B U S I N E S S
Prominent among the non-budgetary financing sources are national environmental protection funds, set up in several countries of the region. The first to be established was the National Fund for Environmental Protection and Water Management in Poland. The State Environmental Fund of the Czech Republic, and what was later to become the Slovak State Environmental Protection Fund, were established in 1991. Hungary and Bulgaria followed in 1993.
The funds, as the basic instrument for the implementation of the national environmental policy, are either directly managed, or supervised, by the Ministry of Environment. Their main purpose is to provide financial support for environmental protection investments. The resources finance national and regional public infrastructure projects, support local projects (such as the construction of wastewater treatment plants and potable water systems) whose costs exceed the capabilities of local budgets, and back projects in the fields of special concern. Recipients are municipalities, industrial enterprises, R&D institutions, and NGOs. Generally, non-commercial organizations may receive grants, while commercial enterprises may only apply for loans.
Air emission fees and wastewater charges tend to make up the major source of revenue, although details vary from country to country. In Hungary, for instance, taxes on fuel, car tires and batteries, and coolants are channeled to the fund, making up a substantial part of fund's budget. Additionally, since 1995, a waste packaging fee is applied to any goods where packaging is required. In the Czech Republic, a third of the 1995 funding came from the national Clean Air Program. Slovakia was the only country where a significant portion (24%) of fund revenues came from the state budget.
Recently, interest and loan repayments account for a significant portion of funds income. In the Czech Republic, 6% of 1995 revenues came from loan servicing. The same figure in Poland and Hungary was much higher, at almost 25% in 1995.
Finally, some funds administer foreign assistance programs. The Hungarian Fund, for instance, manages Phare funding; the Polish Fund also manages Phare programs, World Bank assistance and bilateral agreements.
In practice, distinctions in project financing mechanisms are made on the basis of environmental policy priorities, regional conditions, project type, and financial capabilities of the investor. In the Czech Republic, allocations covering up to 40% of the project cost are available to non-profit applicants and municipalities. Loans, covering up to 50% of the expected project cost, are an option for commercial enterprises.
| Expenditures of National Environmental Protection Funds | ||||
|---|---|---|---|---|
| COUNTRY | CZECH REPUBLIC | HUNGARY | POLAND | SLOVAKIA |
| Expenditures | 191 mln USD | 43 mln USD | 427 mln USD | 40 mln USD |
| Number of Projects | 364 | 267 | 970 | 962 |
| Expenditures by Sector |
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| Percentages may not add up to 100% due to rounding errors Figures in USD calculated by the author, based on average 1995 exchange rate |
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Each of the Funds publishes financing and eligibility rules, which include the list of priority funding areas. Hungary's guidelines for 1996 designate water supply and quality control, air protection, and waste treatment. In Poland, the 1996 list included 97 specific project categories, grouped in 16 topical areas. The Slovak Fund focuses on small- and medium-scale environmental investments and projects Ð 75% of support was allocated to municipalities and settlements. Slovak guidelines in 1995 listed 22 categories, grouped in nine areas.
Another way of looking at funding priorities is to analyze expenditures by sector. As the table demonstrates, in all countries water and wastewater, and air protection are major areas. Hungary is a somewhat different case, as about a third of Fund's 1995 expenditures was allocated to projects related to transportation.
One way or another, it is clear that in looking for financing for environmental projects, one should consider these funds as one of available options.