Environment in emerging and transition economies

Good Practices of Public Environmental Expenditure Management


The Good Practices of Public Environmental Expenditure Management (PEEM) build upon the 1995 St. Petersburg Guidelines on Environmental Funds in the Transition to a Market Economy, which became an internationally-acknowledged framework for evaluating the performance of public environmental funds. The Good Practices of PEEM extend their applicability to all public agencies managing environmental expenditure programmes, and not only to environmental funds. They provide a framework for streamlining environmental management into mainstream public finance.

These Good Practices provide guidance on how to design and implement public environmental expenditure programmes in line with the sound principles of public finance. They outline rules, procedures and organisational frameworks that are acceptable for Ministries of Finance and international donors. The Good Practices have been developed through a series of international consultations with various stakeholders from Eastern Europe, Caucasus and Central Asia (EECCA), CEE and OECD countries.

The Good Practices provide specific checklists for measuring to what extent a public environmental financing institution aligns with the sound, internationally-recognised standards for such institutions. The performance of programmes and institutions is measured along three dimensions: environmental effectiveness, fiscal prudence and management efficiency. The EAP Task Force has used this methodology to review and evaluate the performance of a couple of EECCA environmental funds.

Different countries will follow different paths of implementing these Good Practices, depending on their economic and institutional development and maturity of markets and public finance systems. However, the Good Practices offer a general ”roadmap” for implementing reforms of existing public environmental expenditure programmes and their management structures. They can also be used as guidance to those countries that are considering establishing new such programmes. The Figure "Stepwise Reform of public enviornmental expenditure management system", provides a recommended stepwise approach to reforming PEEM systems. In 2006, to guide the OECD member countries in improving the management of their public environmental expenditure programmes, , the OECD Council adopted the Good Practices for PEEM as Council Recommendation.

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