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

TABLE 2: Key challenges and constraints at municipal level (continued)
Inadequate capacity for financial, environmental
and investment planning
Many local governments lack the capacity to understand environmental infrastructure
investments in the context of a market economy, including issues of social
affordability, cost recovery, depreciation and the appropriate use of subsidies.
They are reluctant to take on loans, either due to legal restrictions on debt servicing
or insecurity about their repayment capacities stemming from inadequate financial
management practices. They therefore prioritise investments that can be
serviced by grants or inexpensive soft loans from the central government or foreign
donors, rather than real needs driven by rational environmental and financial
planning (REC, 2005). In the meantime, necessary but more expensive and complex
investments are postponed; the environment and society are further degraded;
and necessary institutional reforms and popular awareness-raising programmes are
not implemented. While not denying that local governments should optimise
funding by using the “free” grant options first, this should not be done at the expense
of revenue-increasing reforms or a clear analysis of the affordability of environmental
investments.
Legal/institutional
Decentralisation and institutional capacities
All SEE countries have devolved significant environmental responsibilities to
the local governments. The decentralisation process has been accomplished in all
countries except for Serbia. In Albania, decentralisation is partly accomplished,
having been completed in the water and waste sectors. In the process of decentralisation,
SEE countries have transferred competencies for environmental services to
the municipal level. In many cases, these are new responsibilities at the local government
level, and the institutions have not managed to adjust their staff and capacities
to properly manage the obligations. So far there has been no sufficient
human and financial resource planning in connection with the newly acquired responsibilities
in environment. The human resources capacity of local governments
C H A P T E R 3
C H A L L E N G E S T O E N V I R O N M E N TA L F I N A N C I N G I N S E E
TYPE CONSTRAINTS DESCRIPTION ADDRESSED IN
GREATER DETAIL IN
Project Low capacity for
preparation project preparation
Low level of project maturity Lack of feasibility studies prior to
initiating the design phase; lack of
EIAs; failure to take into account
institutional and financial issues
when planning environmental
infrastructure
S T R AT E G I C M O V E S 65