Environment in emerging and transition economies

A Review of Environmental Permitting Systems in the EECCA


The Review is being finalised and will be soon available to policy makers and other stakeholders in the NIS. Below, some preliminary conclusions are presented.

Although the economic collapse of the 1990s led to growing poverty and income inequality in the NIS, in recent years there have been signs of recovery. Industry is still an important source of employment in the NIS but it is also an important source of pollution, with adverse effects on human health. Production technology is very resource- and energy-intensive. Pipeline infrastructure is not properly maintained and renewed, moreover, and industrial activities are often clustered in particular regions, resulting in major hot-spots. Besides, environmental reforms are slow, especially in heavy industry and the mining sector.

Current industrial regulation in the NIS revolves mainly round Emission Limit Values (ELVs), which are laid down in permits. Companies exceeding ELVs receive a fine, which is relatively low, however. There is little financial incentive to operate according to permits or reduce pollution, for procedures are cumbersome and administrative costs may outweigh taxes and fines for pollution. Permits tend to be rigid towards process and product changes, moreover, and certain statutory requirements are not even feasible. The upshot is that industry is permanently in non-compliance.

The key challenge for environmental permitting reforms is to control pollution effectively, without excessive cost to the regulator or industry. This implies, in particular, that regulatory frameworks in the NIS must be improved, institutions strengthened, regulatory standards enforced and incentives for companies to introduce cleaner production methods enhanced. Given the various flaws and weaknesses in the existing regulatory framework, this is no easy task.