Mirjana Papafava, M. Econ.

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• Presentation
• Mirjana Papafava, M. Econ.
• Head of Economic Incentives
  Department
• Ministry of Environmental
  Protection and Physical Planning
• Republic of Croatia
• Environmental Strategy
• ENVIRONMENTAL FUND
• IN CROATIA
• ____________________________________
• UNEP-PAP/RAC
• Instructive Seminar on Development and
  Application
• of Economic Instruments for the Sustainable

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Topics

• Figure 1. Environmental Strategy
• Figure 2 Water Management and coastal and
  island zone management
• Figure 3 Priority Activities Plan (PAP)
• Figure 4 Priority Activities Plan (PAP)
  Legislative/institutional/organizational projects
• Figure 5 Priority Activities Plan (PAP)
  Investment projects
• Figure 5.1. Priority Activities Plan (PAP)
  Water management in the coastal zone
• Figure 6. Assessment of 10-year implementation
  costs
• Figure 7. Fund for Environmental Protection
  and Energy Efficiency
• Figure 8 Legal grounds for Fund establishment,
  legal status, organisation, Funds bodies,
  management application of regulations
• Figure 9 Objectives and principles, Fund
  activities and funding methods and Fund
  resources users
• Figure 10 Earmarking of funds
• Figure 11 Funding mechanisms
• Figure 12 Environmental Fund establishment
  benefits
• Figure 13 Funding sources and allocation
• Figure 14 International support

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REPUBLIC OF CROATIAEnvironmental Strategy
(Draft, September 2001)

• The Republic of Croatia has prepared the National
  Environmental Strategy
• with Action Plan (Environmental Strategy) in
  order to
• Reassess and restate its objectives and
  priorities in environmental protection
• Guide its
• over the medium term, including
  assurance of long-term stable
• financing based on
• Attract the interest and support of external
  partners

• environmental policy formulation
• institutional development and
• investment planning

• sustainable development principles
• partnership and shared responsibility

FIGURE 1

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL STRATEGY (Draft September 2001)

• Chapter Water management
• Key problems
• Pollution of water springs, ground and surface
  waters used for water supply, including pollution
  of the sea from land-based sources
• Shortage of funds for the construction of
  municipal and industrial wastewater treatment
  plants, including construction of public sewage
  systems
• Non-functioning of the existing and constructed
  wastewater treatment plants
• Accidental pollution (emergency situations)
• Chapter Coastal and islands zone management
• Key problems
• Prevention of marine pollution from land-based
  sources and ships and the transboundary pollution
  
• Raising awareness of problems and introduction of
  a system of coastal zone management
• Adoption of a national strategy relating to the
  coastal region and especially to islands,
  including adequate implementation measures
• Improvement of integrated coastal zone
  management, including the adoption of
  corresponding legislation
• Efficient fire prevention and fire-fighting

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

FIGURE 2
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PRIORITY ACTIVITIES PLAN (PAP)

• Based on sustainable development principles and
  an assessment of environmental problems and
  priorities, the Environmental Strategy document
  includes strategic elements and an Action Plan in
  each area of concern, summarised in the Priority
  Activities Plan (PAP) for the highest priority
  actions that need to be started in the next two
  years.
• The PAP presents two sets of projects
• 1) Legislative/institutional/organisational
  projects
• 2) Investment projects

FIGURE 3

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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PRIORITY ACTIVITIES PLAN (PAP) (September 2001)

• PRIORITY ACTIVITIES PLAN (PAP)
• Section Legislative/institutional/organisational
  projects
• Subsection Water management
• Subsection Coastal zone and island area
  management
• Coastal Zone Environmental Management Project, as
  an element of ASEMP (Adriatic Sea Environmental
  Master Plan Project), is intended to provide a
  strategic framework for environmental
  infrastructure investment decisions and guide
  policy co-ordination for sustainable economic
  development across the region
• Implementation of Environmental Management Plan
  for the Cres-Losinj Archipelago
• The objective of the Management Plan is to
  establish a protected area in the Cres-Loinj
  archipelago and to establish a Management Agency
  for the Protected Area, being developed with the
  METAP, EC European Investment Bank, World Bank
  and UNDP

• Development of the Water Management Plan to
  create a quality basis for sustainable water
• management in the Republic of Croatia
• Pre-feasibility Study of Sewage Systems in
  Coastal Areas to create conditions for achieving
  a good
• status and sustainable use of the coastal
  waters, with a positive impact on the general
  health level

FIGURE 4

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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PRIORITY ACTIVITIES PLAN (PAP) (September 2001)

• Section Investment projects
• 1) WASTE MANAGEMENT
• Remediation and reconstruction of existing sites
• Construction of new disposal sites
• Preparation of a pilot project for solid
  municipal waste management on islands and in
  coastal area on the model of one island
• 2) WATER MANAGEMENT
• Construction of sewage systems
• Construction of wastewater treatment facilities

FIGURE 5

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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PRIORITY ACTIVITY PLAN (PAP)Water management in
the coastal zone (September 2001)
PROJECTS NOT INCLUDED IN PAP (EXCEPT 1.1).
LIST OF CURRENT PROJECTS, AS WELL AS PROJECTS NOT
INCLUDED IN ANY OF THE HRVATSKE VODE
WORKPLANS CAN BE OBTAINED AT HRVATSKE VODE.
THE FINAL COMPLETE LIST OF PROJECTS WILL BE
COMPLETED BY THE END OF APRIL 2002.
FIGURE 5.1.

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL STRATEGY COST ASSESSMENT

• ENVIRONMENTAL STRATEGY
• Assessment of 10-year implementation costs for
  (bio US)
• Solid waste management........2.20
• Wastewater treatment.....5.00
• Air quality protection..0.56
• Total.......7.76
• Annual average (estimate) US 776.0 mio
  /3.7 GDP/
• Costs per capita at 2000 level ..US
  ..1.712,78
• __________________
• Note 1999 ? total investments in fixed long
  term environmental assets amounted to US 35.0
  mio /0.23 GDP /
• Statistical yearbook, 2000

FIGURE 6

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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Ministry of Environmental Protection and Physical
Planning
ENVIRONMENTAL FUND
FUND FOR ENVIRONMENTAL PROTECTION AND ENERGY
EFFICIENCY
ENERGY EFFICIENCY AND RENEWABLE SOURCES FUND
Ministry of Economic Affairs
FIGURE 7

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND/from the Draft Environmental
Fund Bill, May 2001/

• Legal grounds for Fund establishment
•  Law on Environmental Protection, Article 60,
  para 5 (Off. Gazette 82/94)
• Legal status, organisation, Fund's bodies and
  management
• legal person - public and non-profit institution
  owned by the Republic of Croatia
• established by the special law, regulating
  principal issues - Fund set-up
• - Fund organisation and activities
• - Fund bodies and management
• - financial sources, etc.
• Fund's Statutes regulate internal organisation,
  decision-making procedures, cooperation with
  external
• state and other bodies, and international
  institutions
• Fund's bodies Management Board and Managing
  Director,
• Management Board - Representatives of relevant
  ministries, Croatian Chamber of Commerce,
  scientific institutions,
• 
  independent NGO experts
• - MB members are appointed and
  renounced by the Government of the Republic of
  Croatia upon
• proposal of the minister for the
  environment
• - Managing Director is elected
  through public procedure and appointed/renounced
  by the GRC
• Application of regulations
• Regulations on public institutions, the
  Environmental Fund Law, regulations on non-profit
  organisations and
• non-budgetary funds, the Croatian Code of
  Obligations.

FIGURE 8

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND/from the Draft Environmental
Fund Bill, May 2001/

• Objectives and principles
• Providing additional funds (i.e. not
  supplementary to the existing environmental fund
  sources) for drawing up and
• implementation of environmental programmes,
  projects and related activities
• Financing the priority activities cominjg from
  the Environmental Strategy
• Respecting principles of transparency and
  publicity, objectivity and responsibility in
  decision-making, and
• international standards of good practice
• Through allocation of resources, respecting the
  principle of reaching the highest overall
  benefits to the environment
• with the available resources
• Fund activities and funding methods financial
  services of granting - incentive loans
• 
  - subsidies on
  interest
• 
  -
  guarantees
• 
  -
  grants (donations)
• other activities - maintaining a database
  of environmental projects
• - fostering cooperation with local and
  international financial institutions focused on
  project funding
• - rendering consultancy on specific
  programmes, etc.
• Fund resources users
• Any legal or physical person which complies with
  the Fund's prescribed conditions and procedures,
  from the private sector
• (business) and public sector (units of local
  self-government, public companies, etc.)

FIGURE 9

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND /from the Draft Environmental
Fund Bill, May 2001/

• Earmarking of funds
• Protection, conservation and improvement of air,
  soil, water and sea quality, climate change
  mitigation, and ozone layer protection
• Protection and conservation of the biological and
  landscape diversity
• Remediation, encouraging of waste avoidance and
  reduction, waste reuse and treatment
• Environmental infrastructure improvement and
  construction
• Improvement in environmental monitoring and
  assessment, and environmental management systems
• Encouraging sustainable use of natural resources
• Encouraging sustainable businesses and economic
  development
• Encouraging research and development projects and
  activities

FIGURE 10

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND Activities envisage

• Funding mechanisms
• Direct funding of projects not attractive for
  commercial financing, but being of public
  interest (local self-government units, public
  institutions, public companies)
• Funding of commercial projects (developers)
  through commercial banks
• Funding in collaboration with international
  organisations and financial institutions
• Allocation of funds primarily through public
  tenders

FIGURE 11

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUNDfrom the Draft Environmental
Fund Bill, May 2001/

• Environmental Fund Establishment Benefits
• Permanent and steady source of additional (not
  substitute) environmental protection funding
• Efficient use of total available funds for
  financing environmental protection in Croatia
• Encouraging and promoting development of project
  background documentation
• Focal point for prospective environmental
  investors and donors at national, regional and
  local levels
• Supporting implementation of the Environmental
  Strategy, international environmental treaties,
  regulations and documents
• Central database on projects, investments,
  funding sources for environmental protection
• Creating capacity for approval of applications
  for the use of funds
• Loan and subsidy granting and environmental
  evaluation criteria
• Additional market-based environmental funding
  sources and mechanisms Polluter Pays Principle
• Systematic cross-linking of state authorities,
  financial institutions, businesses
• Systematic collaboration with international
  institutions and organisations
• Macroeconomic effects
• - Direct contribution to permanent,
  systematic and efficient environmental protection
  and increased
• investment in sustainable development
• - Improved quality of total Croatian
  development and quality of life

FIGURE 12

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND /from the Draft Environmental
Fund Bill, May 2001/

Funding Sources and Allocation
FUNDING SOURCES
ALLOCATION

• PERMANENT SOURCES
• State Budget funds generated by
• redirecting portions of charges, excise
• taxes and fines
• Extrabudgetary funds created by
• redirecting portions of the following
• charges
• - Water charges in water management
• sector
• - Charge for multiple non-wood forest
• functions
• - Agricultural land conversion charge
• Instalment loan payments with interest
• New charges
• - Environmental polluter charges
• - Environmental user charge

LOANS
ENVIRONMENTAL FUND
ENVIRONMENTAL INVESTORS
SUBSIDIES
BANKS
GUARANTEES

• PUBLIC SECTOR
• PRIVATE SECTOR

• PERIODICAL SOURCES
• 1 of revenues from privatisation
• Funds based on international bilateral
• and multilateral cooperation
• Grants
• Other

GRANTS
Source Draft Environmental Fund Bill, May 2001
FIGURE 13

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department

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ENVIRONMENTAL FUND

•  International Support
• UNECE Committee on Environmental Policy in the
  1999 Environmental Performance Review, supports
  establishment of the Environmental Fund as a step
  towards improved financing of environmental
  protection and efficient payments (revenues) and
  environmental expenditures during the transition
  towards the market economy
• European Union, Stability Pact, the Regional
  Environmental Reconstruction Program for SE
  Europe (REReP) German Government through German
  Technical Collaboration Society (Deutsche
  Gesellschaft für Zusammenarbeit, GTZ)
•  

FIGURE 14

• MINISTRY OF ENVIRONMENTAL PROTECTION AND PHYSICAL
  PLANNING
• Economic Incentives Department