero-
sols, as a result of either direct emissions or their secondary formation in the atmosphere, leads to light scattering. Further, gaseous
nitrogen dioxide absorbs light at the high end of the spectrum, which gives the atmosphere a reddish-brown tinge. The result is a haze
which may extend over a large region such as Upper Silesia and Northern Bohemia or Eastern Ukraine. Alternatively, topographical
features may concentrate the haze over a city.
Depositions of sulfur and nitrogen or "acid rain" are primarily associated with the long distance transport of acid aerosols formed
in the atmosphere from a mixture of dilute hydrochloric, nitric and sulfuric acids plus ammonium sulfate and nitrate. Rainfall gives
rise to wet deposition which rapidly infiltrates soils, groundwater, rivers and lakes. Both dry and wet depositions may cause direct
damage to trees and other vegetation by affecting their plant chemistry and pathology. Acidification of soils leads to a leaching of
plant nutrients combined with the mobilization of aluminum that would otherwise be bound up in rocks and mineral particles. An
excessive level of aluminum damages roots, reduces the capacity of plants to take up necessary trace elements such as calcium and
magnesium, and interferes with water transport within trees which increases sensitivity to drought. Acidification of rivers and lakes
can result in drastic changes in their ecosystems including the complete loss of fish stocks.
The dose-response relationships between acidic emissions and damage to forests, crops and lakes are complex and still poorly under-
stood. Rainwater has not become significantly more acid (lower pH) in Central Europe over the last 50 years, but the area covered by
highly acid rainfall has increased greatly Evidence from Germany and other West European countries suggests that forest loss may be
linked to the long term effects of acid depositions but that a variety of other (often site-specific) stress factors are also involved.
The nature of the damage to ecosystems caused by acid rain means that it is necessary to distinguish between "stock" and "flow"
aspects of the problem. Long term acidification of soils is a "stock" problem which cannot be quickly reversed by reducing the level
of current depositions, though applications of lime and nutrients and changes in silvicultural practices may mitigate its consequences.
At the same time, it is possible to define "critical loads" which represent the maximum "flow" of acid depositions that can be absorbed
by specific soil types without provoking a tendency to acidification. These critical loads define a measure of long run sustainability
which can be used in setting the ultimate goals of environmental policy. However, in setting priorities for short term actions, countries
must also consider how far immediate measures to reduce acid emissions will affect the amount of damage that will occur over the
next few years.
The implication is that short term priorities should focus on the local, health-related, damage caused by acid emissions while dam-
age to ecosystems should be the basis for a longer term reduction in emissions from those sources and regions which have contributed
most to acidification in the past. Any measures to alleviate the local damage caused by sulfur dioxide and other emissions should be
consistent with achieving a declining trend in emissions, which would not, for example, be the case with a tall stack policy
and household burning of coal and other fuels, and motor with particulates) is at least as important. There will often
vehicles. Box 6.1 describes some of the scientific aspects of be important localbenefits from reducing emissions of sul-
the environmental damage caused by acid emissions. The fur, particularly in regions where ambient concentrations
CEE countries are important contributors to transbound- of sulfur dioxide are high-for example, Northern Bohe-
ary flows of acid pollutants-Maps 5 and 6 illustrate the mia, Upper Silesia and the areas near to large lignite-fired
distribution of acid emissions in the area of the Central power stations in Poland, Bulgaria, Hungary and other
European Initiative (CEI). They are also large recipients of countries. Appropriate measures to control sulfur emis-
acid depositions from other countries, so that, for exam- sions in such locations may be in the national interest
ple, almost 50 percent of Poland's acid depositions origi- without any regard to transboundary concerns. The trans-
nate from outside Poland. Thus, environmental policies to boundary benefits of such measures reinforce the case for
address the problems caused by acid rain must take action.
account of the flows between countries and of the joint Studies of the transport of acid pollutants show that an
efforts by European countries to reduce emissions. This average of only 10-25 percent of sulfur and NOx emis-
was one of the motivations for the development of the sions stay within the 150 km grid square from which they
Geneva Convention on Long-Range Transboundary Air originate. Of course, the average concentration of these
Pollution and its related protocols. gases is highest in the area where they arise. Particular
While public attention has tended to focus on the trans- combinations of topography and weather may tempo-
boundary dimension of sulfur and nitrogen oxide emis- rarily trap emissions in smog close to the ground and
sions, the damage caused within individual countries by cause dramatic increases in respiratory morbidity or mor-
these emissions (either on their own or in combination tality, especially among children and the elderly. Such
50
smog emergencies can cover wide areas over several tells us where capital-intensive controls such as desulfur-
countries and are greatly exacerbated by high concentra- ization of oil or of flue gases appear in the cost curve.
tions of particulates. They can be alleviated by requiring Such estimates are essential to any attempt to assess the
power plants and other large sources either to close down extent to which CEE countries may require assistance in
temporarily or to switch fuels. This illustrates the impor- order to conform with the targets now being negotiated
tance of implementing measures which address both peak for a second sulfur protocol under the Convention on
and average levels of exposure to acid pollutants. Long-range Transboundary Air Pollution.
The crucial questions about policies to reduce pollution It is essential to examine the costs of reducing emis-
that crosses boundaries are (a) how far they should go sions of sulfur from groups of sources in aggregate rather
beyond policies that can be justified on the basis of their than applying a piecemeal plant-by-plant approach. The
local benefits alone? (b) how should these additional mea- alternatives for reducing sulfur emissions from a single
sures be financed? Answers to both questions depend source may be quite limited. The main ones are: the use of
upon the nature of the cost curve for reducing total emis- low sulfur coal or oil; switching from coal to oil or gas; the
sions and the marginal benefits of improving local ambi- installation of in-furnace controls or of FGD; or the partial
ent conditions. The larger are the marginal local benefits or complete closure of the source. If emissions come from
relative to the costs, the less will be the investment and several sources, the key question is how the total reduc-
other costs of meeting specific targets for reducing trans- tion is to be shared out. Again, the answer can be found
boundary flows. by mimicking the ways in which sources would respond
to the imposition of different levels of pollution charges on
Policies to reduce transboundary emissions sulfur emissions. For example, this would take account of
possible adjustments in the number of operating hours for
Substantial reductions in emissions of acid pollutants can power-generating plants. It would clearly not be efficient
be achieved at relatively low cost by a combination of fuel to commit large sums to installing expensive controls at a
switching (both to low sulfur fuels and to gas) and chang- high-emission plant if an equivalent reduction in emis-
ing the utilization of installed equipment. Beyond a cer- sions could be achieved by operating the plant for fewer
tain point, which will vary from country to country, fur- hours per year and replacing its output with production
ther reductions in emissions will typically involve a large from a low-emission plant, albeit one with higher operat-
increase in the marginal costs of control. ing costs.
Emissions of sulfur and NOC from large stationary The great merit of relying upon market-based instru-
sources are prime candidates for the application of eco- ments is that they allow enterprises to find low cost solu-
nomic instruments-either pollution charges or tradeable tions which may not be apparent to regulators. It follows
permits.1 An appropriate system of pollution charges can that models are likely to overestimate the marginal cost of
easily be developed within the framework of current leg- reducing emissions and the level of the emission charge
islation in most Central and East European countries. necessary to meet a particular target.
Mobile and small scale emissions of sulfur can be covered A study of the costs of controlling sulfur emissions for
by imposing differential charges on fuels. In due course, it the United Kingdom illustrates the implications of this
will be necessary to require that new vehicles should be approach.2 The savings permitted by adopting a single
fitted with catalytic converters in order to avoid a rapid target for total UK emissions or targets for separate
increase in NOx emissions as well as traffic-related urban regions within the country instead of imposing uniform
pollution. Over the next decade, however, it is likely to be technological standards or emission targets on all individ-
more cost effective to concentrate on reducing sulfur and ual emitters are potentially large. For example, if a single
NO, emissions from large sources. target for Great Britain were established and plants were
Even if a country does not intend to rely upon market- allowed to trade sulfur emission permits, the cost of
based instruments to reduce emissions of sulfur, the idea achieving the level of emissions implied by applying the
of pollution charges provides the basis for ranking alter- EU's Large Combustion Plant (LCP) directive3 to each
native measures to meet a given target. The cost curve of individual plant would be 15-20% lower than the cost of
different measures for a particular country is constructed imposing the same limit on each plant separately.
by considering what measures would be implemented if a In the longer term, increasing attention could also be
tax of, say, US$100 or US$200 per ton of sulfur emitted given to Integrated Resource Planning, especially in the
were imposed. The information provided by this analysis power sector: Power stations may find it less expensive to
Box 6.2 Low cost options to reduce sulfur dioxide pollution
* Use low sulfur coal or fuel oil
* Switch from burning coal to fuel oil, or from both to gas
* Temporarily close down large industrial plants-e.g. iron & steel mills, large petrochemical plants, pulp mills-
when there are temperature inversions or sulfur dioxide levels are very high
* Reduce the number of operating hours per year of power plants buming sulfurous fuels by placing them lower
in the ranking that govems how plants are brought on-stream as the total demand for electricity increases.
51
Box 6.3 Black Triangle Environmental Programme
The Black Triangle Environmental Programme was established in August 1991 by the environment ministers of Poland, Czechoslovakia,
and Germany. The Commission of the EU later became the fourth official partner (the Czech Republic took over the functions of the
CSFR). To date, a framework plan has been endorsed, a Programme Coordination Unit established in Usti nad Labem (Czech Repub-
lic), and a joint air monitoring system is being established.
obtain "additional" power capacity by financing energy to take into account differences in reduction costs and in
savings investments among their clients, rather than to damages at different locations. The nature and phasing of
invest in new power production facilities. To achieve this, these targets must, of course, also reflect the short and
power production and energy savings will eventually be medium term priorities of each country, for which a clear
given equal weight, thus offering additional opportunities understanding of the national as well as the transbound-
for reducing emissions of pollutants associated with the ary benefits of emission reductions is essential.
energy sector. A future international agreement aimed at reducing
transboundary environmental damage may, for a particu-
Combining local and transboundary concerns lar country, entail abatement measures whose cost cannot
be justified on purely local and/or national grounds,
For the most part, there is no conflict between measures including the benefits of thereductions made by other par-
that reduce local, national and transboundary damage. As ties to the agreement as well as the wider economic and
the scenario analysis demonstrates, the pursuit of appro- political benefits of international cooperation. The Stock-
priate economic and industrial policies will lead to a sub- holm Declaration, in the spirit of the Polluter Pays Princi-
stantial fall in emissions of sulfur dioxide and of NO, for ple, states that countries in this situation should bear the
most countries in the region up to the end of the century. costs of reducing emissions to avoid causing significant
This point is reinforced by Figures 6.1-6.3 which show total damage to the environment in other countries. Nonethe-
emissions of these pollutants for Central and South-East- less, for hard-pressed countries in Central and Eastern
ern Europe, Russia and other European countries of the Europe the costs of undertaking an accelerated program of
former Soviet Union. Under a combination of economic emission reductions to meet such international obligations
reform and minimal environmental regulations, emissions may involve an unacceptable diversion of resources from
of sulfur dioxide could fall by 40-60 percent over the next domestic environmental or other objectives. Some coun-
decade. Stricter but affordable environmental policies
(equivalent to requiring that all new capital meets current
EU emission standards) could ensure that emissions of sul- Figure 6.1 Total emissions of sulfur
fur dioxide are at least halved by 2005. For NO, the decline dioxide and nitrogen oxides from Central
in emissions in the base scenario is rather less, especially and South-Eastern Europe
for Central and South-Eastern Europe, because of the
growth of emissions from vehicles. Even so, the imposi- Indices with 1988-90=100
tion of EU standards on new capital and vehicles alone
should result in a reduction of almost 50 percent. 100
These results show that it is possible to ensure that total
emissions of acid pollutants from the countries of Central NOx - base estimates
and Eastern Europe follow a declining trend towards 80
meeting long term goals based on criteria of sustainability
such as critical loads, without imposing excessive costs.
Map 9a shows that under the scenario in which EU stan- S02 -
dards are achieved by 2010 for all new plants (Scenario 1), 60 v-75 - base estimates
critical loads for acidity would be exceeded mainly in the - - = =-=-
most sensitive areas of Central Europe. If the much more - - , ,
expensive policy of bringing all CEE large sources up to 40
EU standards were adopted (Scenario 2), there would be NOx - new capital
no significant exceedances in Central Europe (see Map S02 - new capital
9b). A more selective approach is therefore required which 20
would rely more heavily on economic incentives rather
than uniform emission standards, and which would focus
on key hot spots.
Reduction targets are currently being negotiated 0 l I l l
within the framework of the Convention on Long-range 1988-90 1995 2000 2005 2010
Transboundary Air Pollution; in contrast to the first sulfur
protocol discussions, those for a second sulfur protocol are World Bank estimates
based on internationally differentiated reduction targets,
52
tries might, therefore, decide not to participate in the
Fiue6.2 Total emissions of sulfur agreement or might find themselves unable to afford to
Figure and Togen oxides om Rulfur make the emission reductions which they had committed
dioxide and nitrogen oxides from Russia themselves to.
Provided that the total benefits of emission reductions
Indices with 1988-90=100 to all the countries involved exceed the costs, there should
100 be ample scope for those who benefit most to assist indi-
vidual CEE countries to meet more ambitious targets.
Such agreements would leave all parties better off. Box
80 6.4 illustrates a number of ways that international agree-
ments could be made more flexible. Minimizing the net
NOx - base estimates cost of meeting international agreements is in the interest
S02 - of both individual countries and of Europe as a whole. By
60 base estimates lowering the net cost of reducing transboundary flows,
countries could afford to act earlier or to adopt more strin-
40 * gent reduction targets. Countries which provide assis-
40 * * \^4tance will not agree to open-ended commitments, so that
- -' - - - - - - - - any such arrangements could only operate over a strictly
limited period. Thereafter, recipients would be expected
NOx - new capital " to meet the final targets without help, so that the agree-
20 - - - - - - - - - ments would not affect the long-term commitment to the
S02 - new capital Polluter-Pays Principle.
01 I I I I Regional Concerns: Water Pollution
1988-90 1995 2000 2005 2010 When a river or lake is shared by several countries, pollu-
World Bank estimates tion and conservation become a regional issue. A number
of intemational conventions regulate access to and use of
these shared resources. The most relevant is the 1992 ECE
Convention on the Protection and Use of Transboundary
Watercourses and International Lakes. Similarly, there are
a number of international conventions to manage dis-
Figure6.3 Total emissions of sulfur charges where coastal areas and inland seas are shared.4
Figure 6.3 Total oxides of sulf r River pollution has different local and regional
dioxide and nitrogen oxides from other impacts, depending on the type of the receiving water and
countries of the former Soviet Union the pollutants involved. In many cases, the local effects of
Indices with 1988-90=100 pollution from organic material (oxygen depletion) are
compensated by the "self-purification" capacity of rivers.
100 This is the case if the flow is reasonably rapid and dilution
is large (as for the main river Danube). Thus, some rivers
carry large loads of suspended solids, BOD and to some
80 \ extent phosphorus, without causing local problems.5
However, there are large problems in the Baltic and Black
Seas-into which these rivers flow-caused primarily by
NOx - base estimates phosphorus and nitrogen loads. This peculiar feature of
60 \ \ water pollution calls for strong international coordination.
\ S02- Transboundary water pollution raises many of the
base estimates issues of the appropriate balance between local and inter-
40 4 ~\ national concems that have been discussed for the case of
4t;_ - -transboundary air pollution. Problems arise from the rela-
' *, e - -tionship between neighboring countries along the banks
20 NOx - new capital - - of international rivers. For example, phosphorus and
7 ~~ i ' nitrogen levels in the Danube are already very high by the
S02 - new capital time the river reaches Slovakia; from there on, it is very
difficult to achieve any significant improvements in the
0 1 I I I water quality of the Danube in the downstream countries.
1988-90 1995 2000 2005 2010 One simple solution would be to set a target that the qual-
ity of water that leaves the country is no worse than the
World Bank estimates quality of water in rivers that enter the country. The strict
application of this goal may not be feasible or, indeed, sen-
53
Box 6.4 Mechanisms to share the burden of reducing transboundary pollution
The transboundary benefits of reducing air pollution can be "internalized" in various ways:
Direct Deals. Countries that expect to benefit from a reduction in emissions may offer to finance part of the cost of installing controls
or adopting other measures to reduce emissions. So long as there are only a small number of origin and destination countries
involved, negotiations of this kind can lead to an efficient outcome. The main difficulty is that transboundary flows from a single
country (or, even, from a single large emitter) will typically cause damage in several countries. Some beneficiaries may, then, be
tempted to "free-ride" by offering less than the full value of their benefits from a reduction in emissions in the hope that other benefi-
ciaries will contribute a larger share of the cost of reducing emissions. Strategic behavior of this kind will achieve less than the efficient
level of emission reductions.
Compensatory Premia. The idea of pollution charges can be extended to introduce a system of premia for countries which reduce their
emissions below agreed base levels. Beneficiaries could contribute to a fund which would be used to pay each source country a pre-
mium (per tonne of sulfur or NOx) reflecting the transboundary benefits of incremental reductions in its emissions which should be
built into the comparisons of the costs and benefits of alternative domestic measures and would shift the balance towards more strin-
gent reductions. This approach avoids many of the difficulties of multilateral negotiation when there are several beneficiary and
source countries, but strategic behavior by beneficiaries may still result in a lower level of compensation and reductions than would
be efficient.
Tradeable Permits. Each country would be allocated permits corresponding to the basic level of emission targets. Countries wishing
to see larger reductions in permits could buy but not use permits from the source countries whose emissions most affect them. This
mechanism is more transparent than direct negotiations and should lead to a more efficient result, but, as for all permit trading
schemes, the non-uniform impact of emission reductions in different locations causes problems. Where one country's emissions affect
several countries, it will be necessary to put together a coalition of beneficiaries to buy permits, which will lead to the difficulties out-
lined in the Direct Deals described above. The great advantage of tradeable permits is that they can provide the basis for reducing total
emissions from a group of countries at minimum cost without requiring the monetary payments associated with compensatory pre-
mia. Thus, a permit scheme would be more appropriate for global pollutants like carbon dioxide whose origin is unimportant than for
regional pollutants like sulfur dioxide whose origin is critical to the marginal damage caused by emissions.
Certain problems are common to all of these schemes and, indeed, to any international agreement to reduce emissions of acid pol-
lutants. Monitoring total emissions is difficult and estimates of total emissions are quite uncertain. It is hard to devise enforceable
penalties for countries which fail to honor undertakings to reduce emissions, though most will wish to do so, if only to retain their
credibility in future international negotiations. Payments under any mechanism may be staged or linked to the implementation of
specific investments in emission controls, but these cannot avoid the problem that the extent of emission reductions may depend upon
the maintenance and operation of the control equipment.
International negotiations over emission targets are what economists call a "repeated game" since they occur at more or less regular
intervals. Some people have, therefore, suggested that any mechanism involving compensation for reducing emissions will encourage
some source countries to increase their emissions. In fact, this will not happen so long as it is possible to monitor levels of emissions,
which is an essential pre-condition for any such agreement. Assuming that there are domestic benefits from reducing emissions, any
compensation offered will be less than the marginal cost of controls, so that strategic behavior of this kind would leave the country
worse off. In any case, countries are rightly concerned about their reputation which is a critical aspect of any repeated game, since the
penalties for being thought of as an unreliable partner can be high. The short term gains from such strategic behavior will, therefore,
be greatly outweighed by the prospective costs.
sible where large cities or industrial centers are located protect economically valuable coastal industries-espe-
just upstream of a border. Nonetheless, it embodies the ciaily tourism and fishing. Such measures, which are
fundamental principle of international law that upstream important for purely local reasons, will also make a signifi-
countries should not cause appreciable harm to countries cant contribution to reducing BOD and nutrient loads in the
downstream. Baltic and Black Seas. Thus, transboundary considerations
Most of the international concern about transboundary reinforce an already strong case for giving priority to such
water pollution has focused on the long term threat to investments over other forms of wastewater treatment.
enclosed seas such as the Baltic, the Black Sea and the Taking account of transboundary as well as local con-
Mediterranean. These problems are primarily associated cems may justify the installation of treatment technologies
with flows of nutrients and the danger of eutrophication. in coastal centers which remove more nitrogen and, per-
The impact of untreated sewage discharges from coastal haps, phosphorus than those which would be appropriate
towns and cities in the Baltic and the Black Sea also raises on the basis of local considerations alone. The additional
issues of coastal zone management, although such dis- investment required would justify international assistance
charges are more easily tackled because there are substan- (Box 6.5).
tial local benefits from reducing them and the costs There is considerable uncertainty about the extent of
involved need not be large. the transmission to the sea of BOD and nutrients from
Chapter V gave high priority to investments to prevent upstream cities, industries and agricultural run-off. While
irreversible damage to sensitive coastal ecosystems and to big rivers such as the Danube, the Dnieper, the Don, the
54
Box 6.5 Environmental Programs dealing with international waters
The Baltic Sea Joint Comprehensive Environmental Action Programme
At a Diplomatic Conference in April, 1992 in Helsinki a new Convention on the Protection of the Marine Enviromnent of the Baltic Sea
Area was signed to supersede, upon entry into force, the 1974 Helsinki Convention. On the same occasion, the Environment Ministers
or High Representatives of eleven countries in the Baltic Sea drainage area, as well as of the European Communities, adopted a strat-
egy for addressing the environmental problems of the Baltic Sea, as outlined in the Baltic Sea Joint Comprehensive Environmental
Action Programme. They also established, within the framework of the Helsinki Commission, a Programme Implementation Task
Force (PITF) to co-ordinate, facilitate and monitor implementation of the Programme, as well as to initiate its periodic updating. All
the 14 countries in the drainage area of the Baltic Sea, as well as the European Commission, EBRD, EIB, NIB, the World Bank, and the
International Baltic Sea Fishery Commission are members of the HELCOM Task Force.
In preparing the Programme, detailed studies of wetlands, agricultural run-off and atmospheric deposition of pollutants were car-
ried out as well as pre-feasibility studies in eight former centrally-planned economies (including the Eastern states of Germany).
Implementation of the Programme was estimated to cost at least 18 billion ecu over 20 years (at 1992 prices). Measures to reduce
emissions from 98 hot spots in Central and Eastern Europe-covering both point and non-point sources-would cost at least 8.5 billion
ecu. Among these hot spots, 47 have been identified as priorities which would require an estimated budget of 6.5 billion ecu to cover
the cost of investments and other measures to deal with their emissions.
Efforts are being made to ensure that feasibility studies are carried out as rapidly as possible for the measures required at the priority
hot spots. On 24-25 March 1993 a conference was held in Gdansk to mobilize resources to fund the initial stage of the Programme with
the participation of bilateral donors and multilateral financial institutions. The Gdansk Conference endorsed the guidelines for imple-
mentation of the programme: "The Baltic Sea Joint Comprehensive Environmental Action Programme; Opportunities and Constraints
in Programme Implememntation."
Black Sea Environmental Management Programme
The Black Sea Environmental Management Programme has been initiated in conjunction with the Global Environment Facility and
other donors in cooperation with the littoral states-Bulgaria, Georgia, Romania, the Russian Federation, Turkey, and Ukraine. The
program's main purpose is to identify the principal sources of pollution of the Black and Azov seas, which has resulted in extreme
eutrophication and a drastic decline in fish populations and biodiversity.
Environmental Programme for the Danube River
The main objective of the Environmental Programme for the Danube River is development of a Strategic Action Plan (SAP) for envi-
ronmental improvement in the Danube countries. The actions proposed (including investments, technical assistance and institutional
development) will be closely linked to the implementation of the Danube Convention which is to be signed in 1994. The Plan is not
designed as a donor program, but as a tool for the countries themselves to set realistic priorities for the implementation of the Conven-
tion-a process to which the donor community has indicated an interest to contribute.
Dvina, the Oder and the Vistula carry large loads of these * an assessment of water pollution affecting shared
pollutants into the Black Sea and the Baltic, it is difficult to water resources as a basis for determining the most cost-
establish what proportion of the total load originates from effective control measures;
sources more than 100-200 km upstream. During the ini- * the development of systems to collect and exchange
tial stages of programs to address these problems it will information about trends in water quality and emissions,
generally be advisable to concentrate the limited resources * the coordination across countries of water policies
for dealing with transboundary pollution on downstream and regulations affecting shared water basins-including,
sources. As better information becomes available on both if appropriate, a joint water basin management agency
the principal sources and the transmission of pollutants, it responsible for implementing cooperative programs.
will be possible to develop a more comprehensive frame-
work for emission reductions in international river basins Wetland management
which will maximize the domestic and transboundary
benefits of control expenditures. This implies that over The management of water resources and quality has a
the next 3-5 years countries should follow a two-pronged significant impact on inland and coastal wetlands, which
strategy of concentrating domestic resources on protect- are internationally important because of their role as
ing coastal waters and improving upstream water qual- habitats for migratory birds. These issues are addressed
ity-see Chapter V-while external resources are directed by the 1971 Ramsar Convention on Wetlands of Interna-
towards downstream sources which have the most direct tional Importance, to which most Central and East Euro-
impact on the sea concerned (Box 6.6). pean countries are now Parties. The Danube and Volga
In conjunction with these measures it is important to deltas, Lake Balaton and Lonsjko Pole are among the
build up the information and a framework of cooperation most important sites in the region. The immediate
needed to take stronger action in future if justified. This threats are from the expansion of agriculture and of set-
would cover: tlement which leads to the drainage of wetlands. Heavy
55
Box 6.6 Possible wastewater investments which meet both domestic and transboundary objectives
The Baltic Sea program sets out an extensive list of wastewater treatment projects to be implemented gradually over the next two
decades. Applying the criteria developed for the Action Programme to these projects suggests that a number of them should have
priority because they will generate substantial local or national environmental benefits, as well as significantly reducing pollution in
the Baltic. These projects include:
. Poland. Treatment plants at Gdansk, Gdynia and Szczecin with the inclusion of denitrification capacity in order to reduce dis-
charges of nutrients which encourage algal blooms that are jeopardizing valuable coastal ecosystems and tourist revenues.
. Lithuania. The completion of the partially constructed treatment plant at Klaipeda plus support for pre-treatment of industrial
wastewater discharged to municipal sewers. This investment together with improvements in nature conservation and coastal man-
agement of the nearby Kursiu lagoon will protect an important area for recreation and ecosystems.
* Latvia. Rehabilitation and extension of the Liepaja wastewater system, again with provision for pretreatment of industrial waste-
water, will protect recreational facilities.
* Estonia. Improvements at the Haapsalu wastewater treatment plant can protect the ecologically valuable resources of Haapsalu
Bay with its unique curative mud and of Matsalu Bay, a protected area important for migratory birds.
* Russia. Investments in the wastewater treatment plants at Kaliningrad and St Petersburg. The current efficiency of the former is
so close to zero that the investment will substantially improve the quality of nearby coastal waters and protect the Kursiu lagoon. The
overloaded treatment plants in St Petersburg are responsible for 40% of BOD and 50% of phosphorus from all point source discharges
to the Gulf of Finland. The project would concentrate initially on collection and primary treatment of untreated discharges and on pre-
treatment of the industrial wastewater that accounts for nearly 90% of heavy metal discharges to the Gulf of Finland, especially copper
and chromium.
In all of these cases, it will be important to phase the expenditures over a considerable period in order to obtain the maximum benefit
both domestically and in the Baltic from the resources available. Primary treatment with chemical enhancement will often be the best
approach in the short term. Then, as more resources become available, plants can be extended to incorporate various degrees of bio-
logical treatment or denitrification.
metals and toxic chemicals pose a more insidious threat * complete inventories of wetlands and assess poten-
to bird and fish, and are reported to have caused serious tial threats to their future health;
declines in various species in the Danube and Volga del- * ensure that wetland management is integrated into
tas, (though over-exploitation may also have played a the broad framework of policies for water management
part). These concerns reinforce the importance of deal- and nature conservation with due account being taken of
ing with emissions of toxic materials from chemical the scope for multiple use management.
plants as outlined in Annex 6.
Among the actions which can be undertaken immedi- Global Issues
ately to support longer term programs for the integrated
management of wetlands are to: Phaseout of Ozone Depleting Substances
* support current measures to protect the Danube and The stratospheric ozone layer shields people, plants and
Volga deltas; animals from the sun's harmful ultraviolet (UV) rays, and
Box 6.7 The Polish Debt-for-Environment Swap
In 1992, an independent foundation (ECOFUND) was established to manage the funds arising from an agreement by the 17 creditor
nations of the Paris Club to swap 10% of Poland's debt for investment in environmental projects. The Paris Club specified that this
debt reduction must be based on separate bilateral agreements between Poland and the creditor countries. To date, the United States,
France and Switzerland have completed such agreements. The full potential amount of debt that Poland could reduce by this swap
mechanism is about US$3.1 billion.
The Polish Government has decided that the swap money should target environmental projects that provide mutual benefits for cred-
itor countries and Poland. These include (i) reducing long-range transboundary air pollutants, (ii) reducing pollution of the Baltic Sea,
(iii) lowering emissions of greenhouse gases and phasing-out substances damaging the ozone layer, and (iv) protecting biodiversity.
In its first year of operation, ECOFUND supported 25 projects totalling about US$20 million, including desulfurization of power
plant emissions, waste-water treatment plants, and replacement of coal with geothermal energy. ECOFUND finances only the imple-
mentation phase of environmental investment projects.
Given the significant size of some of the investments that are being supported by the ECOFUND, the question has been raised
whether it does not (i) redirect the investment program away from some of the highest priority domestic environmental problems, and
(ii) encourage technologies which may not be most cost-effective in achieving both transboundary and local benefits. The investments
may also tie up scarce local resources for long-term operation and maintenance.
In addition to this, Poland has a separate ecoconversion arrangement with Finland, based on a 1990 agreement and administered by
the Polish National Fund for Environmental Protection and Water Management. Under this arrangement, financial assistance has
been allocated to 28 projects totalling US$12 million.
56
is a factor in determining the earth's climate. There is a will be much more difficult. Several companies in CEE
scientific consensus that the protective ozone layer is have established technology alliances with multinational
being depleted by human use of certain chemical agents, companies to facilitate access to new technologies.
particularly chlorofluorocarbons (CFC) and halons. These Governments in Central and Eastern Europe should
chemical compounds are used in aerosol propellants, hard prepare national recovery-reclamation-recycling strate-
and soft foams, refrigeration and air conditioning, indus- gies to ensure a sufficient supply of refrigerant to maintain
trial solvents, coatings and adhesives, and in materials for the existing stock of capital goods relying on ODS (mainly
fire extinguishing. A reduction in total stratospheric cooling, air conditioning and refrigeration equipments).
ozone is expected to increase ultraviolet-B radiation at Refrigeration appliances have operational lifetimes of an
ground levels with adverse consequences for human average of 20 years, and during this period, many have to
health and the earth's ecosystems.7 be refilled with refrigerant. Investments in recovering and
The Montreal Protocol of the 1985 Vienna Convention recycling ODS-refrigerant will avert the need to retire
for the Protection of the Ozone Layer now requires phase- equipment prematurely.
outs for the production and consumption of halons by
1994, of CFCs by 1996, and of other ozone-depleting sub- Reduction of Greenhouse Gases
stances (ODS) by 2000. All the main producers and con-
sumers of ODS in the CEE region are Parties to these As the energy intensity of production and the share of coal
agreements. Unlike the reduction of emissions of sulfur in total energy demand decline in Central and Eastern
dioxide or the treatment of sewage, the phase-out of ODS Europe during the next decade, CEE's emissions of carbon
is not a policy which has local benefits that justify much of dioxide will fall.
the cost. The gains are purely global. Figure 6.4 shows the projected emissions of carbon
Box 6.8 outlines the main issues now facing several CEE dioxide until the year 2010. The Central and East Euro-
countries in their efforts to phase out the use of ODS. ODS pean countries covered by these projections account for a
use can be eliminated at very low cost from aerosols and little over 20% of total world emissions of carbon dioxide
flexible foam. Substitute technologies already exist. Scar- from industrial sources. Under the main reform scenario
city of capital is the key constraint. These projects are not (see Annex 3), their emissions would fall by 46% in the
expensive and may be candidates for international funding period up to 2000, so that economic reform in the region
(on a grant or loan basis) given the potential global envi- should lead to a reduction of 10% of global carbon dioxide
ronmental benefits. In the technology-intensive sectors emissions from industrial sources. This is equivalent to
(mainly refrigeration), developing non-ODS technologies 80% of the total emissions from the European Union coun-
Box 6.8 ODS Phaseout Activities
Refrigeration
* Support research and development to manufacture refrigerators and freezers using the new HFC-134a compressors, now estab-
lished as the international standard for domestic refrigeration appliances;
* Develop and implement a CFC recovery and recycling program to help meet the demand for CFC refrigerants for refrigeration
applications and air conditioners, including improved servicing and maintenance procedures.
Foam
* Flexible foam. Encourage the development of water-blown foam manufacturing for soft foam products. The use of HCFC or other
chemical based blowing agent is not recommended given the cost and production-related health considerations, especially now that
most qualities of foam can be produced without using these substances.
* Rigid foam. Introduce the internationally available reduced-CFC foam formulations (which use 50% fewer ODS). Keep abreast
of international developments and experiences with HFC and HCFC-blends and with complete water-blown rigid foams.
Aerosols
* Make capital available for production of ODS substitutes.
Solvents
* Disseminate technical information to this sector's numerous small users through seminars and demonstration projects. Establish
a technical clearing house within industry associations serving the solvent users.
Fire Protection
* Introduce measures to recover and recycle or destroy the large stock of halons which has accumulated over the last few years.
Consider participating in the planned international Halon Bank.
57
for the countries themselves. Further measures to imple-
Figure 6.4 Emissions of carbon dioxide in ment the 1992 United Nations Framework Convention on
Figure 6.4 Emissions of carbon dioxide in Climate Change would have to be assessed in the context
Central and Eastern Europe of the limited resources available and the relative priori-
(total emissionsfrom all countries) ties attached to other environmental problems-local and
Indices with 1988-90=100 transboundary-for which these resources might be used.
In the future, reliance upon national taxes on the carbon
100 content of fuels would minimize the economic cost of
meeting national targets for reducing carbon dioxide
emissions. They would provide direct economic incen-
80 ' Slow reform tives to reduce the use of all fossil fuels by encouraging the
development of renewable sources of energy as well as to
switch from high to low carbon fuels (i.e. from coal to gas).
60 \ ,+In addition, an arrangement which allowed countries to
60 ', trade national emission reduction targets would provide
the flexibility required to minimize the overall cost of
Faster reform ' Base scenario meeting a fixed target for reducing carbon dioxide emis-
40 sions over the whole region.
Overall, the marginal cost of reducing emissions of car-
bon dioxide and other greenhouse gases (GHGs) from
countries in Central and Eastern Europe will remain well
20 below the equivalent marginal costs for Western Europe
for many years. Internationally as well as nationally,
countries should reduce GHG emissions in ways that give
0 I I I the greatest reductions at the lowest cost. For West Euro-
pean countries, that implies using much of the resources
1988-90 1995 2000 2005 2010 devoted to greenhouse warming to reduce carbon emis-
World Bank estimates sions from the CEE countries.
Conservation of bio-diversity
tries combined, or to the total emissions from all of the There are a number of existing international and regional
countries in Asia other than China and India. Economic legal agreements that regulate various aspects of the pro-
recovery and growth will lead to an increase in emissions tection and management of biological diversity, either
after 2000, unless measures are adopted to reduce further through protection of species or of ecosystems and habi-
the energy-intensity of production and dependence upon tats. The broadest legal instrument is the convention on
coal. The reduction in emissions will, of course, be less if Biological Diversity, signed by over 150 States at the time
economic reform proceeds more slowly, while faster eco- of UNCED. The status of biological resources and diver-
nomic reform enhances the initial decline but leads to sity of species has traditionally been good in the region
higher emissions after 2000 because of the higher rates of because population densities are so much lower than in
economic growth that it permits. Western Europe. However, the transition to market econ-
Further reductions in emissions of carbon dioxide and omies together with high levels of pollution in some vul-
other greenhouse gases, especially methane, could be nerable areas is beginning to be harmful.
achieved by collecting the gas associated with oil produc- There are various suggestions for immediate actions
tion rather than flaring it, by minimizing natural gas that can be undertaken to allow countries to fulfil their
losses from transmission and distribution systems, and by commitments under the Conventions as well as setting in
installing more efficient compressors on gas pipelines. place the necessary support structures to protect species
These investments will typically generate high rates of and habitats. These should be taken in conjunction with
return over and above their environmental benefits. Some the measures discussed in Chapter V as well as the actions
projects of this kind are under way or are at the planning in the report on Nature Protection presented to the Luc-
stage-primarily in Russia-and the provision of techni- eme Conference. They include:
cal assistance to develop more would clearly be justified.
There have also been proposals to utilize coal-bed meth- * completing inventories of biological resources;
ane resources, especially in Poland and Ukraine. The eco- * building up the institutional and human resources
nomic returns to such investments are highly uncertain at required to assess and manage biological resources;
present but their potential environmental benefits could * revising national legislation to conform with the pro-
warrant the provision of technical and financial assistance visions of the Convention on Biological Diversity;
to develop pilot schemes. * preparing national strategies for the conservation of
These changes follow directly from policies and invest- biological resources and implementation of the Conven-
ments that are economically or environmentally desirable tion.
58
Management of Toxic Chemicals and Hazardous Wastes
The concern here is not only toxic chemicals originating in Figure 6.5 Primary energy use in Central
commerce, services, agriculture and industry, but also radio- and Eastem Europe
active substances produced by energy generation, research
and medicine and military activities. While the disposal of Indices with 1988-90=100
these wastes is primarily of national concern, it becomes a
regional or even global issue when accidents occur, or when 120
wastes are transported across boundaries. Various interna-
tional agreements regulate the management and transport 100
of hazardous substances, including the 1957 European
Agreement Concerning the International Carriage of Dan- Central & South
gerous Goods by Road (ADR, as amended), the 1986 Con- 80 Eastern Europe
vention on Early Notification of a Nuclear Accident; 1986
Convention on Assistance in the Case of a Nuclear Accident
or Radiological Emergency; the 1989 Convention on the 60
Control of Transboundary Movements of Hazardous Wastes
(Basel Convention); the 1992 ECE Convention on the Trans- FSU Europe
boundary Effects of Industrial Accidents. 40
Changes in governance in the region have important
implications for the management of hazardous sub-
stances. Of particular concern is the rapid loosening of 20
state controls that could result in unregulated transport of
hazardous substances across borders.
Immediate actions could be directed to: 0 1 I l l l 1
- assessment of the state of industrial plants that gen- 1985 1989-90 1995 2000 2005 2010
erate hazardous wastes as well as the related disposal and
transport facilities;
* improvement of safety measures, including better
institutional, technological, managerial systems and
equipment;
* strengthening the institutional and technical capacity Europe and the former Soviet Union is projected to decline
to comply with the provisions of the Basel Convention. by more than 20% from 1989/90 to 1995 and will not rise
significantly before 2000. Electricity demand will grow as
Nuclear issues a share of total energy demand, but it is unlikely to recover
to pre-reform levels in any country much before 2005.
The safety of nuclear power plants in the CEE countries is
regarded as a matter of both national and international Conclusions: The Key Messages
concern. Work so far supported by international donors
has been mainly limited to assessments of the need for Given their limited resources, the countries of Central and
improvements to operating safety. Eastern Europe need to give priority to those environmen-
The 1992 Munich G-7 Summit adopted a multilateral tal measures which promise the greatest gains at the low-
program to improve operational safety, make immediate est cost. Generally speaking, such measures will be
technical improvements to plants based on safety assess- primarily local in their impact, because the average con-
ments, and enhance regulatory regimes. In addition, the centration is greatest near the point(s) of emission.
program will create the basis for longer-term safety However, many such measures will also have benefi-
improvements by examining the scope for replacing less cial side effects on those kinds of pollution whose impacts
safe plants with alternative energy sources and more effi- cross borders. When designing policies that bring local
cient use of energy, and the potential for upgrading plants benefits, it will be important to bear in mind the possibil-
of more recent design. The Summit extended the existing ity of making simultaneous improvements to reduce
G-24 Coordination mandate to the new States of the cross-border or global environmental damage.
former Soviet Union and proposed the setting up of a sup- Where the costs of mitigating transboundary environ-
plementary multilateral mechanism to provide for finan- mental damage exceed the local benefits, it is reasonable for
cial support for immediate measures not covered by bilat- CEE countries to ask their richer neighbors for assistance.
eral programs. From the point of view of West European countries, there
The period of economic stabilization and transforma- may sometimes be greater gains to be had from spending
tion provides a good opportunity to put sound long term money on reducing sources of pollution in Eastern Europe
energy policies into place and to develop non-nuclear than by spending it at home, where standards are already
sources of electricity supply. Figure 6.5 shows that pri- high. This principle is likely to hold in areas as diverse as
mary energy demand in both Central and South-Eastern global warming, nuclear safety and river quality.
59
Box 6.9 Global Environment Facility Biodiversity Projects in Central Europe
Country Project Areas & Ecosystems Adjoining Projects Specific Innovations
Belarus * Byelovezhskaya forest * Poland GEF Conservation planning and research
* Berezinsky wetlands * Poland Forestry (World Bank outreach programs
* Pripyatsky forest supported)
Ukraine * Carpathians Biosphere Reserve forests * Poland GEF Management of forest fragments and
and alps * Slovak GEF introduction of wildlife corridors and
land use planning for biodiversity pro-
tection
Slovak * Morava floodplain forests and * Ukraine GEF Environmental NGO Small Grants Pro-
Republic wetlands * Poland GEF gram; development of tri-national
* Tatras forests and alpine meadows * Poland Forestry (World Bank trans-border Trust to maintain coordi-
* Eastern Carpathians forests and supported) nated management of the international
meadows * Austrian Eco-Fund Activities biosphere reserve in the Eastern Car-
pathians
Czech * Palava wetlands and floodplain forests * Slovak GEF Environmental NGO Small Grants Pro-
Republic * Sumava forests * Poland GEF gram and improved wildlife manage-
* Krkonose alps and forests * Poland Forestry (World Bank ment; establishment of revenue mecha-
supported) nisms and use of economic measures to
* Austrian Eco-Fund maintain use below determined ecolog-
* FACE project at Krkonose ical carrying capacities
Poland * Bialowieza primeval forest * Ukraine GEF Establishment of a gene bank to protect
* Sudety forests * Czech GEF genetic diversity at risk because in-situ
v Slovak GEF conservation is not possible due to
pollution.
The synergy that exists between reducing domestic 4. * the 1972 Convention on the Prevention of Marine Pollu-
and transboundary pollution may sometimes dictate tion by Dumping of Wastes and Other Matter (London
domestic priorities. Policies whose gains arise both in a Dumping Convention), as amended;
* the International Convention for the Prevention of Pollu-
CEE country and beyond its boundaries may not be eco- tion from Ships, 1973, as modified by the Protocol of 1978
nomic if considered in purely national terms. But, by per- relating thereto (MARPOL);
suading neighboring countries that they will also enjoy * the 1974 and the 1992 Helsinki Conventions on the Protec-
some of the gains from such policies, and securing a con- tion of the Marine Environment of the Baltic Sea Area;
tribution from them towards the cost, CEE countries may * the 1976 Barcelona Convention for the Protection of the Med-
find that measures with domestic benefits become more iterranean Sea against Pollution, with its related protocols;
affordable. * the 1990 International Convention on Oil Pollution Pre-
paredness, Response and Cooperation;
* the 1992 Bucharest Convention on the Protection of the
Notes Black Sea against Pollution, with its related protocols.
5. A large portion of nitrogen compounds is converted sooner
1. The United States has introduced a system of tradeable per- or later to nitrate which is persistent and not easily removed.
mits for large and medium sources in the Clean Air Act Amend- "Self-purification" is therefore less effective in assuring the
ments of 1990. In principle, this system could be extended to quality of drinking water resources-a problem which is com-
small scale sources by requiring that fuel suppliers must acquire pounded by the inability of existing water treatment plants to
permits to cover the estimated emissions of small scale consum- cope with nitrate contamination. There may also be local prob-
ers of gasoline, heating oil or coal. Emissions trading in the U.S. lems with phosphorus which can cause high algae biomass if
is gradually beginning to be a well-accepted process in the light conditions are favorable and the flow is slow. Existing
power sector and is expected to result in substantial resource wastewater treatment facilities cannot cope with this problems.
savings and additional industrial growth.
2LnoEeMechanisms in 6. For example, Bulgaria and Greece are considering the possi-
the Control of Acid Rain. Environmental Economic Research bility of establishing a system which would monitor discharges
Series (Department of the Environment, London HMSO: 1992). into rivers that flow from the Balkan and Rhodope Mountains
Series (ermtotenine,Linto the Mediterranean, including the Maritsa and Struma Riv-
3. The European Union's Large Combustion Plant (LCP) direc- ers which are among the most polluted in Bulgaria.
tive sets stringent targets for reducing emissions of S02 and 7. Human health: Increases in non-melanoma skin cancer and
NO, from large sources. The policies for implementing the cataracts, and in the incidence or severity of infectious diseases
directive varv across countries but effectively all new and many due to suppression of human immunological systems.
existing large plants (> 300 MW) will be required to install flue Ecos stems: Reduction in the numbers of phytoplankton,
gas desulfurization or in-furnace sulfur controls plus low NO, and inhibited growth and phoosnthesis of certa plants.
burners and selective catalytic reduction if they are to continue
operating into the next century.
60
Chapter Seven
Principal Recommendations
This chapter draws together the main themes of the report. Nine key messages stand out:
(i) Countries have many opportunities to implement policies and invest in projects which provide both economic and environmental
benefits. "Win-win" policies include removing subsidies that encourage the excessive use of fossil fuels and water in industry, agricul-
ture and households. They also include investments in energy and water conservation, low-input and low-waste technologies, and
expenditures on "good industrial housekeeping."
(ii) Environmental priorities should be based on a careful comparison of costs and benefits. The resources available for environmental
improvements will be severely constrained in Central and Eastern Europe for at least the next 5-10 years. It is essential that limited
resources be applied to the most urgent problems first.
(iii) Market forces should be harnessed to control pollution wherever possible. Market-based instruments, such as pollution charges,
fuel taxes, and deposit refund schemes, can help achieve desired levels of environmental quality at much lower costs than traditional
regulatory approaches. Regulatory instruments will still be needed to control emissions of micro-pollutants such as heavy metals-
particularly lead-and toxic chemicals.
(iv) Countries should concentrate on local problems first. Many people suffer health damage from exposure to lead in air and soil, air-
borne dust and sulfur dioxide, from nitrates in drinking water and from contaminants in water and food. Solving these problems will
bring the biggest gains in health and well-being. Measures to reduce emissions of pollutants in response to local concerns should also
contribute to reducing transboundary and global emissions.
(v) Standards need to be realistic and enforceable. Countries should implement stricter standards over a 10-20 year period, and ensure
that industries comply with interim standards. Local people should be involved in setting priorities and in implementing solutions.
Neither governments nor donor institutions are equipped to judge how local inhabitants value their environment. A participatory
approach is essential for the long-run sustainability of environmental improvements.
(vi) Responsibilityfor past environmental damage needs to be clarified. Uncertainty about who will be responsible for past damage can
discourage foreign and domestic investment and can impede privatization. For practical reasons, governments will have to bear most
of the costs of dealing with past pollution. Governments must define clearly the environmental standards that new owners must meet
and the period of adjustment that will be permitted.
(vii) Donor countries should consider providing funding to accelerate the reduction of transboundary and global emissions in coun-
tries of Central and Eastern Europe. Such funding would be particularly appropriate where the marginal cost of reducing emissions is
lower in Central and Eastern Europe. Minimizing the net cost of meeting international agreements is in the interests of individual
countries and Europe as a whole. If the net cost of reducing transboundary flows is lowered, countries will be able to afford to act earlier
or to adopt more stringent targets.
(viii) More research, training, and exchange of information are needed to help decision-makers set sensible priorities. Research should
focus on the state of the particular environment of Central and Eastern Europe. Much more information is also needed on low-cost
ways to reduce emissions of air and water pollutants from non-ferrous metal smelters, iron and steel plants, chemical plants, paper
mills, and wastewater treatment plants and on ways to conserve biodiversity.
(ix) Finding, implementing, and financing solutions will require building partnerships. Transferring know-how and clean technologies
will require strong cooperation between East and West, between countries of Eastern and Central Europe, and within countries,
between cities, institutions, and enterprises.
61
Priorities in Detail and maintaining inventories-and monitoring the dis-
posal-of hazardous, toxic and nuclear wastes;
What governments must do * Invest in "win-win" projects which can be justified
on economic grounds alone but which bring substantial
IMPROVE STANDARD-SETTING. environmental benefits. These include improvements in
* Adopt a framework of environmental standards that energy efficiency, water conservation, the adoption of low
allows for a gradual tightening over a 20-30 year period, input and low waste technologies, and minor plant
and enforce interim standards; improvements which facilitate "good housekeeping;"
* Adopt a realistic set of ambient standards which can * Provide funding for training, internship and
be easily monitored and enforced; exchange programs, for the development of environmen-
* Do not set uniform emission standards at a country- tal education curricula, and for other activities which raise
wide level. Allow for substantial variation in emissions at local capacity for effective decentralized decision making;
different locations and sources. Set the most stringent * Publicize how improvements in management and
requirements-such as the adoption of Best-Available operating practices can achieve environmental improve-
Control Technology-for hot spots where economic trans- ments with existing plant and equipment;
formation and capital replacement will not bring ambient * Require existing large sources to improve their envi-
concentrations of criteria pollutants down to acceptable ronmental performance. This strategy will yield most of the
levels. benefits derived from an attempt to achieve lower emis-
sions for all sources, large or small, but at much lower cost;
CLARIFY ENVIRONMENTAL LIABILITY. * Aim for larger reductions in emissions of particu-
* Clarify responsibility for past environmental dam- lates, air-borne lead and heavy metals than for sulfur diox-
age. Uncertainty about who will be responsible for past ide or nitrogen oxides since it is much less expensive to
damage can discourage foreign and domestic investment control emissions of the former than the latter;
in heavy industries and impede privatization. For practi- * Require all non-ferrous metallurgy and parts of the
cal reasons, governments will have to bear most of the chemical industry to reduce or eliminate their discharges
costs of dealing with past emissions. Governments must of heavy metals-particularly lead-to air and water.
define clearly the environmental standards that new own-
ers must meet and the period of adjustment that will be GIVE PRIORITY TO THE FOLLOWING PUBLIC INVESTMENTS.
permitted; * Invest in measures to reduce emissions from low
* Establish a monitoring system to make it possible to stacks in urban areas where home heating is a significant
distinguish between damages caused by past pollution contributor to high ambient concentrations of particulates
and current emissions; define the environmental stan- and sulfur;
dards that privatized firms will be required to meet and * Install dust collection systems and filters to non-fer-
the adjustment period to be permitted; rous metal smelters-particularly lead, zinc, and alumi-
* So as not to delay privatization, limit full environ- num plants-which are located 5 km upwind of
mental audits to a small number of the largest firms. Set significant centers of population;
aside a portion of privatization proceeds to pay for any * Install equipment to reduce emissions of dust,
clean-up subsequently required. smoke, and soot, and carbon monoxide from iron and steel
plants, especially those relying on open hearth furnaces;
USE THE MARKET. * Make investments to replace coal with gas or to per-
* Reduce energy subsidies, providing transitional mit the burning of smokeless solid fuels in district heating
assistance if necessary for households or industries dis- plants, commercial enterprises and households in towns
proportionately affected; and cities where the average ambient concentrations of
* Choose market-based instruments for pollution con- particulates exceeds 150 micrograms per cubic meter;
trol wherever possible, building on existing frameworks of * Invest in facilities to pre-treat the wastewater dis-
pollution charges. These can help achieve desired levels of charged by small and medium-sized industrial plants
environmental quality at much lower costs than tradi- where contamination of groundwater and rivers by heavy
tional regulatory approaches. Regulatory instruments metals is a significant problem-for example in towns and
will still be needed to control emissions of micro-pollut- cities with a concentration of tanning, electro-plating and
ants such as heavy metals and toxic chemicals. In some other metalworking plants;
regions, tradeable permits may be appropriate. * Facilitate the installation of domestic septic tanks
and the appropriate disposal of manure from intensive
REORGANIZE PRIORITIES FOR PUBLIC SPENDING. livestock operations in rural areas where levels of nitrates
* Design and select public investments to accelerate in drinking water drawn from shallow wells typically
the impact of industrial restructuring on the environment exceed 10 mg of nitrate-N per liter;
and to reinforce market incentives for economic change; * Ensure that the disposal of domestic, toxic, nuclear
* Provide funding to cover the operational, mainte- and other hazardous wastes is carefully monitored and
nance and repair costs of existing public environmental that leachates from disposal sites do not contaminate
services, especially the treatment of drinking water and ground or surface waters, especially sources used for the
sewage, the collection and disposal of municipal waste, abstraction of drinking water supplies;
62
- Install municipal wastewater treatment plants in cal gardens); and to undertake well-defined studies on the
towns and cities close to important tourist or wildlife ecological damage caused by large-scale development
areas, especially on the Adriatic, Baltic and Black Sea projects such as dams, canals, and major tourism
coasts, Lake Balaton, the Mazurian Lakes and the Car- developments;
pathian and Rhodope Mountains; * Strengthen the collection and dissemination of data
* Complete partially constructed wastewater treat- on the state of the environment and natural resources.
ment plants either in the upstream sections of seriously
polluted rivers or where the bacteriological quality of Transboundary issues
water downstream of major towns and cities is particu-
larly poor; ACID AIR POLLUTION.
* Implement sustainable rural development projects in * Combine local and transboundary concerns. Imple-
defined areas of high biodiversity and great ecological menting good economic and environmental policies in
importance that are under threat. Such projects should response to local concerns will do much to reduce trans-
combine better management of protected areas with eco- boundary emissions;
logically benign agricultural/forestry, tourism and other * Choose market-based instruments-such as pollu-
activities. tion charges or tradeable permits-to minimize the costs
of meeting international agreements;
What enterprises must do * Provide a framework which allows groups of coun-
tries who might each benefit from cooperation to share the
* Invest in mitigating discharges of saline water from burden of achieving larger reductions in emissions than
mines in countries such as the Czech and Slovak Repub- would be warranted on purely domestic grounds. In par-
lics, and Poland, provided that the costs of such invest- ticular, donor countries might consider arrangements by
ments are recovered over the long run from the mines which they contribute to the incremental costs of meeting
responsible for salt water emissions; stricter or earlier targets for emissions reductions in Cen-
- Provide industrial wastewater treatment facilities in tral and East European countries.
plants-for example in the textile and pulp and paper
industries-which discharge heavy loads of BOD and PHASEOUT OF OZONE DEPLETING SUBSTANCES.
other pollutants into receiving waters that are relatively * In the short term, focus on the aerosol and flexible
clean and that lie upstream of major centers of population; foam sectors where ODS use can be eliminated at very low
I Install equipment to reduce leakages of heavy met- cost;
als, toxic gases and discharges of toxic wastes-to the air, * To facilitate access to new technologies in the tech-
in wastewater or in solid wastes-from petrochemical and nology-intensive sectors (mainly refrigeration), encourage
other chemical plants, especially those located close to companies in CEE to establish technology alliances with
substantial towns and cities. multinational companies;
* Prepare national recovery/reclamation/ recycling
What government must do to address longer-term strategies to ensure a sufficient supply of refrigerant to
environmental problems maintain the existing stock of capital goods relying on
ODS (mainly cooling, air conditioning and refrigeration
* Establish vehicle testing stations combined with equipments).
facilities for better vehicle maintenance in order to enforce
reasonably strict emission standards for the commercial REDUCTION OF GREENHOUSE GASES.
diesel vehicles-buses and trucks-which are the princi- * Collect the gas associated with oil production rather
pal mobile source of particulate emission; than flaring it, minimize natural gas losses from transmis-
* Develop a program to phase out leaded gasoline. sion and distribution systems, and install more efficient
Require that new vehicles (automobiles, buses and compressors on gas pipelines to reduce emissions of car-
trucks), from some appropriate future date, meet the bon dioxide and other greenhouse gases, (especially meth-
emission standards laid down by the EU. Most of the cost ane), beyond what will occur as a result of economic
of these measures will be borne by refineries, automobile reform. These investments will typically generate high
manufacturers and their customers, but resources for rates of return without taking any account of their envi-
technical assistance and to deal with special transitional ronmental benefits;
problems would speed up the implementation of these * Use market-based instruments-such as carbon
programs; taxes-wherever possible to reduce emissions of green-
* Fund applied research into a number of environ- house gases. Encourage the development of an arrange-
mental problems for which solutions may be very costly ment which allows countries to trade national emission
(e.g., treatment of nitrate pollution) or where implementa- reduction targets;
tion of remedies has been difficult. Such research could * In the European context, West European countries
focus on ecologically acceptable agriculture and forestry could make the best possible use of their resources
practices-especially their economic costs and benefits. devoted to greenhouse warming by allocating a substan-
Support could also be channelled to specialized research tial fraction to reducing energy use and carbon emissions
institutions engaged in crucial conservation (e.g., botani- from the CEE countries.
63
TRANSBOUNDARY WATER POLLUTION. approach is a fundamental prerequisite for longer-term
9 Install treatment technologies in coastal centers which successful environmental policy
remove more nitrogen and, perhaps, phosphorus than those * Donors should make greater use of local expertise.
which would be appropriate on the basis of local consider- Not only would this help to develop local skills, it can also
ations alone when transboundary effects are important. provide a better understanding of local circumstances and
International assistance would be appropriate for those be more cost-effective then using experts from donor
countries in Central and Eastern Europe which border on countries. Donors should address the problem of tied aid.
international seas threatened by transboundary pollution; * Environmental objectives should be based on realis-
* Concentrate on downstream sources during the ini- tic assumptions about the availability of financial and
tial stages of tackling the problem. This implies a two- human resources.
pronged strategy of focusing domestic resources on * Much more emphasis should be placed on the front-
improving upstream water quality while external end of the project cycle, (i) establishing objectives; (ii) iden-
resources are directed towards downstream sources which tifying efficient solutions among a range of institutional,
have the most direct impact on the sea concerned; policy and technological options; (iii) and identifying
* Develop the framework of cooperation needed to what is needed for successful implementation.
take stronger action in the future if justified, including: * Be cautious in developing comprehensive environ-
mental laws; the rapid political and economic changes
(i) gathering information on water pollution affect- may make them difficult to implement.
ing shared water resources to determine the most cost- * Integrate environmental concerns in the economic
effective control measures for controlling pollution; reform laws wherever possible.
(ii) developing systems to collect and exchange
information about trends in water quality and emissions; STRENGTHENING INSTITUTIONAL CAPACITY.
(iii) coordinating across countries water policies and * To build a local environmental management capacity
regulations affecting shared water basins-including, if and establish appropriate coordination mechanisms, CEE
appropriate, a joint water basin management agency countries should: (i) clarify roles and responsibilities for
responsible for implementing cooperative programs. environmental management among national, regional and
local levels; (ii) strengthen co-operation between munici-
WETLAND MANAGEMENT. palities to overcome administrative fragmentation; the
* Support current measures to protect the Danube and environmental divisions of local authorities sharing a par-
Volga deltas; ticular environmental system (e.g. a watershed or an "air-
* Complete inventories of wetlands and assess the sta- shed") need better horizontal links; (iii) increase efficiency
tus of resources which they offer and the potential threats of municipal services with significant environment impact
to their future health; such as water, district heating, solid waste management
* Ensure that wetland management is integrated into and urban transport; (iv) strengthen environmental plan-
the broad framework of policies for water management ning, project preparation and financial management
and nature conservation with due account being taken of capacity at the local level.
the scope for multiple use management. * Institutions that manage river basins should be cre-
ated or strengthened and given appropriate autonomy.
CONSERVING BIO-DIVERSrrY. They need finance.
* Complete inventories of biological resources; * CEE countries should share experience and know-how
* Build up the institutional and human resources through, for instance, the Regional Environment Center.
required to assess and manage biological resources;
* Revise national legislation to conform with the provi- STRENGTHENING ENVIRONMENT MINISTRIES.
sions of the Convention on Biological Diversity; * Environment ministries should emphasize policy
* Prepare national strategies for the conservation of bio- and coordination, rather than implementation, which is
logical resources and implementation of the Convention. better left to regional and local institutions. They should
build a close working relationship with ministries of
MANAGING TOXIC CHEMICALS AND HAZARDOUS WASTES. health, which have often have been responsible for ambi-
* Assess the state of industrial plants and activities ent environmental monitoring, to establish the vital link
that generate hazardous wastes as well as the related dis- between health objectives and environmental policies and
posal and transport facilities; investments.
* Improve safety measures, including through institu- * Bilateral donors should facilitate the secondment of
tional, technological, managerial systems and equipment; CEE country experts in western institutions (and western
* Strengthen the institutional and technical capacity to experts should be made available to assist in Central and
comply with the provisions of the Basel Convention. Eastern European environment ministries). Such second-
ments would be especially useful for cross-sectoral issues,
Reforming Institutions and for designing effective legislation and implementa-
tion procedures and for helping to upgrade economic
THE KEY PRIORITIES. analysis and other techniques to support decision-making.
* A clear government commitment and environmental * Improve cooperation between ministries, perhaps by
objectives set in the context of a broad participatory setting up cabinet-level committees for environment and
64
development, and by designating staff from the ministry cies. Invite NGOs to the relevant advisory boards, delega-
of environment to participate in strategy development in tions, negotiations, etc. Western governments,
all sectoral ministries. multinational institutions and western business should
recognize CEE NGOs as regular discussion partners for
IMPROVING MANAGEMENT CAPACITY, their activities in and related to the region.
TRAINING AND EDUCATION. * Provide NGOs with access to environmental infor-
* CEE countries should design and implement educa- mation and permit their participation in environmental
tional training programs for high-level decision-makers at impact assessments. Consider following U.S. legislation
national and local levels, in close collaboration with local and practice concerning access to information, and Dutch
institutions. Training programs could be supported by legislation and practice concerning environmental impact
voluntary contributions from donors, with CEE countries assessment.
providing the on-site organization and support. * Consider providing financial support to NGOs.
* CEE countries should establish a network of national
institutions involved in environment training. The pur- Implementation
pose of the network would be to promote exchange of
information between those institutions and their counter- ASSISTANCE PRIOR TO INVESTMENT.
parts in other countries, and with external financial * CEE countries should clearly specify commitments
partners. to policy reform and structural change that affect the via-
* All bilateral and multilateral assistance projects with bility of a project.
a direct impact on the environment should include some * CEE countries should better design feasibility stud-
environmental training. ies. The terms of reference for such studies should address
not only the technical case for investment, but also the
IMPROVING ENVIRONMENTAL MONITORING often neglected financial and institutional requirements
AND INFORMATION SYSTEMS. for implementing the project over time. Donors should
* Expand gradually environmental information sys- involve international financial institutions when prepar-
tems in accordance with priorities and resource availabil- ing terms of reference.
ity. As resources become available, expand coverage of:
(i) water quality parameters (e.g. biological indicators, PROGRAM MANAGEMENT.
phosphorus and heavy metal levels); (ii) marine dis- * CEE countries should undertake programs in an
charges; (iii) pesticide use; (iv) ambient air concentra- integrated manner in support of long term country and
tions of carbon monoxide, hydrocarbons, and lead; (v) regional strategies, not as an aggregation of individual
exposure to noise from traffic, airports and other sources; projects, and should establish effective program and
(vi) wastewater treatment, including the numbers of project management procedures.
households connected to sewage systems, capacity of
treatment systems and degree of treatment prior to dis- STRENGTHENED COORDINATION.
posal; and (vii) volumes and sources of solid waste and * The key functions of coordination should be: (i) to
hazardous waste. monitor whether priority issues are being addressed in
* Extend monitoring networks, comparability and reli- investment and technical assistance programs; (ii) to stim-
ability of the data collected. Replace costly census meth- ulate corrective actions when priority needs are not being
ods with sample surveys. addressed; (iii) to put CEE countries with a particular need
* Strengthen links between CEE countries' environ- for assistance in touch with potential providers of assis-
mental information systems and international systems. tance; (iv) to help avoid duplication of effort by collecting
a Promote self-monitoring of enterprises, with random and effectively disseminating information on assistance
spot-checks by the authorities. Consider making the activities; (v) to review and share experience gained, both
future frequency of monitoring or spot-checks depend on by donors and recipients.
the past record of compliance (e.g., sources found in viola-
tion twice in a row could be put on a watch list for frequent THE PRIVATE SECTOR.
audits). With appropriate penalties for violations, it has * Provide clear "rules-of-the-game" for the private sec-
been demonstrated that high rates of compliance are pos- tor in order to attract foreign investment and remove
sible even with tight budgets. uncertainty for business. In developing national strate-
* Give priority to monitoring areas with the highest gies, give priority to clarifying environmental liability
ambient levels of pollutants which damage human health, issues and establishing appropriate Environmental Impact
even if it means transferring air and/or water pollution Assessment procedures. Western donors should support
monitoring stations from other parts of the country. the development of the local environmental services
sector.
STRENGTHENING NON-GOVERNMENTAL ORGANIZATIONS * Encourage companies to use The Budapest Guiding
* Encourage authorities and business to recognize the Principles on Environment, Industry and Investment Decisions
role and importance of environmental NGOs as full partic- in Central and Eastern Europe for guidance with regard to
ipants in the public debate about sustainable development the environmental dimension of investment. This may
and the formulation and implementation of practical poli- facilitate the transfer of technology and know-how.
65
REVIEW OF IMPLEMENTATION. PROMOTE DEVELOPMENT OF NATIONAL
* All countries concerned should report periodically ENVIRONMENTAL ACTION PROGRAMS.
on adaptation and implementation of the EAP NGOs can * CEE countries should take the lead in developing
be encouraged to contribute to this effort. environmental action programs specific to their needs and
* In monitoring the State of the Environment in the environmental problems they face. This process
Europe, the European Environment Agency should take should start with a clear agreement on priorities among all
account of environmental trends in "hot spots" or critical interested parties in the country. Efforts should then con-
regions identified in the EAP and national strategies. centrate on choosing the most cost-effective way to
* Establish a mechanism to enable the EAP to function achieve the desired objectives within the given financial
as a "living document", elaborating key elements of the and institutional constraints.
strategy and providing feedback on the original strategy.
66
- -Anexe
04| Axnnexes
Annex One
Summary of Human Health Problems and Major industrial
plants located in pollution "hot-spots" in Bulgaria,
Czech and Slovak Republics, Hungary, Poland, Romania;
Latvia, Lithuania, Estonia; Belarus, Ukraine, and European Russia
This summary outlines those environmental health prob- (d)Bulgaria. Plovdiv, Asenovgrad, Kuklen, Kurdzhali
lems in Central and Eastern Europe for which reasonably (results of lead studies of adults in Voden, Kremik-
credible epidemiologic data are available. It is meant to be ovtsi, Jana and Pernik imply that there are probably
a comprehensive summary, but there are obstacles to overexposures to children, too).
achieving this goal. Health outcomes in the various (e) Romania. Bucharest, Copsa Mica, Baia Mare (prob
regions with similar chemical exposure problems have not able).
necessarily been investigated to an equal degree, and dif- (f) Russia (European).2 St. Petersburg, Berezniki, Pod-
ferent methodologies of varying credibility have been olsk, Yaroslavl, Samara, Nizhnyy Novgorod, Uly-
used. This is particularly a problem for chronic and multi- anovsk, Rostov-na-Dony, Kursk, Astrakhan.
factorial diseases which require advanced epidemiologic (g) Ukraine. Kostiantynivka (probable).
methods that are not commonly understood in Eastern
Europe. Thus, the following summary draws attention to
those chemical exposure problems which have been ade- 2. Places where there are documented associations
quately studied, but does not mean to imply that other, between acute respiratory diseases (sinusitis, pharyn-
well recognized episodes of environmental pollution or gitis, bronchitis and laryngitis) and air pollution (46
degradation have not led to human health problems. locations in 10 countries):
The problems described here are primarily the result of
exposures to lead in air and soil, airborne dust, sulfur (a) Poland. Krak6w.
dioxide and other gases2 and nitrate in water. (b) Slovakia. Bratislava.
(c) Czech Republic. Central Bohemia- Neratovice,
1 Places where there is a problem with overexposure to Kralupy.
lead among children (37 locations in 7 countries): North Bohemia- Usti nad Labem, Teplice, Most,
Chomutov, Decin.
This problem is important because it may lead to neu- (d)Hungary. Dorog, Ajka.
robehavioral deficits which will have long term effects (e) Bulgaria. Ruse, Vratsa, Devnya, Srednogorie,
on children's educational attainment. Evidence of neu- Krekikovtsi, Asenovgrad, Shvistov, Dimitrovgrad,
robehavioral deficits among exposed children has been Sofia, Gabrovo, Varna, Kameno, Burgas.
found in several of the following places: (f) Estonia. Narva/Kohtla-Jarve/Sillamae area,
Kunda.
(a) Poland. Katowice Wojewodship-Szopienice, (g) Lithuania. Jonava, Kaunas.
Miasteczko, Zyglin, Lubowice, Zabrza, Toszek, (h) Latvia. Olaine.
Bytom, Bojszow, Brzeziny, and Brzozowice. (i)Romania. Slatina, Baia Mare, Tasca, Sendreni-Galati,
Legnica-Glogow area-near copper smelters (note: Savinest, Suceava, Hunedoara, Mintia, Otelul Rosu,
quality control problems with blood lead data). Navodari, Remicu-Vilcea.
(b) Czech Republic. Central Bohemia-Pribram (note: (j)Russia (European). Arkhangelsk, Berezniki, Voskre-
quality control problems with blood lead data). sensk, Cheboksary, St. Petersburg.
(c) Hungary. Inner Budapest, Romhany, Szolnok. (k)Ukraine. Zaporizhzhia.
1. There is a need to carefully review the places with environmen-
tal health problems due to airborne exposures to evaluate the rel- 2. This and the following information on European Russia is
ative importance of gaseous exposures in the absence of dust. preliminary and subject to verification.
69
3. Places where there are documented associations Central Bohemia
between chronic respiratory diseases (chronic bron- - increased rates of "small for gestational age"
chitis/emphysema and asthma) and air pollution (29 babies in the regions with worst environmental qual-
locations in 9 countries): ity.
- reduced pulmonary, hematological, and
(a) Poland. Regional association between SO2 levels immune function in children from most air polluted
and chronic bronchitis and asthma rates throughout areas.
the country; also found specifically within Krak6w.
(b) Czech Republic. North Bohemia-Usti nad Labem, Mining Districts of Bohemia
Teplice, Most, Chomutov, Decin. - reduced hematological and immune function in
(c) Hungary. Dorog, Ajka, Nagyteteny (in District 22 of children.
Budapest), Borsod County (especially Karincbarcika - delayed bone maturation in children.
and Miskolc).
(d) Bulgaria. Ruse, Razlog, Vratsa, Devnya, Srednogo- Teplice and Usti nad Labem, North Bohemia
rie, Plovdiv, Asenovgrad, Kremikovtsi, Pernik. - increased rates of congenital anomalies.
(e) Estonia. Narva/Kohtla-Jarve/Sillamae area,
Kunda. (c) Hungary. Nagyteteny-anemia among children.
(f) Lithuania. Jonava, Kaunas. Ajka-reduced pulmonary function among chil-
(g) Latvia. Olaine. dren.
(h) Russia (European). Sterlitamak, Ufa, Chaykovskiy (d)Bulgaria. Dimitrovgrad-reduced pulmonary
(Perm oblast). function and reduced growth rates among children.
(i) Romania. Turda, Copsa Mica. (e) Estonia. Narva/Kohtla-Jarve/Sillamae area-
reduced hematological and immune function in
4. Places where there is reasonably strong evidence of a children.
connection between excess infant and lung cancer Kehra-reduced pulmonary function among chil-
mortality and air pollution (8 locations in 3 countries): dren.
(f) Romania. Slatina, Copsa Mica, Turda-reduced
(a) Poland. Katowice-infant mortality in areas with pulmonary function among children.
the highest dust levels. Copsa Mica, Baia Mare-growth retardation.
Krak6w-Lung cancer in relation to community (g)Ukraine. Mariiupil, Zaporizhzhia-increased rates
exposures to steel mill emissions. of congenital anomalies.
(b) Czech Republic. Infant mortality (especially post-
neonatal respiratory mortality) in regions with the 6. Places where nitrates in drinking water are wide-
highest dust and SO2 levels. spread, requiring water replacement to protect new-
(c) Russia (European). Berezniki, Nizhnyy Novgorod, borns against methemoglobinemia (Widespread in 6
Dzerzhinsk, St. Petersburg, Lipetsk. countries):
NB: Other places where correlations between air pollu- Methemoglobinemia is a form of chemical asphyxia
tion and adult mortality and/or cancer incidence are wherein the oxygen carrying capacity of the blood is
likely valid, but require further investigation, include chemically inhibited by nitrates:
the mining districts of North Bohemia (lung cancer, all
cancer, total mortality), the most polluted districts of (a) Slovakia. Widespread problem.
Central Bohemia (total mortality), Ziar nad Hronom (b) Hungary. Borsod County-widespread problem.
region of Slovakia (total mortality), L6dz (total mortal- (c) Bulgaria. Districts of Haskovo, Burgas, Varna,
ity) and the mining district of southern Bulgaria (lung Razgrad and Lovech-widespread problem. Also
cancer). in Stara Zagora, Pazardgik Targovichte.
(d)Belarus. Brest, Gomel, Grodno, Vitebsk, Minsk,
5. Places where there are documented associations Mogibv oblasts.
between abnormal physiological development and air (e) Lithuania. One-third of country covered by water
pollution (18 locations in 7 countries): replacement program for pregnant women.
(f) Romania. Widespread problem throughout the
(a) Poland. Krak6w-reduced pulmonary function country.
among adult males exposed to acid rain emissions.
Katowice-average hemoglobin levels among moth- 7. Places with problems with arsenic:
ers and children reduced by about 20% below nor-
mal. (a) Slovakia. Ziar nad Hronom-increased rates of
(b) Czech Republic. Rates of low birth weight are non-melanoma skin cancer and hearing loss in chil-
increased in the regions with the highest levels of dren downwind of the aluminum plant.
dust and S02. (b) Hungary. B6kes County-high levels of arsenic in
the water supply, with evidence of arsenic-related
70
skin conditions and intestinal colic among children, cow, Murmansk-high concentrations of dioxin in
as well as a possibility of increased rates of stillbirths the soil on grounds of industrial plants and in the
and spontaneous abortions. ashes of waste incinerators.
(c) Bulgaria. Srednogorie-increased levels of arsenic (h) Ukraine. Thyroid cancer in 3 contaminated areas of
in surface water and in the soil. Ukraine following the Chernobyl accident.
(d)Romania. Arad-Lipora-Ineu districts-area is con- The information collected and evaluated from ten CEE
tiguous with Bekes County, Hungary. High rates of countries provides the following overall picture:
skin cancer have been found here.
(e) Russia (European). Cherepovets, Kamensk-Sha- Poland-The predominant environmental health threat
khtinskiy (Rostov oblast), Tyrnaua (Kabardino- in Poland is the regional hot spot in the Katowice-
Balkariya), Vladikavkaz. Krak6w area. Threats to human health are mostly due
to airborne exposures, and secondarily to deposition of
8. Other Health Effects of Contaminated Drinking Water metals (especially lead) in soil. Widespread water pol-
Supplies: lution has not been shown to be a significant risk to
health at this time, presumably because there is a tradi-
(a) Latvia. Riga-large waterborne hepatitis A out- tion of not using tap water for drinking.
break
Jelgava-large milk-borne dysentery outbreak Czech Republic-Air pollution in the mining districts of
based on contaminated water supply. Northern Bohemia forms a regional hot spot, which is
(b) Romania. -carcinogenic substances exceeding the primary source of environmental health problems.
standards have been measured in water samples There are smaller areas of concern in industrial areas of
from 32 of 41 districts in the country. Central Bohemia and Moravia, as well as in Prague. As
-chlorinated pesticides found in many water sup- in Poland, water pollution is not a major current con-
plies around the country. cern with respect to human disease.
(c) Russia (European). St Petersburg, Murmansk,
Volograd, Kurgan, Novgorod oblast, Mordovian Slovak Republic-The pattern in the Slovak Republic is
Republic. different from Poland and the Czech Republic, in that
nitrates in drinking water in rural areas appear to be a
9. Places with other problems: significant problem. In addition, there are human
health problems associated with air pollution from spe-
(a) Poland. Krak6w-ongoing problems with fluorosis cific plants in a handful of specific locations.
near an aluminum smelter.
Turow, Silesia-high prevalence of methemoglobin- Hungary-In Hungary, areas with human health prob-
emia near lignite power plant. lems in relation to the environment tend to be old
(b) Slovakia. Michalovce-PCB exposures, with mini- industrial areas with a confluence of airborne pollution
epidemic of Potter's Syndrome (congenital agenesis sources, such as Borsod County and the industrial areas
of kidneys) in the late 1970s. of Budapest, or areas with a single major point source,
(c) Belarus. Gomel oblast-thyroid cancer in children such as Ajka. Waterborne exposures to nitrates are
following Chernobyl. important as well in Borsod County, and there are prob-
(d)Estonia. Widespread beach closures to protect lems with naturally-occurring arsenic in water in Bekes
against the spread of infectious disease. County.
(e) Latvia. Water supply in Daugavpils closed twice in
the last two years to protect against chemical spills Bulgaria-The pattern in Bulgaria is similar to Hungary
upstream on the Daugava River in Belarus. with a mixture of single and multiple point sources of air
Brocenai-large-scale community asbestos expo- pollution predominating. However, the number of areas
sure. with documented associations between air pollution
Liepaja-multiple concerns from electromagnetic and human health outcomes is much larger in Bulgaria
radiation from radar stations. than in Hungary. Nitrate pollution of water is a wide-
Olaine-disordered immune function in adults. spread problem, affecting drinking water supplies in
(f) Romania. Several towns/cities with high airborne rural areas throughout the.Westem part of the country.
asbestos levels.
Suceava-neurological symptoms in children Romania-Most of the air pollution related problems in
exposed to carbon disulfide. Romania are due to intense exposures from single point
(g) Russia (European). Kalingrad, Novgorod, Lepetsk, sources. These tend to be clustered in certain parts of
Syktyrkar, Kandalaksha, Cherepovets-high air- the country, especially in the area of Transylvania near
borne benzo(a)pyrene levels. Cluj. Nitrate pollution is common in 38 of 41 districts of
Dzerzhinsk, Serpukhov-High levels of polychloro- the country.
biphenyls in air, soil, water, vegetation, and breast
milk. Baltic Countries-Aside from prodigious dust emissions
Ufa, Shchelkovo, Chapayevsk, Dzerzhinsk, Mos- from a cement plant in Kunda, Estonia, and a small
71
number of other local concerns, air pollution problems ing to one estimate, been generated by more than 100
in the Baltic Countries tend to have less health signifi- different institutes around the country.
cance than in other parts of Central and Eastern
Europe. Instead, problems with water pollution have A preliminary assessment suggests that industrial facil-
come to the fore. Rural Lithuania has problems with ities are the most important sources air pollution caus-
nitrates which are of human health significance. Riga ing respiratory and developmental problems in urban
has had an epidemic of waterborne hepatitis A as a and industrial locations in European Russia. Chief
result of a temporary lack of coagulant to treat drinking among these are chemical plants, which emit organic
water from the Daugava River. All three countries have vapors and irritant gases, and petroleum refineries,
had to close beaches in recent years to prevent the which emit polycyclic aromatic hydrocarbons. As in
spread of infectious diseases due to inadequate sewage other parts of Eastern and Central Europe, emissions of
treatment in adjacent settlements. lead from lead smelters, lead-cadmium battery plants,
and storage battery factories have been linked with
Russia-It is not clear whether or not the principal envi- high blood levels in children living in the vicinity of the
ronmental health problems in Russia are the same as plants. Suspended particulate matter is a concern in
those in the rest of Central and Eastern Europe. Russia's many urban areas. Finally, there is concern about expo-
size and tremendous diversity impose significant sures to ionizing radiation in communities adjacent to
obstacles to generalization. The task is made more dif- military-industrial facilities.
ficult by the fact that relevant information has, accord-
As in other countries in the region, it appears that ele-
vated nitrate levels in drinking water may be a wide-
spread problem. Arsenic, pesticides, and petroleum
products may also be contaminating drinking water in
some places.
72
Table Al.1 Major industrial plants located in selected pollution "hot-spots"
Nature of environmental problems Number of plants
Count~y Loato Popultio pidia High leiid Hgh Poe|n AIron 2on R| fi |Nen Orai Ino gan| Pul
(000) k~gic of usi S2 le.'ds istrit. an frmas an chimd IbmCal
1mb or both of Lead: heAufting~ st etl petrod"m. P., PI
Bulgaria Dimitrovgrad 56.2 A, P 2 1
Devnya 30.0 A, C * 1 1 1
Kurdzhali 58.0 Pb * 1
Sofiya 1,221.4 A 1 1 1
Ruse 210.2 A, C 1
Plovdiv 374.0 Pb, C * 1
Stara Zagora 186.7 . 1
Pernik 97.2 Pb, C * 1 2
Vratsa 80.5 A, C 01
Kremikovtsi Pb, A, C 1 1
Varna A 1
Burgas A 1 1 1 1
Razlog C
Other 2 - 3 1 1 4
Czech Northern Bohemia:
Republic _
Usti nad 106.4 A, C 0 1
Labem
Litvinov | 29.9 0 C1 1 1
Most 70.8 A, C 1
Central Bohemia:I
(Table continues on the following page)
Table A4.1 (continued)
Nature of environmental problems Number of plants
|Couty Loown ---. .Popdtion Epidemio- Higb lels High Pow and I_n Non- Rfining hganic Inogaic -p
( :. : 0409 logical o dHst SO2 lels distriC . and ftrous and demicals dheicl ad
414.. Or b6th of kled. heatin. SWee metal peod7QXM~ _ Paper-
Prague 1,215.6 1
Kladno 73.3 1
Melnik 19.7 0 0 3
Pribram Pb 1
Neratovice A 1 1
Kralupy A 1 1
Southern Bohemia:
Sokolov 28.5 0 1
Plzen 174.7 0 1 1 1
Ostrava 331.5 1 2 2 1
Brno 392.2 1
Other 31 2 4 3 4 6
Slovakia Bratislava 442.9 A 3 1 1 1
Ziar nad Hronom 21.4 0 1
Other 8 1 2 2 2 3 6
Hungary Borsod-Abauj-Zemplen
industrial zone:
Karincbarcika C 1 1
Ozd 0 1
Budapest C, P . 1 1
Nature of environmental problems Number of plants
XL OULU- - - - -,:
Northern Transdanubian
region:
Dorog 13.0 Pb 1
Komarom 19.6 * 1
Tatabanya 73.8 1 =
Central Transdanubian
region:
Ajka Pb * 1 1
Baranya County:
Pecs 1
Szolnok 0 0 1
Other 24 2 2 4 2 3 1
Poland Katowickie:
Dgbrowg 139.2 M 0 0 2
Gornicza
Chorzow 131.5 M 0 0 1 2
Awiqtochowice 60.6 M 0 0 1
Katowice 366.9 M, P 0 0 1 1 1
Tarnowskie 74.4 M 0 * 1
G6ry
Zawiercie 57.1 1
Rybnik 144.8 1
(Table continues on the following page)
01
Table A4.1 (continued)
Nature of environmental problems Number of plants
CountLy Populain Epidemio- High lv's High Power and Iron Non- Refining Organic Inorganic Pulp
.000) lgi of dt SO,2 leos disrt and ferrous and dcemwials demicals and
links or both of ad beating stedl metls petrochem Paper
Bytom 323.2 Pb e 2
Szopienice Pb 1
Krakowskie:
Krakow 751.3 A, C, M, P 0 1 1 1
Legnickie: .
Legnica 106.1 Pb 1
Glogow 73.9 Pb 2
Torunskie:
Torun 202.0 * 1 1
Wroclawskie:
Wroclaw 643.6 _ 1 1
Other 64 6 5 10 5 13 17
Romania Bucharest 2,325.0 0 0 4
Piatra Neamt 117.3 = 1 2
Zlatna 9.3 0 02
Brobeta Turnu Severin 108.0 0 1
Galati 305.0 0 1 1
Craiova 297.5 0 2 1
Tirgu Mures 166.0 1
Slatina 74.0 A, P 1
Nature of environmental problems Number of plants
:9m7 Loato Poidio Ep_ma Hig l eeb1 Hig P and |r, Non ,R4lnm Oram nogaz P
liks o:r boh ofkIud .ea....... .nds .....n
Hunedoara A 1
Copsa Mica Pb, P 1
Baia Mare Pb, A 2
Suceava A 1 1
Mintia A 1
Otelul Rosu A 1
Navodari A _ 1 1
Remicu-Vilcea A 1 1
Turda C, P 1 1
Other 20 5 3 12 7 10 11
Estonia Narva 82.3 A, C, P 2
Tallinn 484.4 S 2 1
Kohtla-Jarve A, C, P 2 1
Kehra P 1
Other 5
Latvia Ventspils 50.4 1
Liepaja 2
Riga S7
Other - 1
Lithuania Kaunas A,C
(Table continues on the following page)
Table A4.1 (continued)
Nature of environmental problems Number of plants
unte ry Loction .Population Epdmio- Hig kvets Higb Power and Iron Non- Refining Ogwuc Inoganic Plp
cm)q logwca of duss SO levels disu'ict and. fn~w and dxcicpnai chemwicas and
_nks or both "l. d heat:ig s meta pet,oi ______ }Pper
Siauliai 0 1
Kedainai 0 11
Vilnius 0 3
Klaipeda 0 1
Jonava A, C 0 1 1
Other 11 1 1
Belarus Polotsk 0 1
Magilev 1
Grodno 011
Gomel 01 1
Minsk 0 2
Novopolotsk 01 1
Other * 4 1 1 1 1
Western Lipetsk 0 2 1
Russia
Novgorod Pb, M 1
Smolensk *
Kashira (Moscow oblast) 1
Nizhnckamsk (Tatariya) 0 1 1
Segezha (Karelea) 0
Krasnodar 0 1 1
Nature of environmental problems Number of plants
Country Locauon PopiLztion E H ;} 000 =igh leOjl igh Po A and o Non- Rn Oiai Io P
link otbot qfIta heaing stel mtal pemcen Pape
Balakovo (Saratov oblast) 1
Gubakha (Perm oblast) * 1
Dzerzhinsk (Nizhegorod M * 1 1
oblast) _
Saratov 1 1
Astrakhan Stepnoy Pb 1
Novokuybyshevak 1
(Samara oblast)
Kirovo-Chepetsk (Kirov 1
oblast)
Novocherkassk (Rostov 1
oblast)
Syzran (Samara oblast) * 1
Tolyatti (Samara oblast) 1
Saint-Petersburg Pb, A, M 1 2 1
Bereznild Pb, A, M 1
Yaroslavl Pb 1
Samara Pb 1
Nizhnyy Pb, M 1
Voskresensk A 1
Ufa C 3
Other 20 9 10 20 15 7 23
(Table continues on the following page)
Table A4.1 (continued)
Nature of environmental problems Number of plants
Cown*y Loueion Pojpai.. Epiamio- High levls High Power and Iron ::Non- Reining Orgnic Inorc: | Pulp
.. ... ::(00) logica of du SO2 Vds disc and ferrous . nd chemics | mics and
. links or both of kt: beating sel etl :O. . .: . . . PaO
Ukraine Donetsk 1,110.0 * 2 1 1 1
Kryvyi Rih 713.0 * 1 1 1
Odessa 1,115.0 * 1 1
Zaporizhzhia 884.0 A,P 0 1 2 1 1
Dneprodzerzhinsk 300.0 a 1 1 1 1
Dnepropertrovsk 1,179.0 0 1 2 1
Mariiupil 517.0 P e 2
Makeeva = 1 1
Kiev 2,602.0 1
Kostiantynivka Pb 1 1
Other 7 4 2 16 5 8 5
Key: A = places where there are documented associations between acute respiratory diseases and air pollution.
C = places where there are documented associations between chronic respiratory diseases and air pollution.
M = places where there is reasonably strong evidence of a connection between mortality and air pollution.
P = places where there are documented associations between abnormal physiological development and air pollution.
Pb = places where there is a problem with over exposure to lead among children.
I| Annex Two
Occupational Health'
There is a high degree of overlap between the locations of work, since only 13 percent of the workers were said to
environmental health concern and the areas of industrial retire without a disability. However, our visit to the facility
concentration in Central and Eastern Europe. This is not revealed that this statistic distorted the realities of work-
surprising since three of the principal environmental ing conditions in the plant, which were no more threaten-
health threats are dust, toxic gases, and lead: all of which ing than an average North American steel plant. It turned
are emitted in large degree from industrial sources. To the out that the high rate of disability could best be explained
extent that these polluting industries affect both the health as a response to the exceedingly generous disability pen-
of the communities in which they are located and, also, the sion benefits that existed for workers in heavy industry in
workers who work there, a remediation strategy which Poland, rather than the workers' experience of disability
targets environmental health problems will also be effec- per se.
tive in capturing workplaces with significant occupational Routinely reported data on worker absenteeism and
health problems. The best example of this is lead smelters, occupational disease across Central and Eastern Europe
where significant community exposures to children and reveal a pattern which supports these perceptions. Absen-
in-plant exposures to workers seem to coexist everywhere teeism rates tend to be high (probably reflecting benefit-
they have been measured in tandem in Central and East- driven behavior), while occupational disease rates tend to
ern Europe. However, there are some important excep- be no higher than in Western countries. This latter state-
tions to this general pattern which need to be carefully ment, however, must be taken with three important quali-
considered in the development of an environmental action fications. First, certain occupational diseases are under-
program. These include two types of locations: those diagnosed and under-recognized in Central and Eastern
where environmental health problems exist in the absence Europe. Most important among this group are occupa-
of occupational health problems and, conversely, those tional cancers, which have received no recognition at all as
where occupational health problems exist in the absence occupational diseases and very little investigation has
of environmental health problems. been done of them. Second is the problem of political
In many locations in Central and Eastern Europe stack interference in the reporting of occupational disease. In
emissions from industrial sources are prodigious but in- Czechoslovakia, a political decision was made in the early
plant exposures are trivial, or, at least, no worse than 1980s to suppress data on silicosis cases at the national
would be expected in comparable facilities in the West. level. In Romania, financial incentives were exerted on
This would appear to be true for many coal-fired power plant physicians to keep the number of reported cases of
and heating stations as well as certain cement plants, such occupational disease below a targeted value on an annual
as the one in Kunda, Estonia. But the phenomenon is not basis. Anecdotes about less systematic forms of misreport-
confined to these sorts of facilities. In general, the environ- ing came out in other countries. Finally, the prevalence of
ment inside industrial facilities, except in Romania, seems the "traditional" occupational chest diseases, silicosis and
to be relatively closer to Western norms than conditions in silicotuberculosis, certainly is higher among Central and
the adjacent communities, despite a widespread lack of Eastern European workers in exposed occupations than
basic safety equipment and exceedingly lax enforcement among their counterparts in the West.
of health and safety regulations. A good example of this is This third qualification of the occupational disease
the Huta Sendzimira steel works near Krak6w. The facility statistics points directly to the nature of many of those
has historically been a principal source of air pollution for places where there are severe occupational health prob-
Krakow and was represented to us as a dangerous place to lems in the absence of environmental health problems.
1. Country-specific details are in the underlying technical report on Environment and Health in Central and Eastern Europe.
81
These tend to be places with heavy workplace dust expo- theless, community air quality is not of particular public
sures in the absence of large scale emissions into the com- health concern. Similarly, epidemiologic data for ura-
munity, in other words, in mines. This generalization nium miners in Czechoslovakia suggest an ongoing lung
would seem to apply to many underground coal and cancer risk there. To be sure, there are examples of espe-
uranium mines in Central and Eastern Europe. A good cially dangerous workplaces, other than mines, in Cen-
example is found in Pecs, Hungary, where a uranium tral and Eastern Europe which do not coexist with signif-
mine and a coal mine were both in production until icant community exposures. But, when countries other
recently. There is currently a mini-epidemic of lung can- than Romania are considered, it is fair to say that a large
cer which began among the miners from the (now proportion of the dangerous workplaces that do not lead
defunct) uranium mine, while, at the same time, the coal to community exposures are in the energy sector, and
mine (still operating) has been producing 100-120 new should become targets of closure or reinvestment as part
silicosis cases per year among a workforce of 4100. None- of a program of reform in that economic sector.
82
Annex Three
Modelling the Impact of Economic
Reform and Industrial Restructuring
The scenario analysis described in chapter III is based on (iv)The "EC standards for new plants scenario"-refer-
an examination of the following five scenarios: red to as ECS NP-is based on the same economic
assumptions as the main scenario but assumes that
(i) The "main scenario" is regarded as the most plausi- all new capital equipment is required to meet emis-
ble outcome over the next 20 years on the basic sion standards equivalent to those applied in the
premise that a reasonably comprehensive reform European Community in the early 1990s (rather than
program will be pursued over the next 5 years. The the early 1980s).
environmental performance of new capital equip-
ment is assumed to be equivalent to the environ- (v) The "EC standards for all plants scenario"-referred
mental standards operative in Western Europe and to as ECS AP-adds to the previous scenario the
the United States during the early 1980s. This means assumption that all plants are gradually required to
that the emissions from new plants will be similar to conform to current EC emission standards by 2010
the average level of emissions from West European by the installation of end-of-pipe controls or by
or U.S. plants operating today. appropriate changes in process technology
(ii)The "slow/delayed reform scenario" assumes that Comparison of the first three scenarios illustrates the
pricing and other market reforms are delayed until impact of differences in the nature and speed of economic
1995/96 and that the reform process proceeds rather reform on the countries' environmental problems, while
slowly so that incentives to reduce energy consump- comparison of the scenarios specified in (i), (iv) and (v) illus-
tion and to invest in new, more efficient, capital are trates the contribution of alternative environmental policies.
much weaker and operate over a longer time period. Figures A3.1-A3.7 show the projected paths for emis-
This scenario implies that any economic recovery sions of various pollutants in different countries in the
after 1995 will be much weaker and that growth in region. In each case the two solid lines define the band
the decade 2000-2010 will also be lower. Environ- into which the countries fall. The top line represents the
mental standards are as for the main scenario. outcome for a country with high emissions over the
period and the lower solid line a country with low emis-
(iii)The "accelerated reform scenario" assumes govern- sions. The figures show that in almost all cases emissions
ments press ahead with radical economic reforms continue to fall until after 2000 as a result of the combined
and strict enforcement of hard budget constraints impact of higher energy prices, industrial restructuring
for enterprises. These pressures, combined with an and new investment. Emissions of NO, are one exception
active policy to encourage foreign investment, will to this pattern because growth in the number and use of
shorten the period of adjustment to new incentives vehicles can easily outstrip the decline in emissions from
and higher prices. The immediate decline in stationary sources.
employment and output will be greater because Slower economic reform leads to a slower decline in
more of the old capital stock is scrapped but the sub- emissions but over a longer time span. Still, delays in eco-
sequent recovery will be more rapid with faster eco- nomic reform imply that emissions will be higher
nomic growth through the decade 2000-2010. throughout the whole of the two decades studied. Accel-
Environmental standards are as for the main erating economic reform also accelerates the rate of
scenario. decline of emissions, and their recovery as economic
growth bounces back.
83
Figure A3.1 Emissions of particulates in Figure A3.2 Emissions of particulates in
Hungary and Russia under alternative Romania and Ukraine under alternative
reform scenarios environmental standards
Indices with 1988-90=100 Indices with 1988-90=100
100 100
\ Hungary - base
80 80
Romania - base Romania -
60 ;\t s _, _ 60 > EC new plant
\ \ > _ _ Russia - slow refor-m Z@ ==
40 \ * s \ ~ 40 \XX
X, \ _,~~~~~~~ . \ ' U~~~~kraine-base
Russia - faster reform 2 0 E C a l mpania
Russia - base -
Ukraine - EC all plant - - % ._ *
O1II II I O I
1988-90 1995 2000 2005 2010 1988-90 1995 2000 2005 2010
World Bank estimates World Bank estimates
Particulate emissions under alternative reform scenarios. Hun- Particulate emissions under alternative environmental stan-
gary had higher energy prices and a lower level of dards. Romania can expect only a modest reduction in par-
energy-intensity in 1988 than other countries in Central ticulate emissions from economic reform alone because it
and Eastern Europe. Economic reform has therefore already relies heavily on gas for power generation. The
reduced energy-related air pollution much less than else- imposition of stricter standards only on new capital
where. In Russia, however, the gains will be large with a equipment implies a relatively small improvement in
fall of 77% in total particulate emissions for the main emissions; applying the same standards to all sources pro-
reform scenario. Slower reform means that the decline will gressively would reduce emissions in 2010 to a tiny frac-
be less, though still significant. Faster reform implies a tion of their 1989 level. Though reform makes a much big-
greater initial fall in emissions, offset by faster economic ger contribution in Ukraine, it too would benefit from the
growth after 2000. Bulgaria, Poland, Ukraine and other gradual implementation of stricter standards for all
FSU republics should follow paths similar to that for Rus- sources with particulate emissions less than 10% of their
sia, whereas Romania and the Czech and Slovak Repub- 1990 level by 2005. With a few exceptions, imposing
lics lie between Hungary and Russia. stricter standards on new capital equipment alone does
not lead to a significant reduction in pollution, unless per-
Map 1 (at the end of this report) presents the regional con- formance standards for the new sources are very strict
centration levels for total dust in 1990. In the south-west- indeed. It is the reduction of emissions from old plants which is
ern part of Poland, northern Bohemia, in Eastern Ger- critical to achieving substantial improvements beyond those
many near Leipzig and in the Ukrainian Donetsk area, provided by economic reform.
concentration levels exceed WHO-guideline values for
yearly averages (60-90 ,g/m3). Economic reform and new investment can lead to sub-
stantial changes in the composition of emissions by source
type. Figure A3.8 below illustrates how the source compo-
sition of particulate emissions in Poland will change
under alternative scenarios.
84
Figure A3.3 Emissions of Sulfur Dioxode Figure A3.4 Emissions of NOx in
in Hungary and Belarus Hungary and Ukraine
Indices with 1988-90=100 Indices with 1988-90=100
100 140
N Hungary - base 120 Hungary - base
80
i+> ~~~Hungary - base
100 _ _
60 EC all plant _ Hungary -
80 * EC allplant
Hungary -
X s 60* ECallplant
4040 N
Belarus -base N 4 U
20 Ukraine - EC all plant' .
Belarus - EC all plant - _
l II I I 01 I I
1988-90 1995 2000 2005 2010 1988-90 1995 2000 2005 2010
World Bank estimates World Bank estimates
Sulfur Dioxide Emissions. The pattern for S02 emissions is Nitrogen Oxide Emissions. Emissions of nitrogen oxides in
similar to that for particulates, though in Hungary the Hungary are the clearest case of economic growth out-
decline due to economic reform is less for SO than it was stripping any gain that higher energy prices might induce
for particulates. In part this reflects a reported decline of in energy efficiency. While coal is the main source of par-
25% in S02 emissions from 1980 to 1989. A similar decline ticulates and sulfur dioxide, the use of petroleum products
is reported for the European part of the former Soviet is responsible for a substantial fraction of NO, emissions.
Union, but the published data cannot be reconciled with In 1989, Hungarian coal prices were less than one-half of
more recent data on trends in energy consumption in the comparable West European prices, while prices for petro-
former Soviet republics during the 1980s. Total emissions leum products were above U.S. prices and only about 30%
of SO2 fall to 28% of their 1990 level by 2005 in Belarus below West European prices. All the other countries out-
before rising again as a result of economic growth. Apply- side the former Soviet Union had prices for petroleum
ing stricter controls progressively to all plants would products which were relatively less distorted than coal
reduce Hungarian emissions to 30% of their 1989 level by procts chnwere relal essistor than oal
2005 and to less than 10% of their initial level in all coun- prices. As a consequence, total emissions of NOX from the
tries except Poland. Economic reform alone should reduce Central and South-Eastern countries only falls to 66% of
emissions to less than 40% of their initial level in Bulgaria the initial total by 1995 and rises thereafter to 97% by 2010.
and Ukraine as well as Belarus, with Russia and other FSU On the other hand, prices for petroleum products in the
republics falling in the range of 40-50%. Figure A3.9 below Soviet Union were only one-fifth of West European prices
illustrates how the source composition of SO2 emissions in on average, whereas coal prices were about one-half of
the Czech and Slovak Republics will change under alter- West European prices. Thus, the decline in NO, emissions
native scenarios. is much more dramatic in all of the FSU countries, with
Ukraine's emissions falling to 44% of the 1990 level in 2005
Map 3 shows those regions where concentration levels of before rising slowly thereafter. Strict emission standards
SO2 exceed WHO-guideline values (yearly average of 40- applied to all existing plants and equipment would be
60 ,ug/mi). In the south-western part of Poland, northern required to bring Hungary's emissions down to the same
Bohemia, in eastern Germany near Leipzig, in the Ukrai- ratio by 2010. However, the application of stricter emission
nian Donetsk area and in the area near Moscow, concentra- standards to new equipment alone has a significant impact in
tion levels exceed WHO-guideline values for yearly aver- this case, leading to an average growth in NO, emissions
ages. Map 4 shows that in 2010 no large-scale areas are which is much lower than the general rate of economic
expected to exceed annual average WHO guideline values growth.
for SO2, assuming that all new investments utilize current
Western technology ("Scenario 1"). Note, however, that
due to local conditions within grid cells (especially in
urban areas), extreme values may be higher at a sub-grid
scale. Daily average values are still expected to be
exceeded in a number of areas. 85
Figure A3.5 Emissions of Lead in Bulgaria Figure A3.6 Emissions of Cadmium in
and Romania Belarus, Lithuania and Romania
Indices with 1988-90=100 Indices with 1988-90=100
100 100
80 Romania - base 80
Romania - base
60 60
Bulgaria - base \ - E
;>* - \\>s~~~~~~~~~~~~-. Romania -EC new plant
40 4 40
Bulgaria- _\ _
Bulgaria - 44 ~~~~~~~~~~~Belarus - base
20 EC new plant 20 el ru - - - --
Bulgaria -EC all plant Lithuania - b
01 I 1 0 1 1
1988-90 1995 2000 2005 2010 1988-90 1995 2000 2005 2010
World Bank estimates World Bank estimates
Lead emissions. Economic reform should lead to a substan- Cadmium and other heavy metal emissions. Emissions of
tial reduction in emissions of lead particles in Bulgaria, heavy metals (other than lead), for which cadmium is
but the improvement is both less and more transitory in used as a general indicator, depend upon output in the
Romania. The differences reflect the relative contributions metallurgy industry and on the use of coal and oil. Lower
of the non-ferrous metals sector, combustion of fuels in output from the metallurgy sector, greater energy effi-
other large plants, and leaded gasoline. Where ciency and better environmental performance as old plant
non-ferrous metal plants make a substantial contribution is scrapped all lead to large falls in cadmium emissions in
to total emissions, as in Bulgaria, total emissions can be Belarus and Lithuania. The main scenario for Romania
sharply reduced even without a large shift to the use of indicates a sharp initial fall in emissions followed by a
unleaded gasoline. This is because the initial decline in gradual rise. This upward trend can, however, be reversed
production is followed by a reduction in emissions of lead by the gradual introduction of stricter environmental stan-
per unit of output associated with new equipment and dards for all plants, so that total emissions in 2010 would
stricter controls. In Romania, however, stricter standards be only 10% of their initial value.
on the lead content of gasoline are crucial if total lead
emissions are to be reduced substantially. The projection Map 2 shows hot spot areas of cadmium emissions in
for EU standards applied to new plant alone assumes that Poland (Katowice), the Czech and Slovak Republics, Hun-
the average lead content of gasoline is reduced to 0.15 gary, Romania, Bulgaria, Croatia, Ukraine (Dnipropetro-
grams per liter. This would lower the 2010 index of total vsk) and Russia (Caucasus, Murmansk).
emissions to 55 (from 80). The projection for EU standards
applied to all plant assumes that one-half the vehicle stock
will rely upon unleaded gasoline by 2010, which yields an
emissions index of 17 at the end of period. Figure A3.10
below illustrates how the composition of lead emissions
by source type in Bulgaria will change under alternative
scenarios.
86
Water Pollution. Large industrial plants account for less
Figure A3.7 Emissions of BOD in Russia than 15% of total emissions of BOD in Russia. The remain-
der comes from households and small industrial plants
which are likely to discharge their effluent to municipal
Indices with 1988-90=100 sewers. Thus, a substantial drop in large industrial emis-
120 sions up to 1995, even if reinforced by stricter environ-
mental standards for all plants, has a relatively small
impact on total emissions. Even if governments encourage
100 Total - EC all plant>\ Total - base or require small industries to discharge their wastewater
to central pre-treatment or treatment plants, the relative
contribution of municipal discharges to water pollution
80 - - - will grow over time. In view of the limited resources avail-
Large industry - base able for treating these discharges, any significant improve-
ment in water quality on a broad basis must depend upon
60 \ investment in facilities and technologies which optimize
ambient water quality in a manner which accommodates
40 _ the constraints on investment.
40 __
20 Large industry - EC all plant _
�l I I I
1988-90 1995 2000 2005 2010
World Bank estimates
87
The key assumptions characterizing the different sce- Because the model is based upon detailed projections at
narios are as follows: an industry level, it is possible to distinguish between those
industries-referred to as heavy industry-which are typi-
The paths for GDP follow current World Bank esti- cally characterized by large individual sources and other
mates up to 1995. For most countries, GDP levels out production whose emissions derive from many small
between 1993 and 1995 at 65-75 percent of its pre-transi- sources. The distinction is important because it is much eas-
tion level. In the main scenario GDP is assumed to increase ier to monitor and enforce emission standards for a limited
at 6.5 percent per person per year over 1995-2000 and at 4 number of large sources in the paper, chemical, cement,
percent per person per year over 2000-2010. These growth metallurgy and heavy engineering industries than for the
rates are high but historical experience suggests that they much greater number of medium and small enterprises in
can be achieved if the necessary reforms are implemented. other branches of the industrial sector as well as agricul-
The accelerated growth scenario follows an East Asian ture, services and households. The relative contributions of
pattem, whereas the slow/delayed reform is based on different types of sources to total emissions of some key
growth rates post 1995 that are similar to those achieved pollutants are shown in the following figures.
by the former Soviet Union.
* The share of investment in GDP falls sharply to 1995
and recovers thereafter but only to 20 percent in 2000 and * * * * i
25 percent in 2010-well below past levels. Slower or faster Flgure A3.8 Particulate Emissions In
growth implies correspondingly lower or higher invest- Poland, by Type of Source
ment shares.
* The composition of private and public consumption Indices, 1989 total=100
gradually shifts by 2010 towards the pattern typical of 120
middle income countries with similar incomes measured
in terms of purchasing power parity.
i Improvements in x-efficiency and the adjustment of 100
energy and other inputs per unit of output using old capi-
tal are phased over a period of 10 years in the main sce-
nario. This adjustment period is 20 years for the slow/ 80
delayed reform scenario and 5 years for the accelerated
reform scenario. Under the latter it is assumed that 20 per-
cent of the initial capital stock is scrapped by 1995 as enter- 0
prises contract or close down. Under the slow/delayed
reform scenario it is assumed that new investment has
input-output coefficients based on typical former Soviet
technology rather than Westem technology.
* The long run aggregate elasticity of energy use in 2
industry is approximately -0.5 for the main and accelerated
reform scenarios. This is typical of the long run responses of
West European economies to the two oil shocks. Under the 0 A M
slow/delayed reform scenario it is only -0.075 which is
more typical of the response of centrally planned economies 1988 2000 2000 2010 2010
to price changes in the past. Note that the short run price EC all EC all
elasticities are much lower because the adjustment to higher SM
prices is phased over 5, 10 or 20 years as appropriate. Small sources
* Lags have been built into the adjustment process to U Heavy industry
reflect the slow initial response of industrial energy con- M Power/heat plants
sumption to changes in output, so that energy-related pol-
lution declines more slowly than might be expected from a
simple link between industrial output and energy demand. For particulates, investment in new power and heat plants
* The detailed assumptions about the manner in which or in rehabilitating existing ones will greatly reduce the
the stricter environmental standards in the ECS NP and contribution of these sources thatotal emissions in countries
ECS AP scenarios will affect various emission coefficients like Poland. Remember, also, that this reduction in the share
are described in a Background Paper to the Action Pro- due to power and heat plants accompanies a large fall in
gramme. In particular, the coefficients relating to emis- total emissions. The reduction in emissions from large
sions of NOx and lead from household use of oil products, industrial sources is less than for total emissions, unless
which is assumed to be almost entirely comprised of gas- stricter standards are applied to existing as well as new
oline in automobiles, do not imply that all new automo- plants. If srcstandards are applied to all plants, then it is
biles will be fitted with catalytic converters. For the ECS small sources-households, services and small industry-
AP scenario it has been assumed that 50% of the vehicle which make the largest contribution to total emissions. Still
fleet will run on unleaded gasoline. the overall level of emissions is so much lower that this
would hardly warrant stricter environmental controls on
small sources over the time period considered.
88
Figure A3.9 S02 Emissions in the Czech Figure A3.10 Lead Emissions in
and Slovak Republics by Type of Source Bulgaria, by Type of Source
Indices, 1989 total=100 Indices, 1989 total=100
120 120
100 I
80 80
400
1988 2000 2000 2010 2010 _ _ . . .0_
EC all EC all 1988 2000 2000 2010 2010
EC all EC all
m Heavy industry E Small sources
OM Power/heat - EC all U Heavy industry
* Power/heat plants d Power/heat plants
(Data were not available on the separate republics)
In Bulgaria, as in all countries, vehicles are the major source
For sulfur dioxide, as for particulates, large reductions in of lead emissions. Emissions from heavy industrial plants
total emissions are not uniformly spread across different originate both from non-ferrous metal smelters, some of
types of source. The share of power and heat plants tends which can be cleaned up at a reasonable cost, and from the
to fall, especially when stricter standards are applied to all combustion of coal and oil. The latter can only be reduced by
such plants. The share of heavy industry tends to rise in installing controls to reduce all dust and particulate emis-
the absence of stricter standards, whereas with stricter sions. Thus, changes in the contribution of large industrial
standards it is the share of small sources that tends to rise. sources to total lead emissions after the initial economic
However, small sources never become the largest contrib- downturn depend upon the relative strictness of controls on
utor to total emissions of sulfur dioxide, so that environ- vehicle emissions and dust emissions from large plants. For
mental policies and controls should focus on the power vehicles, improvements in average fuel efficiency combined
and heat sector and on large industrial plants. with an upgrading of gasoline quality will bring about a
gradual decline in the share of lead emissions from small
sources under the main scenario and the scenario with EC
controls applied only to new equipment. On the other hand,
strict controls applied to all large industrial plants mean that
an increasing share of (the much lower) lead emissions will
come from small sources. This implies that reducing lead
emissions even further will depend upon an almost com-
plete shift to the use of lead-free gasoline.
Slower economic reform leads to a slower decline in emis-
sions but over a longer time span. Still, delays in economic
reform imply that emissions will be higher throughout the
whole of the two decade studied. Accelerating economic
reform also accelerates the rate of decline of emissions, but
this means that the trough is reached more rapidly and
continuing rapid economic growth can lead to the total
level of emissions overtaking those under a scenario in
which both reform and economic growth are less rapid.
j|~UI Annex Four
Why Raise Energy Prices?
Until 1990, energy prices were set well below market lev- additional 90 million tons of crude oil per year worth
els in all Central and Eastern European countries. Raising more than US$10 billion (after allowing for changes in
energy prices is the classic win-win policy which total GDP). Since Russia's revenue from exports of goods
improves economic efficiency and generates large envi- and services outside the former Soviet Union was about
ronmental benefits. This report emphasizes the environ- US$53 billion in 1991 and is expected to be little more
mental consequences of adjusting energy prices to world than US$35 billion in 1992, the additional oil exports
market levels. But what are the economic arguments? In would imply a substantial increase in Russia's ability to
summary, most sources of energy are prime examples of import capital equipment or consumer goods from the
commodities which can be traded freely. This means that a rest of the world. This is a simple measure of the potential
country which sells energy at domestic prices below the gains from increasing domestic energy prices to world
world market price is sacrificing the difference between market levels. There would, of course, be some capital
the domestic selling price and the world price. investment (and social) costs involved in raising energy
Consider the case of crude oil in Russia. In mid-1992 efficiency to adjust to higher energy prices, so that the net
this was being sold to Russian refineries at a price of Rb gains are somewhat more difficult to estimate. But the dif-
2200 per ton while the equivalent export price was US$120 ficulties of adjusting to higher energy prices are usually
per ton or Rb 15000 at the then prevailing market exchange exaggerated, and US$10 billion per year can buy a large
rate of US$1 = Rb 125. This would not matter if the level of amount of energy conservation.
oil demand in Russia were unaffected by the domestic Russia is an oil exporter, but the story is essentially sim-
price, since the price differential would simply represent ilar for Ukraine which is a large net importer of oil. In its
an income transfer from oil producers or the government case the burden of low domestic energy prices (for a given
to oil consumers. However, Russia is now the most level of world prices) is felt in a reduced capacity to
energy-intensive economy in the world with total energy import goods and services from the rest of the world. Sim-
consumption amounting to 6,000 kilograms of oil-equiva- ilar calculations suggest that the cost of its oil imports
lent per person for a GNP per person of about US$2,500. It could fall by US$2-3 billion per year over the next 5-6
uses about 8 times as much energy per dollar of GDP as years. While information on Ukraine's trade balance is
the average for Western Europe. Even allowing for harsh lacking, this figure may be compared with the country's
weather it is clear that low prices lead to higher levels of total foreign debt in convertible currencies which was esti-
consumption and wasteful use of energy. mated to be about US$10 billion in late 1991.
Simple calculations suggest that an immediate deci-
sion to raise energy prices to the world market level Source: Based on material in Russian Economic Reform: Crossing
should, over a period of 5-6 years, halve that level of the Threshold of Structural Change (Washington, DC: The World
energy-intensity. This would enable Russia to export an Bank, 1992).
91
IS| Annex Five
Environmental Standards
There are three kinds of environmental standards which environmental pollution. Historically, ambient standards
serve quite different purposes in environmental policy: in the rich market economies have been continually tight-
ened in the light of medical evidence on the impact of cer-
* Ambient standards set maximum levels of a pollutant tain pollutants, and as the demand for better
in the receiving medium (air, water and soil). Ambient environmental quality has increased.
standards offer a simple method of establishing priorities * Emission standards2 set maximum amounts of a pol-
since areas (or stream lengths) which comply with the rel- lutant that may be given off by a plant or machine. They
evant ambient standards are considered to require no fur- may be established in terms of what can be achieved using
ther intervention, while other areas may be ranked by the the "Best Available Control Technology" (BACT) or by try-
extent to which concentrations exceed the ambient stan- ing to estimate the volume or concentration of a pollutant
dards. Ambient standards require an explicit agreement in exhaust gases or wastewater discharges that is compat-
on the environmental quality objectives that are desired, ible with ensuring that areas around the plant meet the
and the costs that society is willing to accept to meet those ambient standards that are defined for the pollutant. Con-
objectives. Because ambient standards can be set at differ- tent standards, such as fuel quality standards, may influ-
ent levels for different locations, it is possible to use them ence the amount of, e.g., sulfur in fuel oil or the recycled
to protect valuable ecosystems in a way that would not be content of packaging.
possible by using emission controls.' It has been usual to * New Source Performance Standards (NSPS) are specific
establish an ambient standard for a pollutant by reference emission standards-always based on BACT-in which
to the health effects of different levels of exposure (as dis- the emission standard is only applied to new plants. They
cussed in Chapter II), although certain countries have are a special and very rigid form of grandfathering since
been moving more recently toward ambient standards emissions from existing plants are treated differently
based on the capacity of natural ecosystems to absorb from emissions from new plants. If it is costly for a plant
to install the controls necessary to meet NSPS, they have
.. . . ~~~~~the effect of prolonging the economic life of existing
1. An example of this differentiation is the setting of 'critical plant by posi ina cos hand ic new plant
loads" for acidic depositions in different areas of Europe. "Crit- plants by imposig a cost handicap on new plants-of
ical Loads" are a specific application of an ambient standard course subject to the influence of other economic and
designed to protect vulnerable ecosystems from the damage technological factors.
caused by acid rain. They are a quantitative estimate of an expo-
sure to one or more pollutants below which significant harmful
effects on specified sensitive elements of the environment do not
occur, according to present knowledge. Critical Loads illustrate 2. In some CEE countries, the term "emission limits" is used, to
that it may be desirable to set joint ambient standards for several indicate that the emission standards are only in reference to
pollutants which interact or reinforce each other. Another exam- physical emissions from the plant, regardless of the technology
ple is the joint ambient standard for particulates and sulfur used. In contrast, Western emission standards often imply the
dioxide that has been adopted by the EU. requirement of a type of technology.
93
- Annex Six
Priorities for Environmental
Expenditure (Details)
This Annex provides a more detailed description of some of the environmental expenditure priorities described in chapter V. It
also contains an indicative listing of possible actions as endorsed by the Lucerne ministerial conference. The Annex is struc-
tured like chapter V; in addition, nine text boxes provide specific case study examples:
a Immediate priorities for public investment
(a) Non-ferrous metal smelters
(b) Iron and steel plants
(c) Households and small-scale boilers using coal
(d) TreatmentVpre-treatment of wastewater from small industrial plants
(e) Rural wastewater treatment
(f Toxic, nuclear and other hazardous wastes
4 Investments to deal with urgent problems specific to different countries
(g), (h) Municipal wastewater treatment plants
(i) Biodiversity conservation
* Low-cost measures to address longer-term environmental problems
(j), (k) Traffic
(Z) Natural resource management
Immediate priorities for public investment tion, the costs are incurred over a long period of time
and it is important to deal with the problem as soon as
Non-ferrous metal smelters (a).1 Highest priority should possible in order to prevent harm to those born in the
be given to eliminating the bulk of dust emissions from next few years. It is not only direct exposure to airborne
lead, lead-zinc and copper smelters where there are dust which is the source of damage but the deposition
towns or cities that are located within the dispersion zone of heavy metals on soils which may move up the food
around the plants. There is also a case for tackling fluo- chain or leach into drinking water. Thus, even after the
rine emissions from aluminum smelters but the neces- installation of adequate dust control equipment it will
sary measures are substantially more expensive. be important to maintain a cordon sanitaire around smelt-
The dust from lead, lead-zinc and copper smelters ers to prevent soils which are already contaminated with
can include lead, arsenic, cadmium and other toxic heavy high levels of heavy metals from being used to grow
metals in substantial quantities, especially if crops or for grazing. These areas are often best suited
old-fashioned reverberatory furnaces are still in use. The for growing trees.
damage to human health caused by such emissions is Remarkable improvements in the damage caused by
generally large, especially if they affect a substantial non-ferrous smelters can be achieved by improving plant
population, with the worst sufferers being children management and hygiene. Even a cursory inspection
whose development is affected by exposure to lead. may reveal very simple measures that can be taken to
Since children are the principal victims of lead pollu- reduce wind-blown dust, energy losses and other fugi-
tive emissions. A common problem is the poor handling
1. The letters in parentheses refer to the list of expenditure pri- and storage of metal ores which results in large quanti-
orities discussed in Chapter V. ties of dust being distributed around the surrounding
95
Box A6.1 Environmental improvements in the non-ferrous metals industry
Lead and lead/zinc smelters. Lead and zinc are produced in Bulgaria, the Czech Republic, Poland, Romania, Russia, and
Ukraine. Production is characterized by low grade ore and outdated technology, as well as financial weakness-high indebt-
edness and lack of funds for investment. Some of the ores treated in the CEE countries would not be considered economic in
Western Europe, both because of the low metal content and the potential pollution problems. Indeed, the future of many plants
is highly uncertain. In 1991 the Bulgarian Government announced that all primary production of lead would be closed down,
although this has not yet happened. It appears that the lead and zinc subsectors are the weakest of the non-ferrous metal
activities in the CEE countries.
The main environmental problem concerns emissions of dust containing lead which can contaminate soils and affect chil-
dren in a wide radius around a plant. In the plants studied-Plovdiv in Bulgaria and Copsa Mica in Romania-the main
sources of dust emissions were: (a) dust creation in handling the metal concentrates including unloading trucks or railway
wagons, mixing and crushing operations, and transferring it to the sinter plant; (b) wind-blown losses of concentrates from
stockpiles; and (c) fume and dust emissions from the sinter plant, blast furnace and other refining operations. The worst
problems at both plants seem to be associated with handling the concentrates and with losses from stockpiles. Drastic reduc-
tions in output since 1989 have reduced emissions from both plants more than proportionately because concentrates are handled
more carefully and dust control systems are no longer operating far beyond their design capacity. In the long run, neither plant
is likely to be economically viable at current levels of output, urdess the size of their workforces is drastically cut, since they are
operating at less than half the scale of equivalent plants in market economies.
The immediate priorities are to control dust from concentrate reception, stockpiles and handling. At Copsa Mica, a simple
system of water sprays to damp down the stockpiles-at a cost of less than $100,000-would have a big effect, provided that
the water drained from the stockpiles is properly treated. Completion or installation of perimeter walls (or even complete
enclosure) plus other measures to prevent spillage-costing less than $2 million at each plant-would greatly reduce the dis-
persion of dust. These should be "win-win" investments since most or all of the costs involved should be recouped from lower
losses of concentrate. Similar "good housekeeping" measures could also reduce other emissions to both air and water at a very
small cost.
At Plovdiv the dust collection system within the plant has been substantially upgraded in the last two years with the instal-
lation of new hoods and baghouse filters and the upgrading of the old equipment. The plant's management expects to be able
to meet the new emission standards which came into effect in January 1993. Similar measures are the second priority at Copsa
Mica. A sum of $2 million should be sufficient to repair and modernize existing controls and to install additional hoods and
filters.
The sulfuric acid plants at both Plovdiv and Copsa Mica are both in a bad state of repair. Most of the sulfur dioxide produced
in the sintering and roasting operations and in the blast furnace is emitted to the air rather than being recovered. New acid
plant could not be justified economically, but repairs and upgrading to process more of the sinter plants gases could reduce SO
emissions substantially. The cost would be of the order of $3-4 million for Copsa Mica and $6-8 million for Plovdiv, part of
which could be defrayed by the higher sulfuric acid yield from the plants.
area. Investment in water sprays, partial (or complete) plants and furnaces. The costs of installing new
enclosure of stockpiles and conveyors, and careful at- baghouse dust filters or electrostatic precipitators de-
tention to cleaning roadways are the clearest possible signed to eliminate more than 99 percent of dust emis-
example of good housekeeping measures which pay for sions are quite modest, so that the complete replacement
themselves. The costs involved are small in relation to of existing controls may be cheaper in the long run than
the value of the ores that are lost. any attempt to upgrade them. For a typical lead or
Even at apparently well-run plants it is possible to lead-zinc smelter, the cost of an appropriate baghouse
make large improvements by better management and filter system would be of the order of $6 million, while
meticulous attention to the details of plant housekeep- an electrostatic precipitator (ESP) costing about $10 mil-
ing. The largest lead smelter in the United States (at lion might be required for a typical copper smelter.
Herculaneum, Missouri) was able to halve the ambient Some of the aluminum smelters in Central and East-
level of lead just outside its plant without any new in- ern European emit hydrogen fluoride and other fluo-
vestment, by taking steps to: (i) coordinate operations, rides in amounts which are a serious health hazard for
(ii) anticipate problems and act before they caused sig- those living close to the plants. Aluminum smelting is
nificant emissions, and (iii) ensure that emissions are highly energy-intensive, so that many (probably most)
constantly monitored and that all staff are involved in smelters will be seen to be uneconomic as energy prices
measures to bring them down. By making the plant's are raised to world levels, even taking account of the
environmental performance a constant concern of both special electricity tariffs that are usually established for
management and workers, most CEE smelters should the industry. On the other hand, many of the enter-
be able to reduce the environmental damage that they prises - especially those in Russia - have taken advan-
cause and improve their economic prospects even with- tage of current price distortions to operate their plants
out substantial investments. at full capacity despite the decline in domestic demand
Most smelters already have dust collection systems, by exporting the surplus to the world market. Install-
but they are either poorly maintained or inadequate to ing adequate environmental controls is more expensive
cope with the volumes of air coming from sintering than for other non-ferrous smelters -the cost might be
96
Sinmlar measures will be required at several other lead or lead-zinc smelters in the region. In particular, tree lead-zinc
smelters in Upper Silesia at Bukowno, Szopienice and Olkusz in Poland, at Ordzhonikidze in Russia, and at Kostiantynivka in
Ukraine plus the zinc smelter at Chelyabinsk in Russia are prime candidates for such investments.
Copper smelters. The greatest environmental problem with copper smelters in the region concerns emissions of lead and
arsenic which occur as contaminants in copper ores. There are three important sources of these emissions: (a) particulates in
gases from the smelting and conversion operations and dusts created in preparing and handling copper concentrates; (b) liquid
effluents derived from hydro-metallurgical operations which are discharged to settling ponds; and (c) large volumes of smelter
slags which may lead to the leaching of heavy metals into ground or surface waters if not handled properly.
Installation of new dust controls - electrostatic precipitators, scrubbers or baghouses - would cost $5-10 million for a smelter
producing 100-200,000 tonnes of copper per year. Upgrading existing facilities should be much cheaper: the costs vary from
site to site but an expenditure of $2-3 million per plant would have a large impact on dust emissions from most CEE plants.
Water treatment and measures to prevent leaching from solid wastes can be more expensive-for example, $10-15 million for
a water treatment plant utilizing precipitation techniques and closed circuit systems to reduce water use -but again, it is
possible to make significant improvements to existing facilities for relatively modest expenditures.
The priority sites for such expenditures include: Alaverdi in Armenia; Pirdop in Bulgaria; Glogow and Legnica in Poland;
Baia-Mare in Romania; Krasnouralsk, Kushtym, Mednogorsk, Pyshma and Sredneuralsk in Russia; and Krompachy in Slovakia.
Aluminum smelters. Aluminum smelting is a highly electricity-intensive operation whose economic viability in most CEE
countries is very uncertain once electricity prices have been raised to reflect true long run marginal costs. This
is true even in Hungary with its domestic reserves of bauxite and the low operating costs of nuclear power, because the
country relies heavily upon electricity imports from Ukraine whose marginal cost should determine the price at which power
is supplied to the aluminum smelter. With such doubts about their long run prospects, it is difficult to justify the large expen-
ditures-$50-100 million- that would be required for pot-room refits to eliminate fluorine emissions at most of the aluminum
smelters. For some of the Russian smelters-for example, those at Kamensk, Krasnoturinsk, and Volgograd-such investments
might be appropriate because low cost coal plus the prospect of surplus generating capacity may yield marginal costs of power
that are low enough to sustain continued operation.
For other aluminum smelters in the region (e.g., Zaporizhzhia in Ukraine) the highest priority must be better management
and "good housekeeping" to reduce dust and leaks from pipes. A case study of the plant at Ziar nad Hronom indicated that: (a)
the equipment for handling bauxite was old and there were considerable raw material losses in the form of dust emissions; (b)
the solid/liquid separation stage of producing alumina from bauxite has poorly controlled and archaic technology with the
result that there are substantial caustic emissions; and (c) in-plant hygiene in the alumina reduction pot-lines is very poor and
leads to severe emissions of pot-gases laden with tar, fluorine and particulates. The plant's environmental strategy relies upon
the replacement of existing facilities by a new smelter by late 1994, but funds to complete the necessary investment are not
guaranteed. Unless completion of the new smelter and closure of the old facilities within the next 2-3 years is assured, low cost
measures would be justified to reduce dust losses of bauxite and to improve plant controls and hygiene. No detailed costings
are available, but an expenditure of $2-3 million at most should result in substantial reductions in emissions.
as high as $35 million for a smelter producing 100,000 preciated and that is economic because of the region's
tonnes of raw aluminum per year- so that any decision low labor costs.
to invest must first take account of the viability of the Much of the iron and steel industry in Central and
plant at realistic energy prices. Closing plants (espe- Eastern Europe relies upon out-dated and inefficient
cially those in or close to urban areas) or reducing their technology which results in poor environmental perfor-
capacity is the first step. Only after this has been car- mance. Open hearth furnaces account for almost half of
ried out should new investment in environmental con- crude steel production. By ensuring that steel capacity
trols be contemplated. with the worst environmental record is shut down, gov-
Iron and steel plants (b). Every country in Central ernments can achieve substantial reductions in emissions
and Eastern Europe, other than Hungary, has two or as well as enhancing average levels of productivity and
more large urban areas whose air quality is grossly pol- energy-efficiency for their steel industries. In many cases
luted by iron and steel plants which belch out particu- this will mean that open hearth units will be closed at
lates, sulfur dioxide, carbon monoxide and plants which combine both open hearth and basic oxy-
miscellaneous hydrocarbons. At the same time, the eco- gen steel-making -for example, two-thirds of total ca-
nomic prospect of the ferrous metallurgy industry in the pacity at both Chelyabinsk and Magnitogorsk in Russia
region is dire. Domestic demand for its output is not consists of open hearth units.
likely to rise above 60 percent of pre-reform levels be- In the face of such pressures, Poland has already de-
fore the end of the century while export possibilities are cided to restructure its steel industry, cutting capacity
severely constrained. The quality of output tends to be by at least one-third and modernizing the remaining
poor so that the existing plants are competing in the most plants to reduce energy costs and improve the quality
price-sensitive part of the market and, if capital costs of output. The installation of better environmental con-
are properly taken into account, they have little chance trols should be an absolute requirement for any plant
of competing successfully with mini-mills that rely on that receives modernization investment. It is unlikely
electric-arc furnaces. Thus, most of the industry can that any plants with open hearth furnaces will be mod-
survive only by utilizing capital stock that is fully de- ernized, so that the typical cost of new controls to meet
97
reasonable (but not strict) emission standards for air pol- are not dispersed and cannot easily be controlled. Thus, in
lutants would amount to $20 million per 1 million tonnes tackling excessive exposure to particulates, government or
per year of output capacity for a basic oxygen plant. This donor financing should concentrate on the use of coal in
would cover all of the stages of steelmaking, including households, small commercial and industrial premises, and
the sintering plant, coke ovens, furnaces and finishing. small district heating units (see Box 3.3).
Towns and cities with old steel plants have always This does not mean that emissions from power sta-
been among the dirtiest areas in any country, whether tions and similar large sources can be neglected, but
in market or formerly centrally planned economies. Am- rather that the solution for the large sources is clear-
bient levels of particulates are especially high, which install and maintain appropriate electrostatic precipita-
leads to high levels of both acute and chronic respira- tors. The capital costs of these controls should be borne
tory disease as well as a variety of heart and other con- by the enterprises responsible for emissions and appro-
ditions. The damage done by particulates is usually priate incentives provided either through pollution
exacerbated by relatively high ambient levels of sulfur charges or with regulatory constraints. In due course
dioxide and carbon monoxide. All of these health con- the costs of environmental controls on power stations
ditions can be alleviated by better air quality (even for must be built into electricity tariffs, so that consumers
longstanding sufferers), so that eliminating the pollu- bear the full cost of electricity including all environmen-
tion from steel plants will lead to a gradual improve- tal costs. The necessary adjustments in electricity tariffs
ment in the health of the local population. Thus, the to reflect long run marginal costs (LRMC) are much
benefits of investing in better environmental controls for greater than the average increase in energy prices that
steel plants are typically large because of the size of the is required to reach economic levels in all CEE coun-
population affected and the health gains that can be tries - especially for domestic consumers - and govern-
achieved in a reasonable period of time. ments have made less progress in this respect than for
There is substantial scope for "win-win" investments other energy prices. As a consequence, the financial situ-
in a combination of good housekeeping, better operat- ation of electricity utilities is often poor and they
ing practices and greater energy efficiency which would can ill-afford environmental investments. The best
also improve the environmental performance of those solution is to eliminate price controls since they are an
plants which continue to operate. For example, an evalu- inefficient instrument of social policy. If this is not pos-
ation of Ukraine's steel industry estimated that increased sible, goverments might consider providing special, re-
1 . pay~~~~~~aable loans to finance the early installation or
use of scrap could reduce coal requirements per tonne payay
of finished steel by 20% or more. One operational mea- upgrading of filters on those power stations responsible
for the worst pollution. Since the demand for electricity
sure that is standard in the West but is not used by most he surstantiall in mos c esand is ely
Ukrainian mills is the injection of tar, oil, gas or coal in to recover quickly such finance should be provided only
the tuyires of the blast furnace to provide heat and re- forepower sainsu whose on ul ed o an s
ducing gas. This permits a saving of 100-200 kg of coke power staos pose onting operat is
per tonne of pig iron. Other such measures include: heat ported by a least cost power planning study that takes
recver frm te snte coler intalatin o to prs- proper account of environmental costs.
recovery from the sinter cooler, installation of top pres- Studies of the damage caused by air pollution con-
sure recovery turbines on blast furnaces (already used sistently identify the economic costs of average ambient
on one of Kryvyi Rih's furnaces), gas recovery from ba- levels of total suspended particulates in excess of 75 Tg/
sic oxygen converters without combustion, and instal- m3 as one of the two largest components of the total dam-
lation of regenerative bumers and thermal insulation for age. The other component is usually the loss caused by
heating furnaces. In many plants, process controls are lead emissions, though such estimates are controversial
primitive by comparison with Western facilities, so that because they depend critically upon the value attached
the installation of better controls could have a substan- to the lowering of children's IQ associated with exces-
tial impact on energy and raw material use and on emis- sive levels of lead exposure. In addition, high levels of
sions. particulates associated with the burning of coal have
Coal burnt by households and in small-scale boil- substantial material costs because of the soiling of cloth-
ers (c). Though the volume of coal burnt in power sta- ing, buildings and other physical assets. Estimates of
tions and large industrial plants is generally several the total environmental damage caused by particulates
times that used by households and in small scale boil- in some countries of Central and Eastern are currently
ers, it is the latter which are responsible for much of the being reviewed and updated, but preliminary work sug-
local concentrations of particulates and sulfur dioxide gests that the cost might amount to $750-1,000 million
in the majority of the most polluted urban areas in Cen- dollars per year in Poland. This damage is concentrated
tral and Eastern Europe. For large boilers, it is possible, in the most polluted areas of Upper Silesia and a small
at modest cost, to install electrostatic precipitators or number of other urban areas that have traditionally re-
other dust filters to eliminate 98 percent or more of the lied upon coal for domestic heating.
particulate emissions. In any case, high chimneys and There are basically two ways of eliminating or, at
the relatively high velocities of such emissions disperse least, drastically reducing the emission of particulates
them over a relatively wide area within a country. In from small scale sources. The first is to require that all
contrast, the emissions from burning coal on a small scale users burn smokeless solid fuel rather than ordinary coal
98
Box A6.2 Environmental investments in the iron and steel sector
The main sources of particulate emissions from iron and steel plants are materials handling and storage, coke ovens, the sinter
plant, blast furnaces and steel converters. Most plants have reasonable facihties for primary gas collection and cleaning for
coke ovens, sinter plants, blast furnaces and oxygen converters, especially where the exhaust gases are used to fuel other stages
of the operation. Thus, attention must focus on secondary collection of fugitive emissions including those from charging and
discharging steel converters. These emissions may be high because of poor maintenance or careless operating practices in the
past and dealing with them will involve the installation of ventilation hoods, fans and filters or precipitators whose costs will
be highly plant-specific.
Better arrangements for dust suppression are required, for example, at Kosice in Slovakia. Water sprays, partial enclosure of
conveyor belts and other simple measures can reduce dust emissions, especially those generated by handling fine ores in dry and
windy weather. The investment cost would amount to $1-2 per tonne of steel-making capacity or up to $10 million at Kosice.
At Kosice, all four units of the sinter plant have cyclones, while two have also had electrostatic precipitators fitted to the
sinter breaker and screening areas but not to the sinter furnace. As a result, the emissions from the stacks at Kosice are dirty,
and will almost certainly contain relatively large amounts of fine iron oxide dust. The solution to the problem, which is
expensive, will involve changes in operating practice to improve the sinter quality, and the replacement of the ignition and
filtration systems. The total cost of these measures applied to two of the units (two are expected to be closed) is estimated at
$12-18 million. The sinter plant at Kryvyi Rih has a very bad dust problem, partly because it uses low quality waste and sludge
from the iron beneficiation plant. A combination of better housekeeping, installation of fans with sufficient capacity to capture
and clean waste gas prior to stack discharge and the use either of iron ore pellets or of higher grade fines could achieve large
reductions in emissions. The plant management would like to invest in a new sinter preparation plant but more limited
investment to improve the existing unit would probably be justified.
Controlling particulate releases from coking ovens is largely a matter of good operation and maintenance. For example,
adherence to a regular charging and discharging schedule and effective control of oven heating can assist in minimizing brick-
work damage and hence gas leakage. Where plants have been poorly operated and maintained, significant repairs may be
needed to affect a reduction in emissions. The coke ovens at Kosice, Kryvyi Rih, and Mariupil (the latter is located in the
middle of a city of 500,000 people) display signs of age, misuse and the need for urgent repair. Most of the doors were leaking
and there was a constant haze emanating from the top of the ovens. Detailed studies of the coke ovens would be required to
determine the precise measures needed to reduce the emission levels but replacement or extensive rehabilitation of many of the
coke batteries may be necessary in the medium term. This would be expensive, with a cost of $100 million or more for Kosice.
Improvement of primary particulate controls plus installation of secondary fume collection and cleaning for basic oxygen
converters in existing plants may cost up to $10 per tonne of steel-making capacity. For example, the electrostatic precipitator
on one of the Basic Oxygen System (BOS) units at Kosice was ineffective -the stack was emitting a thick plume which depos-
ited red dust around the surrounding area -and may need repair or replacement at a cost of up to $8 million. It is unlikely to
be worth investing significant sums in open hearth plants whose economic life is likely to be limited.
Prime candidates for environmental upgrading include the BOS units at: Kremikovtsi in Bulgaria; Trinec in the Czech Repub-
lic; Katowice and Krak6w in Poland; Galati in Romania; Chelyabinsk, Cherepovets, Lipetsk, Magnitogorsk, Nizhniy-Tagil,
Novokuznetsk and St. Petersburg in Russia; Kosice in Slovakia; and Kryvyi Rih, Mariiupil (both the Azovstal and the Ilyich
plants) and Yenakiyevo in Ukraine.
or coal briquettes, while the second is to substitute some billion over two decades to 2010. The population living
alternative fuel - normally gas - for coal. Reliance upon in those urban centers worst affected by particulates
smokeless fuel involves little investment in the distribu- amounts to about 6 million people out of a total urban
tion of alternative fuels or in the installation of new boil- population of 24 million, so that the cost of a priority
ers, so that it is relatively simple to achieve provided program of gas conversion might amount to $1.25 bil-
that the investment in carbonizing plants required to lion if implemented over the remainder of the current
supply smokeless fuel is ensured. The difficulty is, how- decade; less than $200 million per year.
ever, that most households and other small users have a The full costs of such a program should eventually
strong preference for gas over solid fuels, so that a mar- be paid by gas consumers who would benefit substan-
ket cannot be guaranteed for smokeless fuel plants while tially from the wider availability of gas. Experience in
investments in gas distribution and conversion will, in many countries shows that households and other small
any case, proceed in response to consumer demand. scale users of coal are prepared to pay a premium for
An appropriate strategy would be to provide the re- the convenience, cleanliness and labor-saving advan-
sources required to accelerate the substitution of gas for tages of gas. Thus, the role of external donors should be
coal in large, heavily polluted urban areas. In parallel, (i) to provide technical assistance to minimize the costs
governments could adopt a policy of requiring the use of gas distribution programs, and (ii) to make available
of smokeless fuels in smaller towns whose average lev- loans on conventional banking terms which would be
els of particulate exposure during the heating season repaid from the revenues of gas utilities in the usual
exceed some critical value-probably 150 Tg/m3. The manner.
Gas Development Plan for Poland estimated that the to- Treatment/pre-treatment of wastewater from small
tal cost (at 1990 prices) of extending gas distribution for industrial plants (d). In most parts of Central and East-
heating purposes to all urban areas would be about $5 em Europe, it is usual for small and, sometimes, me-
99
Box A6.3 The impact of industrial pollution on municipal wastewater and sludge treatment:
Case Studies
Nove Zamky, the Slovak Republic. The use of chemicals can be extremely effective in upgrading existing mechanical and
biological plants. Nov6 Zanmky in Slovakia is one of many plants in the CEE region which are highly overloaded in spite of the
decreasing water consumption. Because the plant works at full capacity, action is needed regardless of the quality of the
receiving downstream stretch of the Nitra River. The traditional enlargement of the existing biological plant would cost about
$11-14 million. On the other hand, retrofitting costs to the mechanical-chemical-biological process would be only about $4-6
million. Such an upgrading would be able to cope with the high flow of industrial sewage (60% of total) and would be flexible
enough to cope with the likely further reduction in water consumption. Sludge management is not adequate at present; any
alternative would require an additional $1-2 million. The most cost-effective solution may therefore be to pre-treat the indus-
trial effluent rather than to mix it with the municipal sewage.
Hradec Kralove, the Czech Republic. The lack of pre-treatment of industrial wastewater causes serious problems
when it comes to treating the sludge left over after wastewater has been treated. This is illustrated by a case study at Hradec
Kralove in Eastern Bohemia, where the sludge was to be used in agriculture. This was a common practice under the former
large agricultural cooperatives and relatively lenient sludge quality standards. The situation has however changed signifi-
cantly: (i) the state controlled farm cooperatives are being dissolved and land returned to its former owners; (ii) the government
aims to minirmize the transmission of sludge contaminants to humans through the food chain; (iii) there is greater understand-
ing of the sources of sludge contaminants. A technical evaluation of the sludge disposal altematives is planned. Components
of the program will include development of a prototype pre-treatment program to improve sludge quality, a re-evaluation of
disposal/use altematives, an assessment of sludge dewatering technology, selection of specific disposal/use sites, and prepa-
ration of detailed cost estimates. The situation at Hradec Kralov6 illustrates problems that occur throughout CEE countries: the
quality of the sludge is poor due to a lack of industrial wastewater pre-treatment.
dium scale industrial plants to discharge their waste- BOD and other pollutants from the effluent produced by
water to municipal sewers. At a minimum, this can place nearly 200 tanneries in Italy required a total investment
a large burden on municipal wastewater treatment of about $20 million to treat 10,000 m3 of wastewater per
plants (where they are operating) and the nature of in- day. At the same time, it is equally important to reduce
dustrial effluent may severely reduce the efficacy of bio- the total volume of effluent to be treated by encouraging
logical or other treatment processes. Since these enterprises to switch to tanning technologies which do
industrial effluents may contain significant amounts of not rely upon chromium. On a smaller scale, a facility to
heavy metals, organic chemicals or heavy concentrations treat 6,000 m3 of wastewater from textile activities might
of COD and BOD, municipal treatment plants may also involve an investment of $2-2.5 million.
not be adequately equipped to prevent serious contami- Based on available data, discharges of industrial
nation of the receiving waters. wastewater have not been a significant threat to human
A crucial part of the long run strategy to deal with health in the region, because water authorities have been
industrial wastewater from all industrial sources should able to obtain water from unpolluted sources. To meet
be to encourage 'win-win" investments in cleaner tech- the demand for water they have had to incur increasing
nologies which minimize both water use and waste gen- costs to pipe uncontaminated water to treatment plants,
eration. New, clean technologies reduce total emissions sometimes over considerable distances. At the same
by50percentormorewithnoeconomicpenalty. Acom- time, it is certainly the case that careless and
bination of realistic charges for water consumption plus unmonitored discharges of industrial effluent from small
pollution charges based on the volume and characteris- industrial plants have caused or may cause irreversible
tics of discharges to sewers will provide a strong incen- damage to groundwater in a number of industrial towns
tive for the adoption of these technologies. Resources and cities. As the costs of treating such emissions cen-
devoted to disseminating information and providing trally is relatively small, public investment to provide
technical expertise relating to these technologies should such facilities should generate a good return in terms of
produce substantial environmental and economic ben- reducing environmental damage.
efits. As for some of the other priorities, the case for public
Where there are concentrations of small industrial intervention and provision of treatment facilities rests
enterprises engaged in tanning, textile dyeing, electro- on the difficulty of monitoring emissions from small in-
plating or other metal processing activities in a town or dustrial plants and of enforcing regulations or pollution
city, the most cost-effective approach to environmental charges designed to reduce emissions of the most dam-
protection will be to invest in one or two industrial treat- aging pollutants. The long run cost of operating central
ment or pre-treatment facilities designed specifically to facilities should be recovered from the firms that use
remove the persistent, toxic and bio-accumulating sub- them, who should also be barred from discharging their
stances. The total cost of such a facility will, of course, effluent to public sewers. By providing the initialfunds
depend upon the precise nature of the effluent that it is required to develop central treatment plants, the government
designed to handle but it will rarely be large. As an or external donors will provide the basis for local environ-
example, a central facility to remove chromium, COD, mental authorities to take strong action against enterprises
100
that neither treat their own discharges nor ensure that it is speed up the necessary investments and changes in prac-
dealt with by a central plant. tice. Agricultural extension which explains how to re-
Rural wastewater treatment (e). Excessive levels of duce fertilizer applications can substantially reduce
nitrates in shallow wells and other sources of drinking nitrate run-off from intensive arable agriculture, espe-
water are a widespread problem in the rural areas of cially if it is combined with increases in fertilizer prices.
many countries in Central and Eastern Europe. How- Rural communities will need different facilities ac-
ever, as with many diffuse environmental problems, tack- cording to their population, area and location. At one
ling it involves a large number of small measures designed extreme there are scattered individual households for
to reduce discharges of nitrates and to ensure that ground- which proper septic tanks are clearly the solution, while
water sources used for drinking are protected from the at the other end are villages with 2,000-5,000 inhabit-
infiltration of nitrates resulting from the careless disposal ants that will require some kind of sewage collection net-
of human and animal wastes. These measures involve a work and a small scale treatment facility. In between,
large component of agricultural extension and public edu- the appropriate solution will depend greatly on popu-
cation as well as programs to finance the relatively small lation density and the physical characteristics of the land
individual expenditures required to install septic tanks (the cost of installing a collection network for a commu-
or simple systems to collect and treat wastewater in larger nity of 500-1,000 people could easily dominate the cost
villages and small towns. The most important thing is of treatment facilities). The size of each community is
proper legislation followed up by effective enforcement not the only issue, since small but closely spaced com-
to ensure that the location, design, construction and op- munities could be served by a single treatment plant with
eration of septic tanks meet the permit conditions. With- interconnected collection networks. Natural treatment
out that, septic tanks are nothing more than point sources systems, such as artificial wetlands, can be used as low
for groundwater pollution. cost alternatives to conventional treatment if an appro-
A short term program to reduce the incidence of meth- priate site is available.
emoglobinemia among infants should concentrate on The immediate priority for public investment should
monitoring nitrate levels in the affected areas combined be to ensure that the manure from feedlots, dairy and
with public education and the provision of bottled wa- pig farms, and poultry units is properly managed, so
ter for families at risk. This is strictly a palliative ap- that highly concentrated effluent is not allowed to seep
proach, but it is necessary as an interim step because into the ground and is not discharged into neighboring
other measures to reduce levels of nitrates will take a streams or rivers. Quite apart from the contribution such
long time to affect exposure levels. activities make to levels of nitrates in groundwater, they
Once the population is better protected from existing can have a devastating impact on river quality and
problems, policy should concentrate on reducing the aquatic life if the untreated liquors from manure heaps
flow of nitrates into groundwater, especially from in- are simply piped into nearby surface waters. The re-
tensive animal husbandry and rural housing. This need sponsibility for financing improvements in the treatment
not involve substantial govemment expenditure on capi- and disposal of manure is similar to that for other envi-
tal projects since much of the necessary finance should ronmental problems caused by small or medium sized
be found by the households and agricultural enterprises industrial enterprises. Over the long run, enterprises
responsible for the offending discharges, but the nature should bear the full costs themselves, but governments
of the problem means that a substantial commitment to may find it difficult to privatize agricultural enterprises
demonstration projects, dissemination of good practice with an uncosted commitment to invest in environmen-
and the provision of advice will be required. It may also tal improvements. This implies that assessments of likely
be necessary to offer grants or loans on special terms to costs plus initial improvements might be financed by loans
Box A6.4 Rural Water Supplies
The question how best to provide rural households with access to safe drinking water gives rise to some difficult environmental
choices in many parts of Central and Eastem Europe. As in many other countries, it is expensive to provide piped water to
remote rural communities. Further, if piped water is installed, the level of water consumption per person tends to rise dramati-
cally, which can lead to substantial problems in dealing with the resulting wastewater. In many communities the provision of
piped water has far outstripped the capacity of existing septic tanks with the result that the quality of groundwater supplies,
especially from shallow wells, is deteriorating rapidly.
The solution is not to deny piped water to rural communities, provided that they are willing to bear an appropriate share of
the investment and other costs involved. However, these costs must include provision for expenditures that will be required to
adequately dispose the resulting wastewater, so that water and sewerage are seen as joint rather than separate activities.
Discounts could be given to those households which maintain adequate septic tanks whose outflows do not jeopardize neigh-
boring wells.
For those households that cannot or choose not to be connected to piped water supplies, the crucial concern must be educa-
tion about the importance of protecting their water supply -usually from a shallow well- from pollution caused by septic tank
discharges. Intermittent monitoring of the quality of water from non-piped sources should also be carried out, so that mea-
sures to protect babies and other vulnerable individuals can be taken if required.
101
Box A6.5 The Application of Natural Treatment Systems: Szugy, Hungary
The village of Szugy, with a population of 1,200 and residential area of 74 ha, is located in rolling terrain in north Hungary.
There is currently no piped water and no sewerage network in the village. Shallow dug ground-water wells are highly con-
taminated by nitrate, necessitating the partial supply of bottled water and usage of deep wells (shallow wells also continue to
be used). Nitrate contamination originates from both fertilizer application and improper on-site sewage disposal.
The local government plans to obtain public water from the closest town, Balassagyarmat. Designs have been prepared for a
wastewater sewer system and a natural root-zone treatment facility. The treatment will consist of pre-settling, root-zone
method (RZM), and disinfection. The system is planned to be constructed on an area of 4 hectares owned by the local govern-
ment. The filter beds will be installed in beds sealed with a 15-cm thick compacted clay layer. Reeds will be planted with
shoots on a 40-cm by 40-cm grid.
The estimated construction cost is US$140,000. However, when the project was initially let out to bid, the local government
received proposals for conventional primary/biological treatment plants that were about 30 to 80% more costly than the RZM
proposal. The cost for the conventional plants ranged from US$180,000 to US$280,000. Operation, maintenance and repair
(OMR) cost for the RZM system is about one-third that of the traditional system.
The feasibility of the RZM system was analyzed for six villages in a lowland region of the Slovak Republic near Bratislava.
Populations in the six villages range from 400 to 2,200. Four alternative wastewater treatment systems were studied: (i) indi-
vidual traditional biological treatment plants for each village; (ii) two similar regional plants; (iii) a single regional plant; and
(iv) individual natural treatment systems for each village. Investment costs of the first three options ranged between US$1.4-
2.0 million while the natural system would require only US$1.2 million.
made available now, subject to the conditions: (i) that such It is, therefore, tempting to conclude that the comple-
loans must be repaid when the enterprises are privatized, tion of such plants should have a high priority under
and (ii) that privatization is on the basis of making ap- the Action Programme. While this may, indeed, be true
propriate further investments to remedy any remaining for some such plants, there will be many that should not
problems. In some areas, where there are several enter- be completed, either because they were ill-conceived in
prises in a particular locality, it may be sensible to invest the first place or because the resources could be better
in collective treatment and disposal arrangements and devoted to other objectives. The design of such plants
transport effluent to a central facility. Projects which pro- was often predicated on assumptions about operating
vide finance and technical assistance for such facilities costs - for example about the price of energy - which are
may be excellent candidates for support from donors. no longer valid, so that modifications in the proposed
Toxic, nuclear and other hazardous wastes (f). As treatment method might be appropriate even where
for old wastes, experience from the West suggests that completion can be justified. Completing the plants
cleanup should be approached cautiously, and that only would, in any case, often be expensive: the total cost in
those sites that could cause damage to water supplies or oth- Poland has been estimated at over $1 billion, though the
envise imply immediate danger to human health should be situation is much better in the Czech Republic. The ex-
cleaned up right away. Other sites should, as a rule, be penditures necessary to complete partially completed
cordoned off and carefully monitored with information plants should be assessed on exactly the same basis as
being registered in a national inventory of waste sites. other elements of the Action Programme. Bygones are
Inappropriate transport and disposal of dangerous sub- bygones, so the issue is what are the net benefits from
stances could be riskier than leaving the sites untouched spending additional resources in this manner rather than
for the time being. Moreover, financial limitations im on, say, control of particulate emissions in highly pol-
CEE countries argue strongly for this approach.' luted towns and cities.
The two categories of wastewater treatment plants
Investments to deal with urgent problems specific identified in items (g) and (h) of the list of investment
to different countries priorities are placed there because they are likely to gen-
erate the largest benefits from any investment in this sec-
Municipal wastewater treatment plants (g and h). In tor. However, the process of setting priorities is a
many countries of the region there are numerous par- complex one and the recommendations are intended as
tially completed municipal wastewater treatment plants. general guidance rather than specific precepts to be fol-
lowed in all circumstances. The economic losses due to
2. In the U.S., only 63 of the 1,200 sites on the National Priority the pollution of beaches and of surface waters in other
List of hazardous waste sites (32,000 potential sites have been tourist areas can be large.3 Equally, the long term costs
identified) could be cleaned up during the last 12 years, at a of careless disposal of wastewater in areas of high eco-
cost of US$11 billion. Under the Superfund procedure in the logical value are substantial, especially relative to the
U.S., it has been estimated that the cost of litigation has cartvalu are sustntilespecally relaivet th
amounted to 55% of actual clean-up costs. Moreover, between c s e
1986 and 1988, only US$166 million was recovered from pri- protect these areas.
vate parties, or roughly 7% of the US$2.4 billion spent on Deterioration in the quality of water in sources from
Superfund cleanups. which drinking water is abstracted can, in many cases,
102
be compensated by more stringent water treatment, but In the industrial countries plenty of experience is
there may be a considerable economic cost involved. available on how to design, construct and operate treat-
Where deterioration is associated with the presence of ment plants of various kinds. The starting point is al-
heavy metals or toxic organic compounds, the costs will ways the standards set by legislation for effluent and,
be even higher since it will usually be necessary to seek sometimes, ambient water quality standards -often at-
out alternative water sources which may imply substan- tached to a given technology ("Best Available Technol-
tial additional investment or operating costs. Usually, ogy"). The development of appropriate standards can
such deterioration is a result of industrial activities, hence take decades. The CEE countries face this process now.
the emphasis on the protection of drinking water sup- They should recognize the time span required, and plan
plies in priority categories (d), (f) and (g). However, if to move towards West European standards over a pe-
lack of municipal wastewater treatment is the reason for riod of 15-25 years as resources become available.4
a serious threat to the maintenance of drinking water The strategy suggested here is based on the
supplies, then investment in an appropriate treatment multi-stage construction of wastewater treatment plants
plant should be regarded as having equal priority with (in consonance with the gradual updating of standards).
investments in category (d). The first stage is aimed at the removal of organic matter
While large investments in municipal wastewater and, in some cases, phosphorus where local conditions
treatment will undoubtedly be required over the next warrant it-e.g. the need to protect lakes. Later, exten-
two decades, it should always be borne in mind that sions (for removing P and N in varying degrees depend-
measures to reduce the volume of sewer discharges can ing on local and regional needs, standards, etc.) can be
have a substantial impact on the scale of the resources added as resources become available, since the original
required. A variety of measures -varying from dealing design should already have allowed for these process
with leaks and dripping taps to the installation of low modifications. This is an unusual procedure in Western
volume toilets -can reduce household discharges by 30- Europe where plants are generally constructed in one
50 percent. Publicity, technical advice and even the pro- stage as a result of more relaxed financial constraints.
vision of free plumbing services reinforced by the In contrast, the strategy advocated here implies building many
incentives provided by appropriate charging for water wastewater treatment plants with medium removal efficiency
use and sewer discharges are all expenditures which rather than afew advanced ones with high removal efficiency.
bring environmental improvements and economic gains. The same strategy applies also to the completion of
A broad range of wastewater treatment technologies unfinished treatment plants and the upgrading of exist-
is available that can be designed reliably to meet speci- ing ones. Chemical enhancement can be effective for
fied rates of removal and emission standards (see Box upgrading both mechanical and overloaded biological
A6.6). The differences in capital and operating costs treatment plants. Since it removes about one-half of
between wastewater treatment plants designed to BOD, the size and cost of any biological process can be
achieve different levels of treatment are substantial. For significantly reduced (or the capacity increased). Inno-
a population of 100,000 the investment cost for mechani- vative application of various chemicals in combination
cal treatment would typically amount to $10 million in low doses -such as metal salts and synthetic poly-
while chemical enhancement of existing mechanical mers -lead to a much smaller increase in the amount of
treatment plants would add only an extra $2 million, sludge produced by comparison with traditional biologi-
but bring a significant improvement in BOD, SS and TP cal methods.
removal, and allow capacity expansion. Various levels The results of work carried out in preparing the Ac-
of biological treatment would increase investment costs tion Programmes suggest that priority in the short-term
to between $15 million and $25 million. The amounts of should be given to ensuring that chemically-enhanced
different pollutants removed from the wastewater stream mechanical and/or biological treatment is installed
also differ. For instance, chemical enhancement signifi- wherever expenditure on municipal wastewater treat-
cantly reduces the phosphorus content of the final dis- ment is warranted. This implies that for most of the in-
charge. Traditional biological treatment is more effective complete plants the appropriate action will be to spend
in reducing the BOD content while none of the above limiited sums in order to enable them to provide mechani-
methods is really efficient in terms of nitrogen removal. cal or chemically-enhanced mechanical treatment as soon
It follows that there can be no single best technological option, as possible, while deferring any plans for more elabo-
since the choice depends upon the quality of the receiving wa- rate treatment until these can be assessed in the context
ters both at the point of discharge andfurther downstream. of an overall plan for water quality management in the
relevant river basin (or coastal zone). Small amounts of
money spent in this way can achieve significant improve-
3. The local importance of the tourist and inshore fishing in-
dustries, together with the threat to groundwater sources used
for drinking water from industrial discharges, are likely to jus- 4. It is worth noting that in OECD countries as a whole, 40% of
tify high priority being given to municipal wastewater treat- the population (330 million people) are not served by waste-
ment in Istria, Croatia, and other localities along the water treatment plants.
Mediterranean coast, combined with measures to assure the pre-
treatment of industrial discharges from the chemical, metal- 5. Details are provided in the technical report on Municipal
working and food processing industries. Wastewater Treatment in Central and Eastern Europe.
103
Box A6.6 Types of wastewater treatment
Municipal wastewater treatment plants are designed to re- Finally, advanced biological-chemical treatment (BCN) incor-
move organic material (characterized by BOD), suspended porates an anoxic basin (oxygen is absent, but nitrate is
solids (SS), phosphorus (P) and nitrogen (N) at required lev- available) for denitrification, and also sometimes an
els (depending on the type of receiving water, its desired qual- anaerobic tank for biological phosphorus removal. Chemi-
ity and planned water uses). For this purpose, various cals may be added for increasing efficiency and improv-
physical, biological and chemical processes -or a combina- ing economy. This method is the most expensive of the
tion of these - can be used. Examples are sedimentation, me- treatment options in terms of capital costs and requires
tabolizing organic compounds by bacteria, and precipitation. careful management by specially trained staff.
* Mechanical treatment (M) removes particulate matter pri- ' "Natural" (extensive) treatment systems (including artificial
marily by sedimentation in a settling tank. wetlands and the root-zone method) can be low-cost al-
* The addition of chemicals (prior to the settling tank) for tematives depending on site-specific conditions. The area
precipitation enhances sedimentation, leading to Chemi- requirement is larger than for the technologies mentioned
cally-enhtanced Mechanical treatment (CM) requiring practi- above, but operation is simple. BOD and SS removal is
cally no additional capital costs but still leading to acceptable, while P and N removal is not yet properly un-
significant upgrading (and good performance even in derstood. (The Kis-Balaton reservoir at the inflow of the
comparison to biological treatment). Zala River to Lake Balaton in Hungary operates partialy
* 'Traditional" Biological treatment (B) incorporates an aera- as an artificial wetland, with positive experiences.)
tion basin after the settling tank in order to allow bacteria
to oxidize a substantial fraction of the remaining organic The processes differ also in the composition, treatment
wastes. and disposal of the sludge that they generate. The table be-
* Biological-Chemical treatment (BC) enhances biological treat- low shows how the technologies differ in terms of their typi-
ment by adding chemicals to improve primarily the effi- cal removal rates for BOD, Phosphorus, Nitrogen, and
ciency of phosphorus removal by precipitation and Suspended Solids, and the associated capital and operating
expand capacity. costs.
TreatmentProcess Typical Removal Rates (%)for.
BOD Total Total Suspended
Phosphorus Nitrogen Solids
Mechanical (M - primary) 30 15 15 60
Chemically-enhanced mechanical (CM) 55-70 75-90 25-30 80-90
Traditional biological (B - secondary) 90 30 30 90
Biological-chemical (BC - secondary) 90-95 90-95 35 90-95
Advanced (BCN) 95-97 90-95 60-85 90-95
Typical Costs (Mechanical Treatment = 1)
Capital Costs Annual OMR Costs Total Annual Costs I
Mechanical (M - primary) 1.0 1.0 1.0
Chemically-enhanced mechanical (CM) 1.1-1.3 1.6-1.9 1.3-1.5
Traditional biological (B - secondary) 1.8 1.7 1.8
Biological-chemical (BC - secondary) 1.7-1.9 2.2-2.6 1.9-2.1
Advanced (BCN) 2.1-2.6 2.6-3.3 2.3-2.9
a. OMR = Operation, Maintenance, and Replacement (includes dewatering and anaerobic stabilization for sludge treatment).
b. OMR plus amortization of capital costs @ 12% interest rate over 20 years of economic life.
ments in water quality and amenity, while attempts to tem planning similar in character to the planning of a
follow the original plans are likely to be frustrated by power system. Both are complex, highly-interrelated sys-
lack of resources and may generate little in the way of tems which need to be analyzed as a whole rather than
additional benefits in the form of better water quality treating each investment decision as if it could be de-
and amenity (see Box 4.3). cided on the basis of limited local information. It is,
and amenity hofupdatingstandardsgradually (e therefore, inappropriate to impose uniform emission or
The approach of updating standtardts gradtually andt technological standards on all municipal wastewater
relyingr upon multi-stage technologty must be compzle- tehogiasanrdonllm icplwtwtr
relying upon multi-stage technology must be comple- treatment plants within a river basin. A more flexible
mented by careful planning at a water basin or sub-basin approach will be required in order to achieve long run
level in order to maximize the impact of expenditures improvements in the water quality of rivers in Central
on water quality. The management of water quality in and Eastern Europe at a cost that can be afforded by the
a river basin should be regarded as an exercise in sys- countries concerned (see Box 4.5).
104
Box A6.7 Priorities and alternative technologies: Case study of an overloaded municipal wastewater
treatment plant
The municipahty of Zvolent in the Slovak Republic (population 42,000) has a high level of water and wastewater infrastructure:
more than 95% of the population is connected to the water supply system and the combined sewer network. Because of poor
construction of the sewer system, groundwater infiltrates the sewer system and adds to the volume of waste water. Industrial
wastewater represents about 20% of the total. The existing treatment plant is 18 years old and has a traditional primary and
biological (Activated-Sludge Process) design. The plant should handle about 250% of the amount of water for which it was
originally designed, and 150% of the BOD load. More than 10,000 m3 per day is discharged to the Hron River without any
treatment.
Several alternatives to solve the existing treatment problems are being discussed. Investment costs for treatment (including
sludge management) range from US$26-30 million. The annual operation, management and repair (OMR) cost is around
US$2-2.5 million based on the assumption for all options that the original capacity will be expanded by 50%. Funds are not
available for the treatment upgrade and space is limited.
However, the planned capacity expansion is probably not needed. If the sewer rehabilitation is completed, groundwater
infiltration will diminish. A further flow reduction is anticipated due to increasing water prices. As a result, it is estimated that
the future discharge may be reduced by about 40 to 50%.
Thus, the best alternative may be to upgrade the first stage of the plant to chemically-enhanced primary treatment and retain
the existing activated sludge unit. If the ongoing extension of the final clarifier is completed (at an investment cost of slightly
below US$3 million, including the costs associated with the increase in sludge production and treatrnent, and an annual OMR
cost of around US$1.5 mil]ion), this treatment scheme will meet both the existing standards and those proposed for 2004.
The solution is about ten times less expensive than the alternatives currently being discussed, and little additional area is
needed for construction.
Biodiversity conservation priorities (i). Since the be isolated from the encroachment of nutrients and pol-
most polluted areas are relatively well-defined and do lutants from intensive agriculture on the remainder of
not evenly cover all of Central and Eastern Europe, it is the land area. Hence, even if all existing protected areas
possible to prevent deterioration in those areas that are (in Western or Eastern Europe) were managed in exem-
relatively untouched-at a fraction of the costs of the plary fashion, conservation could not be assured. It is
investments required to address the main pollution prob- therefore not enough to improve the management of pro-
lems. This is true especially for some of the remaining tected areas alone; to prevent irreversible loss of species
large, contiguous unspoiled areas (such as the Mazurian and habitats requires awareness and actions in agricul-
Lakes in northeast Poland and parts of the Taiga in Rus- ture, tourism, and industry. In other words, conserva-
sia), and for the remaining wetlands which, according tion should be embedded in all economic activity.
to recent studies, are the most vulnerable ecosystems in CEE countries, in collaboration with the Council of
the CEE region. As part of conservation measures for Europe and IUCN, have proposed five site-based
such sites, investments should ensure above all that tour- projects in areas of outstanding biodiversity as examples
ism and other facilities in pristine areas meet rigorous of an integrated approach serving both conservation and
standards for waste water treatment. Revenues from development objectives (see Box 5.4). Another 22
... . proi~~~ects from the region have been proposed and are
tourism and other recreation activities could provide pro
funds for investment and maintenance expenses in pro- being discussed. A complete picture of the areas that
are or should be protected will not emerge until comple-
tected areas. tion of the CORINE extension to CEE countries, the work
Where protected areas are located in polluted zones
(e.g., in Poland, 6 out of 18 national parks are located in in CEE for the State of the Environment Report, and
regions of 'ecological disaster" or "ecological,har, completion of the IUCN ecosystem surveys.
regions of "ecological disaster" or "ecological hazard"), GREEN LUNGS OF EUROPE PROPOSAL. In March 1992, En-
conservation of living natural resources requires, in the vRo ENt M s EO eRuSA InMa, 1avi, Po-
first nstane, th samekinds f meaures s arecaffe vironment Ministers of Belarus, Lithuania, Latvia, Po-
first instance, the same kinds of measures as are called land, Russia, and Ukraine established a working group
for to address the impact of environmental degradation to prepare a proposal for a Green Lungs of Europe pro-
on human health. In some cases, and only if no other gram aiming to protect regions in those countries rich-
possibilities are available, ex situ conservation of spe- est in biodiversity.7 The program has its roots in the
cies through special measures (e.g., creation of gene concept of the Green Lungs of Poland - the north-eastern
banks) may be called for.6 With regard to protected ar- part of the country that remains largely unharmed by
eas, the basic premise is that investments should focus industrial pollution. The Green Lungs of Europe pro-
on establishing and funding integrated management
plans for existing designated areas. Standard procedures
for environmental impact assessment should be used to 6. A project financed by the Global Environment Facility (GEF)
ensure that new activities do not adversely affect the con- is underway in Poland to provide institutional support for
servation values of these areas. biodiversity conservation management activities and a forest
In Western Europe, biodiversity conservation is con- gene bank to conserve tree species found in the old-growth
centrated on 10% of the land area which cannot easily Bialowieza National Park.
105
Box A6.8 Environmental investments in the paper and pulp sector
The composition of pulping processes installed in CEE countries is broadly comparable with that for West European plants,
though few plants are designed to use recycled paper. Thermo-mechanical pulp making has been adopted more rapidly in
Western Europe while the much lower demand for packaging materials in the CEE region has favored the use of simple
chemical or mechanical processes rather than combined semi-chemical processes.
The environmental problems of CEE pulp mills seem to be particularly associated with the control of wastewater treatment
plants and the treatment of condensate liquors from chemical pulping. Primitive controls - for managing the pulping process
as well as treating wastewater-combined with very limited adoption of water recycling means that CEE plants tend to waste
much more energy and water than their Western equivalents. Other techniques, such as steam stripping of condensates and
black liquors in Kraft and sulfite plants, could pay for themselves by reducing energy costs while also lessening the burden on
wastewater treatment facilities. The costs of such measures varies greatly from plant to plant but an investment of $2-3 million
for a plant producing 50,000 tonnes per year should permit significant improvements in both efficiency and environmental
performance.
Chlorine-based bleaching is believed to be a significant source of pollution from many CEE kraft mills since they have not
been subject to the increasingly stringent emission standards applied to most Western plants with respect to emissions of
chlorinated and halogenated organic compounds (known as AOX and including such compounds as pentachlorophenol and
dioxin). AOX emissions cannot be eliminated but they can be largely removed from wastewater and disposed
of safely in solid form. Further, a variety of options are available to minimize the amount of AOX produced-this can run to 1-
1.5 kg per tonne of pulp with chlorine bleaching of kraft pulp. Pre-bleaching technologies such as improved pulp washing,
exclusion of condensate liquors from wash waters, extended cooking in the digestion stage, oxygen addition to reduce the
lignin content of pulp, and better process control rely more on process modifications rather than end-of-pipe controls with
potentially large investment requirements.
A case study of the Sloka pulp plant in Latvia, which primarily produces chemical pulp using a sulfite process, showed that
the plant's principal environmental problem concerned emissions of various organic compounds such as lignosulfonates and
phenols. The plant would benefit from better process controls, though their main benefit would be economic since they would
reduce energy and material inputs and improve output quality. Separate treatment of condensate liquors would involve an
investment of $2-2.5 milion, but the cost could partly be recovered by burning the methane and distillate produced. The
lignosulfonate problem arises because the wastewater treatment plant cannot degrade this material efficiently, so that it would
be better to remove and reprocess it in solid form. Both the cost and the economics of any investment in such reprocessing are
highly uncertain.
Chemical pulp plants can be highly unpleasant neighbors because of the malodorous nature of their gaseous emissions even
though the gases emitted are generally not hazardous to health. An investment of $0.5-1 million can reduce emissions of
hydrogen sulfide, other sulfur compounds and aromatic VOCs to air by 80% or more.
posal foresees the development of sustainable practices a sustainable manner and that an appropriate share of
in all productive sectors. the resource rents accrues to the government. The expe-
NATURAL RESOURCE AND FOREST MANAGEMENT. Some rience of other sub-Arctic countries would be especially
temperate forests are as rich in species as tropical for- useful as a basis for providing the necessary technical
ests although the diversity is not in the tree species them- assistance. Technical and financial support for sustain-
selves but in the organisms which inhabit or depend able use and protection could be directed through na-
upon them. Russia contains 42 percent of the world's tional Biodiversity Conservation Strategies.
temperate forests. A recent WWF study has found that In some areas, it may be possible to generate the re-
the most serious threat to temperate forests is logging. sources required to enhance the management of national
Economic pressures and lack of capacity to enforce parks and protected areas from the user fees and tour-
legislation is enabling timber exploitation to proceed in ism taxes that can be earned by encouraging
protected areas. This is a matter of great concern in Rus- ecologically-sensitive tourist development. Care must
sia because of the threat to the Taiga from uncontrolled be taken to ensure that such revenues do not just disap-
logging, but similar considerations apply in other coun- pear into the general budget of either national or local
tries and to the exploitation of mineral and fishery re- government and that a reasonable share of the revenues
sources. is reinvested to protect the natural, ecological and other
Extemal resources and technical assistance is required characteristics that provide the basis for tourist devel-
to enable governments to redirect the activities of De- opment.
partments of Forestry and Natural Resources and to re-
train their staff as well as to introduce new legislative Low-cost measures to address longer term
and regulatory regimes governing the use of these re- environmental problems
sources. In the case of forestry this will involve the in-
troduction of stumpage fees plus a combination of Traffic (j), (k) and natural resource management re-
incentives and regulations to ensure that privatized for- lated concerns (l) are either cases where the maxim that
estry and logging operations manage their resources in prevention is much cheaper than cure applies or where it is
necessary first to develop a proper understanding of the
environmental processes involved before making any
7. Estonia joined the working group in February 1993. substantial commitment of resources. The amounts of
106
public expenditure involved will be small. Technical Therefore concentrating on high-use vehicles may be
assistance, training and research support are the obvi- a cost-effective approach for many urban areas. A
ous areas where external donors can support these mea- recent study comparing options for the control of
sures. emissions from mobile sources in Budapest con-
There are numerous policy options available for the cluded that the least expensive way is to replace stan-
control of emissions from transport sources which can dard diesel bus engines with "clean" engines (which
be grouped in three broad categories: are also more fuel efficient than standard engines).
* Measures to reduce or limit the growth of vehicle traf- Another study showed that retrofitting high-use ve-
fic, such as parking fees and prohibitions, fuel taxes, hicles such as trucks to operate on "clean" fuels such
vehicle emission taxes, urban tolls, area/corridor li- as liquid petroleum gas or compressed natural gas
censing, and land-use planning to reduce the volume may be cost-effective for some cities. Finally, it may
of traffic from residential to commercial areas. Mea- be cost-effective to target taxis for emission controls.
sures aimed at commercial vehicles including man- a It may be correct to discourage a large shift of freight
datory night-time deliveries, and user charges; transport from rail to road. In part this can be
* Traffic management, including measures such as achieved by ensuring that trucks bear the full cost of
car-free zones, computerized traffic signals, traffic the environmental and congestion externalities that
routing, and parking enforcement. they cause in the form of heavy license fees and fuel
* Measures to limit emissions per vehicle-km. These taxes. One promising measure is to finance the de-
include emissions controls, fuel-efficiency standards, velopment of rail container-handling facilities, since
and fuel quality standards. For vehicle emissions stan- it is the cost of transferring freight from road to rail
dards to be effective, countries must have in place or vice-versa which has discouraged the combina-
inspection and maintenance programs. tion of long distance rail freight with local road dis-
tribution in Western Europe. In general, modal
Pollution abatement strategies should be tailored to transport (the use of containers and truck-trailers
each city, and to its level of emissions and air quality. which can easily be moved from road to rail and back
Much more research on the cost-effectiveness of various to road for local distribution) tends to be a very cost-
policy options is also needed. However, even in the effective way to simultaneously address transport
absence of detailed information, it is possible to suggest and environmental objectives. Of course, in large
some priorities: countries with long average hauls such as Russia, rail
* Since high blood-lead levels have been recorded in will continue play an important role in freight trans-
several cities in CEE, and since the benefits of reduc- port so long as its efficiency is improved and em-
ing lead emissions almost certainly outweigh the phasis is given to the timely delivery of valuable
costs, reducing lead emissions from transport sources and time-sensitive cargoes.
should be a priority. Cost-effective measures may in- Measures to strengthen public transport, including
clude: (i) taxing fuels differentially according to lead subsidies, are often proposed in West European cities as
content, and (ii) reformulating the leaded grade of mo- a way of reducing environmental damage caused by ur-
tor fuel; ban traffic. However, in Central and Eastem Europe
* Since the vehicle stock in CEE is, on average, old (in most cities already have extensive public transport net-
Hungary, 42% of passenger cars are over 10 years old, works, though some require substantial rehabilitation.
and 62% are over 7 years old), poorly maintained, and Their main problem is a continued reliance upon gov-
includes a high proportion of cars with highly pollut- ernment subsidies when public expenditure is under ex-
ing two-stroke engines (in Hungary, two-stroke en- treme pressure. The solution, which has already been
gines comprise nearly one-third of the vehicle fleet), tried in some CEE countries, is to raise fares substan-
cost-effective strategies may involve targeting these tially in order to finance the modernization of bus fleets
vehicles. Possible measures may include an owner- (diesel buses are a big source of traffic pollution) and to
ship tax which rises as the vehicle ages and an own- enhance the quality of service offered. Reliable and fre-
ership tax on vehicles with two-stroke engines. quent service is the decisive factor in persuading people
Altematively, govemments may offer subsidies for to continue using public transport. At the same time,
scrapping vehicles or incentives (such as tax breaks) automobiles and trucks should bear the full cost of the
for the acquisition and use of "clean" cars; the latter environmental damage that they cause as well as the
approach has been practiced in a number of Western infrastructure they require. Fuel taxes, vehicle license
European countries as a transition measure before fees, parking charges and even road user charges for
making control technology (such as catalytic convert- vehicles operating in congested city centers are all pos-
ers) mandatory. Now that new EU and UN/ECE sible elements of a package designed to internalize the
regulations require strict emission controls from 1994, costs associated with vehicle use. If such a package is
CEE countries may wish to adopt these standards for implemented, the case for additional public spending
new motor vehicles; on public transport is weak, since the experience of the
* Because of their intensive use, the amount of pollu- rich countries suggests that such expenditures have only
tion emitted by buses, trucks, and taxis is very high a marginal effect in shifting passengers and freight from
in relation to their proportion in the vehicle fleet. private vehicles to public transport.
107
Box A6.9 Environmental investments in the chemicals sector
Chemicals and petrochemicals plants in Central and Eastern though there is still a need to dispose safely of sludges and
Europe vary widely in age. Many would probably have been other solid wastes containing mercury. Past practices have
shut down some time ago in the market economies. For ex- left a legacy of contaminated land, especially below the elec-
ample, PVC plants based on an acetylene route are unlikely trolysis unit. Mercury has largely been washed out of the
to be able to compete directly against ethylene-based pro- river sediment in the section of the Sajo river downstream of
cesses now standard in the West. Older plants were often the plant and there seems to be no serious problem of ground-
designed with limited pollution controls or before the dan- water contamination. Some investment may be warranted
gers associated with certain chemicals were fully appreci- to prevent further intrusion of mercury from the electrolysis
ated - e.g., the carcinogenic monomer VCM produced in PVC unit into the ground underneath, but measures to deal with
plants. Finally, the state of maintenance of older plants is existing soil contamination should probably be deferred un-
often poor, so that simple "good housekeeping" measures til more is known about the extent and nature of seepage
can do much to reduce spills and leaks that are the source of from the site into ground or surface waters.
substantial emissions-e.g., refinery emissions of VOCs from Synthetic soda ash plants using the Solvay process gener-
leaks in heat exchangers into cooling waters, or large styrene ate a large volume of saline water effluent which is difficult
losses from driers. The investment cost of achieving these to deal with. Most inland CEE plants discharge their efflu-
improvements in maintenance and operatingpractices is typi- ent- typically 1,000-2,000 tonnes per day containing up to
cally small-less than $5 million even for large plants. 15% of chlorides-into nearby rivers. This can cause serious
Inorganic chemicals. Chlor alkali plants relying upon damage. Solutions rely upon use of settling lagoons, extrac-
mercury cells account for 10-15% of total emissions of mer- tion of lime solids plus the return of concentrated brine to
cury in the CEE countries. Emissions can be almost elimi- spent brine cavities (assuming that solution mining is the
nated by switching to membrane cells, but this is a relatively source of the brine feedstock). Lagoons must be carefully
expensive option- though a case study of PO Kaustik in Rus- constructed and managed to avoid contamnination of nearby
sia revealed a plant in Volgograd which had the necessary soils and groundwater. The total cost of such measures would
equipment but lacked the funds to install it. A combination amount to $8-12 million for a plant producing 500,000 tonnes
of minor equipment modifications to recover lost mercury, of soda ash per year. A modest part of this cost can be recov-
better operating practices and possible conversion from ered from the sale of lime from lime beds. Plants where some
graphite to titanium anodes would permit substantial reduc- or all of these investments have high priority include Govora
tions in emissions (of the order of 80-90%) at a cost of about in Romania, Bashkiria in Russia and Lyssychansk in Ukraine.
$6 million per plant or about $200 million for all plants in Air emissions of hydrogen fluoride from the processing
the region. Among the large emitters which should receive of phosphate rock are the principal problem associated with
priority in the allocation of such funds are: Dzerzhinsk, the production of phosphoric acid for fertilizers. Most CEE
Volgograd, Berezniki and Sterlitamak in Russia; and plants have relatively low efficiency absorbers which could
Lyssychansk in Ukraine. (The latter has serious dust emis- be replaced by high efficiency Venturi scrubbers at a typical
sions which could be reduced by better housekeeping and cost of $0.5-1 million. Plants where such an investment may
attention to reducing dust during conveyance.) be justified include: Gomel in Belarus; Kedainiai in Lithuania;
Borsod Chem in Hungary was another plant studied. This Gdansk in Poland; and Balakovo, Cherepovets, Krasnodar
used to emit substantial quantities of mercury to both air and and Voskresensk (Moscow) in Russia.
water, but air filters and better water treatment combined Organic chemicals. The main environmental problems
with water recycling have largely eliminated these emissions, are to be found in plants producing ethylene intermediates
108
including PVC. There are a number of acetylene-based PVC reduce the volume of suspended solids and BOD in water
plants in the CEE region which are both uneconomic and sent for treatment. A further expenditure of up to $5 miUlion
produce substantial dust emissions; they should be closed on process controls, better maintenance and simple upgrad-
down as quickly as possible. For ethylene-based plants con- ing should result in substantial reductions in both air and
cern focuses on emissions of vinyl chloride monomer (VCM) water pollution together with lower operating costs.
and of other chlorinated organic compounds. VCM is a car- Refining andpetrochemicals. One important type of emis-
cinogen which is primarily a threat to plant workers but may sions from refineries and petrochemical plants is of miscella-
pose a threat to those living near to PVC plants. Emissions neous VOCs to air and hydrocarbons in water effluent. Some
depend partly on plant design, on the collection and treat- aromatic organic compounds, notably benzene, may be a
ment of vent gases, the extent of fugitive emissions, and on severe threat to the health of plant workers in certain CEE
the method of dealing with slurry from the recovery vessel. plants and there are concerns about general levels of ben-
The most cost-effective way of reducing VCM emissions in- zene exposure in a number of Russian cities. A combination
clude: (a) the minimization of losses in the VCM recovery of improved seals on equipment plus floating roof covers on
system; (b) carbon adsorption of VCM from vent gases; and storage tanks offers something close to a "win-win" solution
(c) steam stripping of VCM from slurry. The total invest- to the most serious leakages of VOCs. Costs depend greatly
ment cost of these measures would amount to $10-12 mil- on the design and capacity of the plant concerned but $0.5-1
lion for a plant producing 75,000 tonnes per year of PVC. A million should be sufficient for a typical plant producing ben-
further $3-6 million would be required to install a proper zene, toluene or xylene while up to $10 million might be re-
high-temperature incinerator to deal with chlorinated organic quired for a refinery processing 10 million tonnes of oil per
residues. Plants where such an investment may be justified year. Reductions in product losses should certainly be suffi-
include: Devnia in Bulgaria; Usti nad Labem in the Czech cient to repay the cost of the latter investment within a short
Republic; Wloclawek in Poland; Tula in Russia; Novaky in period. For Plock in Poland the total cost of such invest-
Slovakia; and Lyssychansk and Severo-Donetsk in Ukraine. ments might amount to $15 million covering both the refin-
The case studies indicated that investment in an incinera- ery and the petrochemical plant.
tor to dispose of chlorinated effluents would be a very high Water discharges from refineries may be contaminated
priority at PO Kaustik in Volgograd. An appropriate unit with oily wastes while wastewater treatment plants tend to
could serve the whole Volga basin whose ecosystem is in- accumulate sludge containing a mixture of heavy oil and
creasingly threatened by water discharges containmg a vari- other chemicals. Quite large investments-of the order of
ety of chlorinated hydrocarbons. Other changes in operating $2040 million-are required to deal with these emissions
practices including the separate treatment of water effluents but the oil recovered can either be burnt or converted to other
from different sources within the plant, and a steam stripper products that can be sold to recover much of the cost. Good
for the PVC unit would also reduce emissions of chlorinated housekeeping practices, especially the separation of effluent
organics. streams, can reduce the volume of such wastes and the asso-
The Chimcomplex and Carom plants near Onesti, Roma- ciated losses of products. A case study of the Burgas refin-
nia, share a wastewater treatment plant that is overloaded ery in Bulgaria showed that an expenditure of $5-6 million
and is suffering from substantial corrosion. There are plans on improving the plant's separators, its sewer system and its
to upgrade this plant-at a cost of $10-15 million-but an wastewater treatment plant could substantially reduce wa-
expenditure of $1-2 mllion on centrifuges and presses could ter emissions to the Bay of Burgas and thus to the Black Sea.
109
LOW-COST ENVIRONMENTAL INVESTMENTS
Indicative Listing of Possible Actions
Industry Problem Technologies/Actions Typical Costs per Plant (US$) Potential Locations
NONFERROUS METALS INDUSTRY
Lead & zinc * Lead emissions which can * Install Water sprays to damp down 100,000 * Bulgaria: Plovdiv
smelters affect children living within a stockpiles 2 million * Romania: Copsa Mica
large radius of the plant; * Install of perimeter walls, plus other * Poland: Bukowno, Szopience & Olkusz
* S02 emissions from sulfuric measures to prevent spillage 2 million * Russia: Ordzhonikidze & Chelybinsk
acid plants * Install new hoods, & baghouse filters; repair
& modernize old controls 3-4 million (Copsa Mica);
* Repair & upgrade sulfuric acid plants to 6-8 million (Plovdiv)
process more of the sinter plants gases 10,000 * Poland: Silesia Metallurgical Works,
* Install devices to contain zinc powder when Katowice l
dumping from hoppers to carriages & when
unloading at screening station; utilize
industrial vacuum cleaner
Copper Lead and arsenic emissions * Install new dust controls - ESPs, scrubbers, 5-10 million * Armenia: Alaverdi
smelters baghouses * Bulgaria: Pirop
* Upgrade existing facilities 2-3 million * Poland: Glogow & Legnica
* Initiate water treatment & measures to 10-15 million * Romania: Baia-Mare
prevent leaching from solid wastes * Russia: Krasnouralsk, Kushtym,
Mednogorsk, Pyshma & Sredneuralsk
* Slovakia: Krompachy
Aluminum Emissions of pot-gases * Install low-cost measures to reduce dust 2-3 million * Slovakia: Ziar nad Hronom
smelters containing tar, fluorine, & losses of bauxite & to improve plant
particulates controls hygiene * Russia: Kamensk, Krasnoturinsk, &
* For plants likely to remain viable, install 50-100 million Volgograd
potroom refits to eliminate fluorine * Ukraine: Zaporozhe
emissions
IRON AND STEEL PLANTS
Iron and steel Particulate emissions, especially * Install ventilation hoods, fans & filters, or plant-specific * Ukraine: Krivoi Rog
plants secondary emissions from precipitators * Slovakia: Kosice
charging and discharging steel * Install water sprays and/or partially endose 1-2 per tonne of steel-
converters conveyor belts to reduce dust emissions, making capacity
especially during dry and windy weather
* Change operating practices to improve sinter 12-18 million
quality; upgrade or replace ignition & filtration
systems
* istall fans with sufficient capacity to capture & 50 million
clean waste gases prior to stack discharge; use
iron ore pellets or higher grade fines
Coking ovens Particulate emissions * Improve operational & maintenance
procedures e.g. by adhering to a regular
charging & discharging schedule & control
over oven heating
* Replace or rehabilitate coke batteries 100 million
Basic oxygen Particulate emissions * Improve primary particulate controls & 10 per tonne of steel-making * Bulgaria: Kremikovski
converters install secondary fume collection capacity (8 million for * Czech Republic: Trinec
Kosice) * Poland: Katowice & Krakow
* Romania: Galati
* Russia: Chelyabinsk, Cherepovets,
Lipetsk, Magnitogorsk, Nizhniy-Tagil,
Novokuznetsk, St. Petersburg
* Slovakia: Kosice
* Ukraine: Mariupol & Yenakiyevo
PAPER AND PULP MILLS
Paper and pulp * Discharge of condensate * Initiate steam stripping of condensates & 2-3 million (plant producing * Latvia: Sloka
mills liquors black liquors in Kraft & sulfite plants 50,000 tonnes/yr)
* Emissions of chlorinated & * Remove AOX from wastewater & dispose
halogenated organic of solids; minimize amount produced using
compounds (AOX) pre-bleaching technologies such as
* Emissions of lignosulfonates improved pulp washing, exclusion of
& phenols condensate liquors from wash waters,
* Emissions of hydrogen extended cooking in the digestion stage,
sulfide, other sulfur oxygen addition to reduce lignen content of
compounds, & aromatic the pulp, & better process control
VOCs * Treat condensate liquors 2-2.5 million
* Reduce water usage by: recycling, installing 1.5-2 million * Poland: Swiecie Cellulose & Paper
control devices, continuously supplying Works
water from thickeners to wastepaper plant;
install hydrocyclones, reuse water from
compressor station & vacuum pumps,
separate fibers from water, treat water from
thickeners for reuse
CHEMICAL AND PETROCHEMICAL PLANTS
Chemical & VOC discharges * Improve operating & maintenance < 5 million
petrochemical procedures
plants
LOW-COST ENVIRONMENTAL INVESTMENTS (continued)
Indicative Listing of Possible Actions
Industry Problem Technologies/Actions Typical Costs per Plant (US$) Potential Locations
Inorganic Mercury discharges * Undertake minor equipment modifications 6 million * Bulgaria: Devnia
chemical to recover lost mercury; implement better * Poland: Oswiecim
plants operating practices, & possibly convert from * Russia: Dzerzhinsk, Volgograd,
graphite to titanium anodes Berezniki, Sterlitamak
* Ukraine: Lysichansk
Synthetic soda Saline water discharges * Construct settling lagoons; extract lime 8-12 million (plant * Romania: Govara
ash plants solids; & return concentrated brine to spent producing 500,000 tonnes * Russia: Bashkiria
brine cavities soda ash/year) * Ukraine: Lyshchansk
Phosphatic Hydrogen fluoride air emissions * Install high efficiency Venturi scrubbers 0.5-1 million * Belarus: Gomel
fertilizer plants * Lithuania: Kedainiai
* Poland: Gdansk
* Russia: Balakovo, Cherepovets,
Krasnodar, Voskresensk (Moscow)
Organic Emissions of vinyl chloride * Minimize losses in the VCM recovery 10-12 million for a plant * Bulgaria: Devnia
chemical monomer (VCM) & other system; install equipment for carbon producing 75 tonnes/yr of * Czech Republic: Usti nad Labem
plants chlorinated organic compounds absorption of VCM from vent gases; PVC * Poland: Wloclawek
implement steam stripping of VCM from * Russia: Tula
slurry * Slovakia: Novaky
* Install proper high-temperature incinerator 3-6 million * Ukraine: Lysichansk, Severo-Donetsk
to deal with chlorinated organic residues * Russia: PO Kaustik in Volgograd
* Romania: Chimcomplex & Carom
* Install centrifuges & presses to reduce 1-2 million plants near Onesti
suspended solids & BOD in water sent for
treatment (a further expenditure of 5 million
on better process controls, maintenance, &
simple upgrading will reduce air & water
pollution and allow lower operating costs)
Refining & * VOC emissions * Install improved seals on equipment & 0.5-1 million (plant * Poland: Plock (15 million for both the
petrochemicals * Hydrocarbon discharges floating roof covers on storage tanks producing benzene, toluene refinery & petrochemical plant)
or xylene); 10 million
(refinery processing 10
million tonnes of oil/yr)
Refineries Oily discharges * Initiate good practices, e.g. separation of 5-6 million * Bulgaria: Burgas
effluent streams; improve sewer systems &
wastewater treatment plants
* Optimize clay dosage with automated 8,600 * Poland: Silesian Refinery Works,
process control; improve batching facility; Czechowice-Dzce l
optimize oil storage; incinerate in the
factory power plant after coating the coal
with a water suspension of the clay
MUNICIPAL WASTEWATER TREATMENT
New Sewage discharge * Consider chemically-enhanced primary 18 million for a town of
wastewater treatment 200,000, e.g. Szeged,
treatment Hungary
plants
Overloaded * Require pre-treatment of industrial waste
plants with before discharge to municipal wastewater
significant treatment plants
industrial * Upgrade traditional treatment plants to 5 million (including sludge
pollution chemically-enhanced primary treatment treatment) in a town such as
Nove Zamky, Slovakia
1/ Being implemented as part of the Norwegian transfer of know-how programs in waste-minimization.
IBRD25296
CENTRAL AND EASTERN EUROPE
CONCENTRATION OF TOTAL DUST
AVERAGE CONCENTRATION IN 1990
MICROGRAM PER MAP 1
CUBIC METER:
<I <20
~Z20-40
40 AO - 60 Th bnd., -bs, d-inein
6090 - d -ypT World
8ook Group, ony judgseeto be fhgoI.
> 90 Slobs.~ f -0 eriwy, r yd ,---eo
iX~~~~~~~~~~~~~~~~~~-b f -h b..dy \4 itX
Computations: RIVM
MARCH 1994
A: AC: WarSid ifALi: 0/: f WS, b S~~~~~11
IBRD 25305
CENTRAL AND EASTERN EUROPE
TOTAL DEPOSITION OF CADMIUM
1990
GRAMS! HA/YR MAP 2
<li] f
The bo-sdoro,icoor, don-o,-nhon
[ IZ 2 -nd -ny othe i.fotieo shon -s this
sp d. nt hnply, o she poot o The Wo-ld
[I] 2- 4 2onAkGrosp, onyy jdgenton the lgo1
> 4 or ouceptoena of such bound-ries
Computations: RIVM
MARCH 1994
116
IBRD 25297
CENTRAL AND EASTERN EUROPE
CONCENTRATION OF SULFUR-DIOXIDE
AVERAGE CONCENTRATION IN 1990
MICROGRAM PER CUBIC METER MAP 3
10-20
NM20-A40 Th0 O~O,aon dm~ew
40-60 -,no 6o ;o Wn, dd
>60 &nnh~~~~~~~~~~~~~~~~~~~~~.kG-np, -ny jodg-sot-th.g1
n~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~o ocnpsnc of noch Inoondor,esf
Computations: RiVM
MARCH 1994
117
IBRD 25298
CENTRAL AND EASTERN EUROPE
CONCENTRATION OF SULFUR-DIOXIDE
AVERAGE CONCENTRATION IN 2010, SCENARIO 1
MICROGRAM PER MAP 4
CUBIC METER: Scenario 1: Current Western energy efficiency and
ITI <10 emission standards in new investments
10-20 T boundaries, colors, denona/ons
20-40 andanyotherjnforntnionshoanonths
-pn do not imply, on.h pad. NfTh W6tid
40 - 60 (data class doesn't appear on mapl 6A Crop,-y judgr-npdeI.f
> 60 (data class doesn't appear on map) ar=ce an s odonet
Computaions: RIVM
MARCH 1994
118
A 65 to 350 (25)
A 30 to 65(31)
& IO to 30 (56)
a tolO0(I 79)
Numbers in parentheses indicate
the number of LPS in each rainge
MAP 5
U ~~~Locations of large point sources Of S02
D~_"\ ;L i IASA
I5AAemissions in the CEI region
119
1311IASA
tIkm2/rok
*100to 130
*50 to 1 00
*20to 50
w~~~~
U tolo
MAP 6
Regional 502emissions from all sources in the CEI region
120
IBRD 25312
CENTRAL AND EASTERN EUROPE
LEACHING OF NITRATE IN
AGRICULTURAL SOILS
COMPUTED LEACHING IN THE MAP 7
TOPSOIL IN MG/L
No data
mm 0-10
lifEJ k 0 - 25
25 - 50
- 50 - 100 Th b-nndnns., calars, d.nannafi-ns
> 100 and any other nfonanhan sao n this
_ Mountainous regions, BakGraop any (odgnreerarho legal
forest and natural areas 5reraneef r,..,ch Iondres
Computations: RIVM
MARCH 1994
121
IBRD 25300
CENTRAL AND EASTERN EUROPE
EXCEEDANCE OF CRITICAL LOADS FOR ACIDITY
1990
C?~~~~~
EQ/HA/YR MAP 8
< 500
1- 500 - 1000 The band,ne. a-n, denomntionshi5
and any Atia in-fan-atia sAna an this
1Sil3 1000 - 2000 np ant iGop, an i pa-t f Thle Wed
Bnnk Gnap, ay jo.dgnt anthelegal
> 2000 stbtaysci_my aray endorsmet
_ > 2000 O~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~r acceptanYce of sluch haur ndarindm e
Computations: RIVM
MARCH 1994
122
IBRD 25301 IBRD 25302
CENTRAL AND EASTERN EUROPE CENTRAL AND EASTERN EUROPE
EXCEEDANCE OF CRITICAL LOADS FOR ACIDITY EXCEEDANCE OF CRITICAL LOADS FOR ACIDITY
2010, SCENARIO 1 2010, SCENARIO 2
MAP 9A MAP 9B
EQ/HA/YR Seai :CretWseneegefiicyndScenario 2: Current Western energy efficiency and emission
emission standards in new investmentsEQH YRsadrsplidtaleqpmn
< 500 [ < 5
00 -I 000 500- 1000
10 X00fX - 2 tf000 Zl-tl00 ;Zk1- ItAd N 000 - 00X0 t1
2000 m: kA d ,'LE d +SE: ' S00 v t': 0St? E f010-0B
2000 (data class daesn't appear on map)
Con.putatio-s RIVM C-spWtaior-s RIVM
JULY 1994 JULY 1994
IBRD25304
CENTRAL AND EASTERN EUROPE
ALUMINUM CONCENTRATION IN
ACIDIFIED SOILS
t C~~~~~~~~~~~~~~~~~~~~~C
MAP 10
IN THE TOP METER OF
GROUNDWATER IN MG/L
=< 0.2
OM<2.0
The boundaies, co/orr derooeinotions
_> 5.0 andanyos- infonoion hoononthis
nmop do net imnp/y on the partr of The Wor/d
B-nk Groo, -ny judgment on the leogo
stfs of -cy tsrdtry or - eny endorsos-en
or anne5stanoe of su-h boondenes
Computations: RIVM
MARCH 1994
124
ABBREVIATIONS
ASP Activated-Sludge Process
BACT Best Available Control Technology
BAT Best Available Technology
BATNEEC Best Available Technology Not Entailing Excessive Cost
BOD Biological Oxygen Demand
CAC Command and Control
Cd Cadmium
CEE Central and Eastern Europe
CIS Commonwealth of Independent States
CO2 Carbon Dioxide
COD Chemical Oxygen Demand
COMECON Council for Mutual Economic Aid
CPE Centrally Planned Economy
CSFR Czech and Slovak Federal Republic
DO Dissolved Oxygen
EAP Environmental Action Programme for Central and Eastern Europe
EBRD European Bank for Reconstruction and Development
EU European Union (formerly European Communities)
ECE Economic Commission for Europe (U.N.)
ECU European Currency Unit
EIB European Investment Bank
ESP Electro-Static Precipitator
FGD Flue Gas Desulfurization
FSU Former Soviet Union (also referred to as Newly Independent States)
GDP Gross Domestic Product
GEF Global Environment Facility
GEMS Global Environment Monitoring System (UNEP)
GHG Greenhouse Gas
GNP Gross National Product
IBRD International Bank for Reconstruction and Development (World Bank)
IFI International Financial Institution
IIASA International Institute for Applied Systems Analysis (Laxenburg, Austria)
IMF International Monetary Fund
IUCN International Union for the Conservation of Nature and Natural Resources (now World Conservation Union)
LCP Large Combustion Plant
LRMC Long-Run Marginal Cost
LRTAP Long-range Transboundary Air Pollution
MBI Market-Based Instrument
N Nitrogen
NGO Non-Governmental Organization
NIS Newly Independent States (Former Soviet Union)
NO. Nitrogen Oxide
NSPS New Source Performance Standard(s)
03 Ozone
ODS Ozone-Depleting Substance(s)
OECD Organisation for Economic Co-operation and Development (Paris)
P Phosphorus
Pb Lead
PM Particulate Matter (PM1O = Particulate Matter smaller than 10 ,am)
SO2 Sulfur Dioxide
Rb Ruble (Russian Currency)
TN Total Nitrogen (in water)
TP Total Phosphorus (in water)
TSP Total Suspended Particulates (in air)
TSS Total Suspended Solids (in water)
UN United Nations
UNCED United Nations Conference on Environment and Development
UNECE United Nations Economic Commission for Europe (ECE)
UNEP United Nations Environment Programme
US$ United States Dollar(s)
VOC Volatile Organic Compounds
WHO World Health Organization
BASIC FIGURES FOR COUNTRIES IN CENTRAL AND EASTERN EUROPE'
Area Area 1992 Population Percent Cars 2 ele-
(OOOs sq relative to Population densityper phone Phys- Infant
km) France (OOOs) sq km lmies
Albania 28.8 0.05 3,250 115 36 5 1.4 n.a. 32
4 4 -''.Yg
Azerbaijan 86.6 0.16 7,370 84 54 na.a 9.5 40 32
N * - .* . 544 -U. x .
Bulgaria 110.9 020 8,500 77 69 171 27.2 31 16
Czech Republic 78.9 0.14 10,320 na. n.a 261 19.0 n.a 10
.iX5g,'.."H . ... *11,11-V' WO'
Georgia 69.7 0.13 5,470 79 56 n.a. 9.2 59 19
Latbia 64.5 0.11 2,640 41 71 152 27.0 50 17
W 6. '1 . 2' �:'t i > f e . e 2 Fv-v
Moldova 33.7 0.06 4,360 130 47 51 12.0 40 23
Romania 238.0 0.43 22,750 97 53 79 11.5 18 23
Slovak Republic 49.0 0.09 5,300 n.a.. na.a.a 16.8 36 13
Ukraine 603.7 1.09 52,130 86 67 73 15.0 43 18
Netherlands 37.3 0.07 15,180 404 89 375 47.6 24 6
n.a. No statistics available.
11 Refers to most recent year for which data are available. Figures for population, population density, percent urban are for
1992; car figures for Albania and Armenia are 1991, for Hungary 1992, for all others 1993; telephone lines for countries
of Central and Eastern Europe 1993, for France and the Netherlands 1991; for physicians and infant mortality, 1990.
v/ Passenger cars per 1,000 inhabitants.
2/ Main telephone lines per 100 inhabitants.
4/ Physicians per 10,000 inhabitants.
I/ Number of deaths before age one per 1,000 live births.
j/I Figures for cars, telephones, physicians, and infant mor.tality are for Russia as a whole, not just European Russia.
Sources: Area, population, population density, and percent urban: World Bank. 1994. Social Indicators of Development.
Passenger cars, International Road Federation. 1994. International Road Statistics 1989-1993;
Telephone lines: International Telecommunications Union (ITU) and QECID. 1994. Telecommunication Indicators
for Economies in Transition; ITU. 1992. European Telecommunication Indicators.
Physicians and infant mortality: World Bank. 1994. World Development Report 1994;
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