Encouraging Environmentally Sustainable Growth in Poland

Encouraging Environmentally Sustainable Growth in Poland

OECD Economics Department Working Papers No. 299 Encouraging Grzegorz Peszko, Environmentally Sustainable Patrick Lenain Growth in Poland https://dx.doi.org/10.1787/148456178784 Unclassified ECO/WKP(2001)25 Organisation de Coopération et de Développement Economiques Organisation for Economic Co-operation and Development 14-Jun-2001 ___________________________________________________________________________________________ English text only ECONOMICS DEPARTMENT Unclassified ECO/WKP(2001)25 Cancels & replaces the same document of 12 June 2001 ENCOURAGING ENVIRONMENTALLY SUSTAINABLE GROWTH IN POLAND ECONOMICS DEPARTMENT WORKING PAPERS NO. 299 by Grzegorz Peszko and Patrick Lenain Most Economics Department Working Papers beginning with No. 144 are now available through OECD’s Internet Web site at http://www.oecd.org/eco/eco/ English text only JT00109603 Document complet disponible sur OLIS dans son format d’origine Complete document available on OLIS in its original format ECO/WKP(2001)25 ABSTRACT/RÉSUMÉ This paper reviews several aspects of Poland’s environmental policies. Its main finding is that substantial progress has been made in dealing with the environmentally unfriendly legacy from the past. Poland has successfully combined emission permits based on environmental quality standards, emission fees and fines, public environmental subsidy schemes and widely publicised lists of the worst polluters. Other important factors of success were long-term time consistency, gradual tightening of enforcement and limited administrative discretion. Poland is now embarking on a fundamental revision of its instrument mix in order to respond to new environmental challenges typical of market economies, and to comply with the European Union environmental Directives. In this context, the challenge is to formulate a medium-term strategy that is both environmentally effective and market friendly. Pending legislative amendments, however, may not always live up to this challenge. New instruments under development seem to rely excessively on technology standards that may be both environmentally ineffective and economically inefficient, on excessive subsidies, as well as on undue administrative discretion. The paper proposes alternative developments in policy instruments, such as the introduction of a system of tradable emission permits, a streamlining of environment fees, a phasing-in of elements of green tax reform and a new role for the Environment Funds. Notwithstanding these policy changes, large public investments will need to be made in the context of accession to the European Union, in particular in public environmental infrastructure. Ensuring financing and affordability of these investments will be difficult. Poland could overcome this difficulty by applying three criteria: public investments should be made in a cost-effective manner, fees for using environmental infrastructure should be brought closer to cost-recovery levels, and the private sector should play a greater role as a financier or service provider. JEL classification: H23, Q00, Q20, Q28, Q40, Q48 Key words: Environment, Poland Ce document examine plusieurs aspects de la politique de l’environnement de la Pologne. Sa conclusion principale est que des progrès significatifs ont été réalisés pour faire face à l'héritage environnemental encombrant du passé. La Pologne a combiné avec succès l'usage de permis d'émission basés sur des normes environnementales, des redevances et des amendes portant sur les émissions, des subventions publiques à l'environnement, et la publication de listes des pires pollueurs. D'autres facteurs importants de succès ont été la cohérence à long terme de la politique de l'environnement, le renforcement graduel de sa mise en application et le degré limité d'arbitraire dans les décisions administratives. La Pologne se lance désormais dans une refonte fondamentale de son dosage d'instruments afin de mieux répondre aux défis posés par le passage à une économie de marché, et afin de se mettre en conformité avec les Directives environnementales de l'Union européenne. Dans ce cadre, le défi est de formuler une stratégie de moyen- terme qui soit à la fois efficace sur le plan de l'environnement et favorable au marché. Les amendements législatifs en cours de discussion ne répondent toutefois pas toujours à ce défi. Les nouveaux instruments en cours d'élaboration semblent reposer de façon excessive sur des standards technologiques, ce qui n'est pas efficace sur le plan à la fois de l'environnement et de l'économie, sur des subventions excessives, et sur un degré d'arbitraire dans les décisions administratives. Le présent document propose plusieurs voies alternatives pour le développement des instruments de la politique de l'environnement, telles que l'introduction d'un système de permis d'émission négociables, la simplification des redevances d'émission, l'introduction graduelle d'une éco-fiscalité, et un nouveau rôle pour les Fonds pour l'Environnement. En dépit de ces réformes, des investissements publics importants devront être effectués pour l'adhésion à l'Union européenne, en particulier pour les infrastructures publiques de protection de l'environnement. Il sera difficile de financer ces investissements et d'en maîtriser le coût. La Pologne devrait néanmoins y parvenir en appliquant trois critères : les investissements publics devraient être faits avec le souci d'un bon rapport coût-efficacité, les redevances pour l'utilisation des infrastructures environnementales devraient être relevées afin de mieux recouvrir les coûts, et le secteur privé devrait jouer un rôle plus actif en tant que financier et prestataire de services. Classification JEL : H23, Q00, Q20, Q28, Q40, Q48 Mots clés : Environnement, Pologne Copyright OECD, 2001 Applications for permissions to reproduce or translate all, or part of, this material should be made to: Head of Publications Service, OECD, 2 rue André-Pascal, 75775 Paris Cedex 16, France. 2 ECO/WKP(2001)25 TABLE OF CONTENTS ENCOURAGING ENVIRONMENTALLY SUSTAINABLE GROWTH IN POLAND.............................4 Introduction .................................................................................................................................................4 Facing an unfriendly legacy from the past ..................................................................................................5 Setting up institutions supportive of sustainable development..................................................................14 The mix of environmental policy instruments...........................................................................................19 How to undertake the environmental clean-up required by the EU?.........................................................26 Concluding remarks and recommendations...............................................................................................32 BIBLIOGRAPHY.........................................................................................................................................35 Boxes Box 1. Key government environmental institutions and their main responsibilities.................................16 Box 2. Attempts to integrate environmental objectives into other policies: failures and successes..........17 Box 3. Environment Funds in "advanced " OECD countries versus Polish Environment Funds .............18 Box 4. Mixing economic instruments and technology standards ..............................................................20 Box 5. Are water discharge fees too low? .................................................................................................21 Box 6. Have air emission charges in Poland encouraged emissions reduction? .......................................23 Box 7. Subsidies and the Polluter Pays Principle......................................................................................25 Box 8. How to abate pollution from large combustion plants in a cost-effective manner?.......................28 Box 9. How to assess the economic benefits of environmental policies? .................................................31 Box 10. Recommendations on environmentally sustainable growth.........................................................33 Table 1. Investment expenditure required for EU accession in environmental protection..........................27 Figures 1. Energy supply by primary source.....................................................................................................6 2. International comparisons.................................................................................................................7 3. Environmental investment expenditure............................................................................................8 4. Trends in growth, energy and emissions..........................................................................................9 5. Main pollutants, 1988-98................................................................................................................10 6. Quality of Polish rivers...................................................................................................................12 7. Water discharge and treatment.......................................................................................................13 8. Passenger cars and NOX emissions.................................................................................................14 9. Wastewater effluent fees and treatment cost..................................................................................22

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