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

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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
S T R AT E G I C M O V E S
in SEE is generally low relative to the increasing obligations under the decentralisation
process. This also has a bearing on the financial challenge discussed above,
linked to insufficient available municipal budgets compared to the legal obligations
of the municipalities. After new functions and responsibilities are devolved
to the local level, most of the responsibility for identifying, preparing and implementing
bankable projects is also shifted to the local level (REC, 2005). Other institutional
constraints include the capacity of local consultants and the shortage
of professional project managers able to take responsibility for the overall process
— not only the preparation of the technical documentation but also the facilitation
of smooth teamwork and consensus building across various groups of stakeholders.
Enforcement of laws
As local governments do not have at their disposal sufficient budgets for the
implementation of their responsibilities, the state does not have the moral right to
impose real sanctions for non-compliance. Local governments are not therefore
“punished” by higher levels of administration if they are unable to carry out certain
mandatory activities due to financial and capacity problems. Additionally, the municipalities
do not have the power to impose local fines on polluters who represent
higher levels of the state. The polluter pays principle is seldom fully and effectively
applied at the national level, thus municipalities have little leverage over large polluters
that provide employment in a community, and that may be owned by a state
holding company or even a ministry (REC, 2005).
Cooperation with national authorities
Cooperation with national authorities is critical to the successful implementation
of infrastructure investment projects. National authorities generally control environmental
investment priorities for the country and, through this, access to
international grants and loans as well as funds from the countries’ own national
capital investment budgets (REC, 2005).
Planning
Local and/or regional environmental sector plans (waste management plans and
water management plans) are a basic prerequisite for carrying out environmental investment
projects. Investment projects are very often based on perceived infrastructure
needs rather than on a holistic approach that investigates all aspects of an environmental
problem and proposes an appropriate solution. Furthermore, these plans are
legal requirements of the water and waste framework directives and a precondition
for accessing certain international grant funding such as the EU IPA.
Aspects of project preparation
Detailed environmental investment preparation is generally the responsibility
of the project proponent — that is, the institution that will own and manage the
investment. In most cases in SEE, for the water and waste sectors this will be a re-