Tenth meeting of the EAP Task Force’s EECCA Environmental Finance Network Environmental Financing Trends in South Eastern Europe Joanna Fiedler Senior.

Tenth meeting of the EAP Task Tenth meeting of the EAP Task Force’sForce’s

EECCA Environmental Finance EECCA Environmental Finance NetworkNetwork

Environmental Financing Trends in South Eastern Europe

Joanna Fiedler

Senior project managerEnvironmental financing

www.rec.org

Outline

• Introduction to the report, status of work;

• SEE region context;

• Key messages;

• Domestic environmental expenditures;

• International flows to environment;

• Financial mechanisms in use.

www.rec.org

Introduction to the report

• Category II document for Belgrade Ministerial conference.

• Follow up to the “Environmental financing trends report” for Kiev conference http://www.rec.org/REC/Programs/SofiaInitiatives/Enviro.Finance.in.CEE.pdf

• The main goal of the report is to propose recommendations for decisions-makers in the region so that they could take action and ensure more environmental funding schemes and resources for environmental actions.

www.rec.org

• Major economic and environmental trends which were influencing the situation on environmental financing in the SEE between 2001 and 2005;

• Presenting trends in domestic environmental expenditures in the SEE;

• Analyzing international financing flows to the region including bilateral and multilateral sources;

• Analyzing established and emerging financing mechanisms in the region and their development potential in the future;

• Identifying new possible financing mechanisms which could be developed in the future;

• Providing recommendations to decision makers on improving effectiveness of environmental financing from both domestic and external financing sources.

www.rec.org

Trends in bilateral donors commitments

Austria

Denmark

Germany

Italy

Japan

Netherlands

Norway

Spain

Sweden

United States

Others

Others = Donor countries with less than 3% share of toatal aid

Germany 39 %

US 7 %

Norway 6.2 %

Netherlands 5.7 %

Others 7.7 %

Japan 17.6 %

Source: OECD DAC data base

www.rec.org

Recipients of assistance

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

100.00

Albania BiH Croatia fYROM UNMIK Serbia andMontenegro

Bilateral Environmental Aid per Recipient Countries (usd / capita)

0

5

10

15

20

25

30

35

Albania BiH Croatia fYROM UNMIK Serbia andMontenegro

Share of Total Bilateral Environmental Aid per Recipient Countries (in %)

Source: OECD DAC data base

www.rec.org

Preliminary trends in assistance

Alb

ania

BiH

Cro

atia

fYR

OM

UN

MIK

Ser

bia

and

Mon

tene

gro

2001

20030

0.5

1

1.5

2

2.5

Total Bilateral Environmental Aid per countryin relation to GDP (expressed in %)(including the Zletovic project)

2002

2004

% Source: OECD DACdata base

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Importance of different sources of finance for infrastructure projects over the time

highimportance

mediumimportance

lowimportance

1 2 3 4 5 from 5 onwards years

EU accession short termmedium term

long term

user charges

private sector

public finance

EC

bilateral donors

IFIs

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Key messages

• Environment low on political agenda on central and local levels

• Decentralisation process not supported by allocation of fiscal means

• Low level of domestic financial resources for environment

• EU role is increasing, bilateral donors role decreasing, IFIs – struggling (borrowing legislation)

• Important role of economic instruments

www.rec.org

Key messages

• Potential for innovative financial mechanisms (private sector, carbon finance etc)

• Presenting environmental projects as contributors to growth and employment

• Creating favorable conditions for borrowing,

• Important role of capacity building and technical assistance

• Assistance needed on project preparation

• Need for diversification of sources of finance

Thank you for your attention

Joanna Fiedler

Senior project managerEnvironmental financing and economic instruments

Environmental Policy ProgrammeRegional Environmental Center for

Central and Eastern [email protected]