Strategic Moves - Regional Environmental Center for Central and ...

Introduction
This chapter gives an overview of the main challenges in relation to developing
environmental investment projects in SEE countries. The challenges outlined here
are then explored in greater depth in subsequent chapters.
Financing environmental infrastructure projects in compliance with the EU
environmental acquis is a serious legal, financial and institutional challenge for any
country. It requires the establishment of a clear legal and strategic framework —
through the transposition of the EU water and waste acquis — that creates sufficient
incentives and pressure on both the state administration and municipal project
proponents to result in concrete actions for the reform of all relevant systems,
both institutional and financial. The process necessitates significant financial allocations
as well as the political will to reform the main institutions — the water
and waste utilities — so as to make them capable of implementing the investments.
“Constraints” and “challenges” are used here interchangeably, since all the factors
discussed below hamper and slow down environmental infrastructure investments
and thus need to be overcome.
The authors use two criteria to classify the constraints/challenges to environmental
infrastructure financing. The first criterion is administrative level: that is,
national or municipal.
This classification allows us to look at environmental infrastructure investment
from the point of view of national governments and ministries, but also from the
point of view of the municipalities that are responsible for the practical implementation
of the relevant water and waste acquis.
The main policy and planning work is carried out on the national level through the
transposition of EU legislation and through the drafting of strategic documents that
set out priorities and timeframes. On the other hand, local governments have the difficult
task of implementing obligations that have been devolved to them following the
process of decentralisation. They are faced with the obligation to implement investments
that far exceed their budgetary means. In addition, they have to balance these
investments with other, competing priorities linked to social and regional development.
It is also the local governments that have to embark on a programme to reform
the utilities that will be responsible for the investments in water and waste.
The second criterion is the nature of the challenge/constraint, that is, political,
economic, financial, legal, institutional, planning, or project preparation.
Obstacles to environmental
infrastructure financing — national level
Political
Low level of political will
One of the main constraints to environmental infrastructure investments in
SEE is the insufficient political drive for reform in connection with environmental
financing. The level of political will is generally in direct correlation with the sta-
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