Economic Instruments for Water Resources

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Economic Instruments for Water Resources ECONOMIC INSTRUMENTS FOR WATER RESOURCES MANAGEMENT IN THE RUSSIAN FEDERATION ECONOMIC INSTRUMENTS FOR WATER ECONOMIC INSTRUMENTS FOR WATER RESOURCES MANAGEMENT IN THE RUSSIAN FEDERATION ECONOMIC INSTRUMENTS FOR WATER RESOURCES This report presents findings from a review of the use of economic instruments for water resources management in the Russian MANAGEMENT IN THE Federation. It covers fiscal and tariff instruments, as well as state support to the sector. Their application in the Republic of Buryatia RUSSIAN FEDERATION (Lake Baikal basin) is examined in greater detail. The report also provides recommendations on improving the use of existing instruments and introducing new ones. With the financial assistance of the European Union EAP Task Force CONTRIBUTION TO THE POLICY DIALOGUE ON WATER IN RUSSIA ECONOMIC INSTRUMENTS FOR WATER RESOURCES MANAGEMENT IN THE RUSSIAN FEDERATION 1 ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT The OECD is a unique forum where the governments of 34 democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies. The OECD member countries are: Australia, Austria, Belgium, Canada, Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, the Republic of Korea, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States. The European Commission takes part in the work of the OECD. OECD Publishing disseminates widely the results of the Organisation’s statistics gathering and research on economic, social and environmental issues, as well as the conventions, guidelines and standards agreed by its members. EAP TASK FORCE The Task Force for the Implementation of the Environmental Action Programme for Central and Eastern Europe (EAP Task Force) was established in 1993 at the “Environment for Europe” Ministerial Conference in Lucerne, Switzerland. Its Secretariat was established at the OECD. Since its creation, the EAP Task Force has proven to be a flexible and practical avenue for providing support to environmental policy reforms and institutional strengthening in the countries of the region. More detailed information about Task Force activities can be found on its website at: www.oecd.org/env/eap This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessary reflect the official views of the Organisation or of the governments of its member countries or those of the European Union, not those of the governments of the non-members who have participated in this work. This report is also available in Russian under the title: ЭКОНОМИЧЕСКИЕ ИНСТРУМЕНТЫ УПРАВЛЕНИЯ ВОДНЫМИ РЕСУРСАМИ В РОССИЙСКОЙ ФЕДЕРАЦИИ This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. © OECD (2013) You can copy, download or print OECD content for your own use, and you can include excerpts from OECD publications, databases and multimedia products in your own documents, presentations, blogs, websites and teaching materials, provided that suitable acknowledgment of the OECD as source and copyright owner is given. All requests for public or commercial use and translation rights should be submitted to mailto: [email protected]. Requests for permission to photocopy portions of this material for public or commercial use shall be addressed directly to the Copyright Clearance Center (CCC) at [email protected] or the Centre français d’exploitation du droit de copie (CFC) [email protected]. 2 ACKNOWLEDGEMENTS AND DISCLAIMER This project was undertaken by the OECD, with the financial support of the European Union – DG DEVCO. This support is gratefully acknowledged. The OECD commissioned the Russian Regional Environmental Centre (RusREC) to implement the project, from September to December 2012. The report was prepared by a team of consultants led by Dr. M. Kozeltsev, Executive Director of the Russian Regional Environmental Centre (RusREC) and Director of the Institute for Natural Resources Economics and Environmental Policy of the National Research University Higher School of Economics. Mrs. N. Kulikova, lead expert with FGBU Tsentr Razvitiya VKhK, and Mr. A. Reteyum, professor at the Moscow State University (MSU), coauthored the report. Mrs. M. Chepiga, Russian Regional Environmental Centre, provided continuous administrative support. The authors are grateful to Mr. Shukhrat Ziyaviddinov and Ms. Irina Massovets (both OECD EAP Task Force secretariat) for formatting this publication. The authors acknowledge the contribution from officials of the Government of the Republic of Buryatia. Special thanks go to Ms. T.G. Dumnova, Minister of Economy; to Ms. N.A. Fedoseyeva, Head of the Investment Policy Division in the Ministry; and to Mr. S.A. Ton for their support and help. Mr. B.D. Angaev, Minister of Natural Resources of Buryatia, Mr. M.M. Fedorov, Deputy Minister, and Ms. O.A. Bazarova, Division Head, provided valuable help to implement the project. The authors are grateful to many other stakeholders in the Republic of Buryatia for their valuable comments: first and foremost, to the project’s full-time local consultant, Dr. T.B. Bardakhanova, Lead Engineer with the Natural Resources Economics Laboratory of the Baikal Institute for Nature Management of SO RAN (the Siberian Division of the Russian Academy of Sciences). Her valuable advice informed the final version of the report. The project benefitted from discussions at the final workshop on the project outcomes held in Moscow on 6 December 2012 with support from the Higher School of Economics National Research University (First Vice-President, Mr. L.M. Gokhberg). Financial data on revenues generated by specific economic instruments were provided by institutions in the Republic of Buryatia at the official request of the Ministry of Economy. The consultants are not accountable for accuracy of the data or possible inconsistencies with data provided to other parties by the same institutions. Mr. A. Martoussevitch (OECD) managed the project under supervision of Mr. X. Leflaive, OECD Environment Directorate. The project has also benefited from extensive comments by Dr. I. Gerasimchuk from the International Institute for Sustainable Development (IISD), Geneva office. The views presented in this report are those of the authors and can in no way be taken to reflect the official opinion of the European Union, the Government of Russia, the OECD or its member countries. 3 TABLE OF CONTENTS EXECUTIVE SUMMARY ............................................................................................................................. 7 INTRODUCTION ......................................................................................................................................... 11 SECTION 1. WATER RESOURCES AND WATER COMPLEX IN RUSSIA .................................... 12 1.1. Quantity and quality of water resources in Russia: General description ........................................ 12 1.2. Freshets, floods, mudflows and groundwater flooding ................................................................... 14 1.3. Impact of climate change on water resources status in Russia........................................................ 15 1.4. Macroeconomic dimension – economic development and water consumption trend ..................... 16 1.5. Growing competition for water resources in water-scarce regions ................................................. 18 SECTION 2. LEGAL AND INSTITUTIONAL FRAMEWORK FOR WATER MANAGEMENT IN RUSSIA ........................................................................................................................................... 21 2.1. Executive authorities governing water in Russia ............................................................................ 21 2.2. Delineation of powers among federal, regional and local public authorities .................................. 25 2.3. Ownership rights to water bodies and water resources, and water use rights ................................. 27 2.4. Mechanisms for water resource allocation ...................................................................................... 28 2.5. Ownership right to water infrastructure .......................................................................................... 30 2.6. Main legislative acts and regulations governing fiscal instruments for water resources management ............................................................................................................................................... 30 SECTION 3. ECONOMIC INSTRUMENTS FOR WATER MANAGEMENT IN RUSSIA ............... 33 3.1. A brief introduction on methodology .............................................................................................. 33 3.2. Assessment of
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