Chapter

Chapter V.1 Environment

Author(s):
International Monetary Fund
Published Date:
December 1991
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1. THE CURRENT SITUATION

The magnitude of environmental problems in the USSR cannot be estimated with precision: the information is partial and in some cases it has been distorted because of bureaucratic interests. Nevertheless sufficient information exists to conclude that many of the industrial and agricultural regions are on the verge of ecological breakdown, posing an imminent threat to the health of present and future generations.

The first State of the Environment report was published in 1988. Goskomstat also has begun to publish environmental data. Before this, there was virtually no published information on environmental conditions and their related health effects. Some of the methodological and institutional problems associated with the generation of environmental information are described below. However, two examples help to illustrate the difficulties encountered in using Soviet data and the caution which must be used in interpreting them. First, air pollution data which have been checked against comparable situations in the former GDR, and other data verified independently by Norwegian scientists, contain serious inaccuracies: in some cases the figures seem closer to official standards than reality. Second, data on water pollution is presented as a function of compliance with official standards; no data on absolute levels of pollutants are provided. Thus, when the standards have been strengthened, the quantity of discharged water exceeding standards also increases, and this is the figure which is reported. Consequently, no basis exists for calculating pollution discharge trends.

a. Regional environmental problems

The 1988 State of the Environment report identifies 290 “ranges of severe ecological conditions.” These ranges cover 3.7 million square kilometers or 16 percent of the total land area, equivalent to an area ten times larger than the unified Germany. The largest number of ranges occur in Western Siberia (33), Eastern Siberia (28) and in the Northern European Section (22). The areas where conditions are most severe are in Kazakhstan, Central Asia, Eastern Siberia and the Urals. The magnitude and severity of these conditions are underlined by the fact that 20 percent of the Soviet population lives in severely degraded environments, that is, nearly 60 million people.1

The State of the Environment report divides the crisis zones into three categories:

  • (1) Complex ranges: 45 such zones exist, accounting for 3.3 percent of the total land area. Problems in these areas are especially severe and arise from industrial centers, extensive utilization of natural resources (mining, agriculture) and a very high population density. The principal areas include the Donbass, the Kuibyshev industrial region, the Kuzbass, the Northern Urals, the Fargan lowlands and the Transcaucasus.
  • (2) Transitional ranges: 154 such zones accounting for 3 percent of the land area. The resource and human health problems are identical in severity to the complex ranges, but the population density is lower. These zones include mining areas such as the Kola Peninsula and Northern Siberia, heavily polluted regions such as the Norilsk, and areas where soil and forest resources have been degraded, the Baltic region being an example.
  • (3) Simple ranges: Accounting for some 10 percent of the total land area, these zones are associated with depletion and loss of specific natural resources. These include water bodies which have lost most of their value from a natural resources standpoint (for example, Sea of Azov, Black Sea, White Sea), and heavily eroded arable and pasture land (Central Black-Earth region, Northern Kazakhstan). Also included are zones where there are threats to the genetic stock and losses of unique natural terrain which would be difficult to restore.

b. Pressures on the environment

The 1988 State of the Environment Report indicates that about 62 million tons of a “primary pollutants” are emitted annually into the atmosphere from industrial facilities and another 36 tons from mobile sources. These certainly underestimate the total volume of pollution generated. Soviet experts acknowledge that the omission of the domestic heating sector from the report probably results in a 20 percent underestimation of total air pollution. More than 30 million tons of pollutants are reportedly discharged into water bodies. Uncertainties about the accuracy of these totals and their components render comparisons with Western countries difficult. Nevertheless, the official estimates of total air emissions are greater than those estimated for the OECD European region.

There are virtually no data available on wastes. One estimate projecting from the inputs and technologies used, suggests that the USSR may be generating 20 million tons of hazardous (non-nuclear) waste per year. This compares with a combined total of 22 million tons for the 12 countries of the European Community. Most of the wastes generated in the USSR are not disposed in an environmentally acceptable manner. If Western experience is any guide, there is a massive waste problem waiting to be discovered.

The 1988 State of the Environment Report is more useful in providing a guide to the relative contribution of different sectors to the pollution burden and the degradation of natural resources. The electricity generating sector accounts for 25 percent of all industrial air emissions. Sulphur and nitrogen oxides represent 65 percent of these emissions (43 percent and 59 percent, respectively, of total national emissions). Inadequate control of particulates represents perhaps the most serious health-related air pollution problem. This sector has also generated soil and water pollution problems from ash tailings and the hydroelectric program has provoked strong public reactions. The discharge of waste waters from the petroleum refining and petrochemical industries containing hydrocarbons, ammonia, phenol and other contaminants has had a major impact, notably in the Caspian Sea. Insufficient attention has been given to the recovery and use of wastes. The gas industry is a major source of atmospheric pollution, accounting for 16 percent of total hydrocarbon emissions.

In addition to industrial wastewaters, the coal producing and transforming industry discharges a significant quantity of pollutants into water reservoirs: suspended matter, sulphates, chlorides, iron compounds and petroleum products. Mineral losses and underutilization of mining wastes are also major problems. Nearly 14 percent of the total volume of excavated bituminous coal is irretrievably lost in underground mining operations. Only 14 percent of some 30 million tons of coal-rich waste is recovered.

The ferrous metal industry is estimated to account for 17 percent of all atmospheric pollution and nearly 5 percent of all discharges into water reservoirs. This sector is estimated to generate three million tons of toxic industrial waste, of which one-third is treated. Severe environmental conditions have been created in cities located close to production plants, e.g., Krivoy Rog, Magnitogorsk, Mariupol.

Approximately 25 percent of all sulphur dioxide emissions originate from the non-ferrous metals industry. Only 62 percent of emission sources are equipped with basic pollution control equipment. The capital stock generally is old and inefficient. One plant in Alivardi was forced to close for public health reasons, as its emissions rose by 24 percent in one year. The cement industry was the major source of pollution in the building materials sector, accounting for 85 percent of air emissions from this sector. The oil industry has a very low level of waste gas recovery and hazardous waste treatment and accounts for 9 percent of “all pollutant emissions.” Oil leakages have caused severe problems in the Ufa region and the Caspian Sea (see Chapter V.6). Extremely high air pollution levels have been recorded as a result of the activities of the fertilizer industry. Substantial pollution of certain rivers also has been identified. The State of the Environment report does not consider the environmental problems associated with the nuclear industry or the military. However, evidence from other sources suggests that the military has generated serious problems through the production and testing of nuclear and chemical weapons and through the generation of nuclear waste.

The Soviet authorities have begun to collect low-level nuclear wastes and are trying to identify a repository for high-level wastes, which suggests that the latter category of wastes currently is held in storage. Information from the former GDR suggests that wastes from uranium mining probably also pose a serious problem in the USSR. The IAEA is conducting a fact-finding mission to investigate the safety of 14 older nuclear reactors in Eastern and Central Europe, of which four are in the USSR. In cities, domestic solid waste is said to create epidemic health problems. Air pollution from mobile sources in major urban centers also is severe. In Moscow, it accounts for up to 69 percent of air pollution. In general, motor vehicles generate about six to eight times the amount of air pollutants per vehicle than in the United States, Germany or Japan.

The USSR also contributes significantly to regional and global environmental problems. The western part of the country is strongly implicated in pollution of the Baltic and Black Seas. The USSR also imports and exports air pollutants responsible for environmental damage in the region. It is the second largest emitter of carbon dioxide, the gas primarily linked to global warming, producing nearly 19 percent of the world’s total emissions. The country also uses chlorofluorocarbons extensively, producing 10 percent of the world total.

c. Human exposure and health effects

The polluting activities in the USSR result in a much larger exposure to a broader range of harmful agents than in Western countries. Although the linkage between environmental exposure and health effects is notoriously difficult to establish, there is evidence that in the most polluted regions of the USSR, environmental health risks are 10 to 100 times those which would be acceptable in most industrial countries.

Two thirds of source water does not meet existing standards. Underground water supplies are seriously polluted and in 600 cities sewage water is not purified in a satisfactory manner. In 1988, nearly 20 percent of water samples tested for inorganic substances failed to meet public health requirements, and over 11 percent of water samples tested for bacterial content failed to meet those requirements. One outcome of poor water quality control was an outbreak of typhoid fever in Georgia. In Kirgizia, reportedly over 1,500 persons the yearly from drinking from streams, rivers and primitive wells; more than half are babies less than one year old. There are roughly 900,000 cases of hepatitis yearly, compared to 56,000 in the United States.

Levels of toxic air pollutants in hundreds of urban areas exceed those of countries such as Germany by factors of 20 to 50 or more. In 103 cities with a combined population of 50 million, air pollution levels exceeded standards by ten times or more. Air pollution is linked to a variety of disorders, among them respiratory illnesses. As compared to the Federal Republic of Germany, France, Japan, the United Kingdom and the United States, respiratory causes of death for Soviet males were 340 per million of population compared to 120 per million in the above five countries, i.e., 2.8 times greater. For females, the corresponding figures are 100 per million in the USSR and 60 per million in the five countries, a ratio of 1.7. According to the Chairman of the Russian Committee for Environment Protection and Rational Use of Natural Resources, it is theoretically impossible to survive in every seventh city of the 273 cities of the RSFSR which conduct ambient air quality observations.

Nearly 10 percent of the food samples tested in the USSR are contaminated by substances at levels considered unsafe for human consumption; pesticide contamination accounts for one quarter of this total. Sampling has revealed concentrations of organochlorines 10 times greater than maximum permissible levels and heavy metals more than 100 times above such levels. In Uzbekistan, nearly 20 percent of foods tested failed to meet health standards. In 1989, the Caspian Sea was so polluted that virtually 100 percent of the sturgeon caught were diseased. Some indications of how bad food processing can be is that thousands of families in Khemlinisky had to be issued gas masks in 1988 due to air pollution from the local meat combine.

The number of potent toxic substances in the human environment is also cause for concern. Benzo(a)pyrene is one example. This pollutant is a probable human carcinogen and causes DNA damage, mutation, chromosonal anomalies and sperm abnormalities as shown by in vivo mammal testing. In Abakan and Osh, lifetime risks of cancer from exposure to benzo(a)pyrene are 10 times higher than would be permitted in the OECD area, while in Novokuznetsk (RSFSR), this risk is 40 times higher. For a 68-city average in the USSR, chronic cancer risks for the average person exceed typical OECD norms by a factor of roughly 100. Overall, the USSR/Western country ratio for cancer among males is 1.5 and females 1.04.

The effects of the Chernobyl accident, including the longer-term health effects, currently are under investigation by a team of independent international experts, organized by the IAEA. Official estimates are that 31 people died directly. Initially, 116,000 people were evacuated, and, as more information becomes available, further evacuations are being organized. The number of people exposed to radiation above recommended levels, both inside and outside the USSR, is not known.

Life expectancy for Soviet males in a number of areas is dramatically lower than for males in Western countries. In the highly polluted Kola Peninsula area, life expectancy is about 50 as compared to an OECD average of nearly 70. In the age group 11 to 45, accidents are the leading cause of death in the USSR. Many young people the as a result of industrial accidents since over 3.5 million workers reportedly work under conditions which violate labor safety codes.

The Ministry of Health reported in 1989 that of the roughly 35 million children aged seven or younger, less than one quarter were “effectively healthy”. Fifteen percent of all six year-old children were functionally and physically unfit to begin school. The proportion of children who are in school and can be said to be “absolutely healthy” is about 20 percent. Upon graduation from secondary school, more than half of the graduates are limited in their choice of profession because of health-related difficulties.

In areas of high pollution, morbidity of both children and adults is significantly higher than in other areas. In one city where air pollutants exceed norms by factors of two to six (depending upon the pollutant), cancer rates are double the Soviet average, respiratory diseases are 2.3 times this average and heart disease is more than six times the average. Clearly, the state of the environment is a threat to the present and future population of the USSR. Indeed, Soviet medical authorities have postulated that continued exposure to high levels of toxic substances can cause genetic mutations which are transmitted to future generations. In one region where major chemical production facilities are located, there are reports that such damage has already manifested itself.

d. Natural resource degradation

Industrial, mining and agricultural practices have brought about a serious deterioration in the natural resource base. The current state of land resources is described in the State of the Environment Report as “a cause for alarm.” This degradation has had an important economic impact. According to the State of the Environment Report, “diminishing soil fertility has been the decisive factor in the low return on investment in agriculture.… The belief that technology, fertilizers and pesticides can produce an infinite increase in crop yields has stalled agrarian culture and has resulted in an endless consumption of soil resources.” Indeed, since 1965 the use of agrochemicals has increased by a factor of 4.5, capital equipment and other fixed assets by a factor of 5, and irrigated and reclaimed land by a factor of 2, while gross output from plant cultivation has increased to a substantially lesser extent.

Over-use of pesticides has resulted in persistent residues in soils and water, and their bio-accumulation in food chains. It is estimated that more than 10 million hectares of cultivated land contain residues of DDT—a pesticide banned or severely restricted in many Western countries 20 years ago or more—at levels which exceed the maximum permissible level. Serious soil contamination problems also are associated with deposition of heavy metals from the ferrous and non-ferrous metal industries. Deposits of 100 times or more above the permissible limits for lead and mercury have been detected in some regions.

Terracing and cultivation methods have magnified problems of soil erosion to the point where it has acquired great “socio-ecological significance”. Mining, construction and other operations have taken two million hectares of land out of production, mostly in densely populated regions favorable for cultivation. Irrigation is needed for arable lands, one half of which are located in arid zones. However, large tracts of irrigated land are left unused each year because of flooding, salinization and other consequences of the irrigation system. Two thirds of the irrigated areas fail to meet projected yields.

Similar problems exist in relation to other natural resources; for example, damage to forests from acid rain; extinction of some wild species of vegetation; sharp reductions in the stock and catch of valuable fish species from over-fishing and pollution; and a water management policy which has produced both the world’s highest per capita consumption of water together with water shortages in some regions.

e. Economic costs of health and environmental damage

Estimation of the costs of environmental and natural resource degradation is complex and dependent on value-laden assumptions. Officials in the State Committee for Environmental Protection estimate that the annual costs due to human health, environmental and natural resource damage are about 11 percent of NMP. One leading Western expert estimates these losses to be more than 15 percent of GDP. Although these estimates are several times higher than those for most Western countries, they are comparable with estimates of environmental damage costs in Poland. A conservative estimate of environmental damage costs in the USSR would be in the range of 10 percent of GDP annually, as compared to less than 5 percent in the OECD countries.

2. THE PLANNED ECONOMY AND THE ENVIRONMENT

In Western countries, it has been recognized for some time that the environment and the economy are interrelated, mutually supportive systems. This is also the case in the USSR, where the economy is administered rather than allowed to operate on market principles. The result of this particular symbiosis has been economic inefficiency coupled with extensive and severe environmental degradation. Forced industrialization, originating in the Stalinist era, together with a central planning system has produced a distorted economic structure which is inherently damaging to the environment and wasteful of natural resources.

The targets set in the central plans have been the single most important factor in determining economic behavior, and this has had important environmental implications. The use of quantitative targets has generated a culture of production maximization which discourages considerations of quality or of the environmental impacts of production. Obstacles to achieving the assigned targets receive low priority; the introduction of pollution control equipment “disrupts” production, lowers output and, hence, decreases the rewards assigned to enterprise staff. The fact that most pollution control equipment used is end-of-pipe technology which decreases productivity has further removed environmental incentives.

The pricing system employed in the planning system has reinforced the disincentive for environmental protection measures. Prices do not reflect costs or scarcity values and function as nominal accounting measures. The abundance of natural resources, and the control by the state of all associated property rights, has resulted in prices which are too low and which reflect bureaucratic objectives rather than production costs or relative scarcity. The Marxist labor theory of value also contributed to the undervaluation of natural resources. The price structure is, in effect, a comprehensive system of subsidies which enable enterprises to use natural resources (water, land) at very low cost. With no restraint on demand, this system has led to the overexploitation and inefficient use of energy and raw materials.

Since the 1930s, an “extensive pattern” of industrial development has been the dominant model; that is, output has been boosted mainly by increasing the quantity of inputs—raw materials, energy, labor. This policy of forced industrialization assigned investment priority to the extractive and heavy industries (including armaments) and energy sectors—areas which traditionally have exerted the greatest pressures on the environment. Supply, rather than demand, has driven the economy and produced a distorted industrial sector which is resource-intensive and environmentally damaging. For example, the USSR’s consumption of energy per unit of gross domestic product is more than double that in OECD countries; pollution arising from energy sources also is roughly double that of OECD countries.

Within the planning system, the production ministries operate as powerful monopolies, with no competition and virtually no outside interference. Production ministries have vigorously pursued their own departmental interests, and until very recently were successful in defending their interests against the environmentalists. Thus, environmental issues have been largely excluded from ministerial concerns. With the recent establishment of a State Committee for Environment, the environmental responsibilities which had been assigned to production ministries, in effect, have been reallocated to a weaker and more junior body.

The pursuit of departmental interests goes beyond jurisdictional battles; it has also entailed obstructing the actions of the State Environment Committee. For example, ministries have had the responsibility to generate certain information about the environmental consequences of their actions. However, they have withheld and manipulated environmental information generated by their enterprises. Moreover, there is evidence that “environmental” studies performed by enterprises have frequently been designed to demonstrate the need for production improvements and the lack of cost effectiveness of pollution control measures.

Departmentalism is also a serious problem in the mining sector. The Ministry of the Coal Industry, for example, is only interested in coal; it disregards substantial amounts of other minerals and discards wastes with significant amounts of usable materials. The State of the Environment report states that: “The narrow bureaucratic approach to solving the problems of rational use of mineral reserves represents an obstacle to interdepartmental cooperation and timely construction of interdepartmental facilities that will implement comprehensive exploitation of mineral fields and mineral raw materials. No effective economic mechanism has yet been developed to stimulate mining enterprises to use raw materials both efficiently and thoroughly”.

The production-oriented central planning system has also tended to locate activities without consideration of their environmental consequences. Local and regional authorities have been overridden by central authorities and have not been able to ensure that a proper consideration has been given to local health and environmental concerns in the siting and operation of production facilities. These decisions have resulted in uneven growth strategies and frequently in the construction of overly ambitious, ecologically harmful projects. For example, the hydrological projects undertaken in the Brezhnev era to reverse the large, northward-flowing rivers to irrigate the southern republics resulted in massive ecological harm before they were stopped. Similarly, the environmental consequences for the Aral Sea of the decision to concentrate cotton production in Uzbekistan have been widely documented.

The concentration of production facilities in selected areas is another characteristic feature of the central planning system. The large scale of chemical, steel, pulp and paper and other industrial facilities has resulted in severe local and regional pollution problems. The same pattern is evident for agricultural production where, for example, enormous numbers of pigs and cattle have been concentrated in agro-industrial complexes. The health and environmental consequences of these policies have been particularly severe. The location of large polluting facilities close to centers of population, in particular, has led to very severe, localized human health problems and the emergence of the “complex” and “transitional” zones described in the first section.

Within the industrial sector, most of the technologies were built before the World War II, or are based on outdated technology from that period. It has been estimated that close to half of industrial production assets are not worth much beyond salvage value. The lack of R&D and investment in more modern production technologies and the lack of incentive for environmental measures has generated a sizeable gap vis-à-vis Western countries in the area of “clean technology.” In many cases, more efficient plants could be built for not much more, or even less, than the cost of retrofitting pollution control technology on an existing plant. The problem does not necessarily lie on the R&D side: the general level of scientists and engineers in the USSR is well-regarded internationally. There is also evidence that research institutes have been able to develop cleaner, more efficient technologies. The bottleneck seems to be the introduction into the production process of the concepts and designs developed in research institutes.

The doctrine of socialism-in-one-country underpinned Soviet isolationism and a policy of self-sufficiency. This isolation from the international economy, which was not seriously eroded by the establishment of the CMEA in 1949, insulated the domestic economy and the central planning system. As the need for foreign investment and technology to tackle environmental problems has been recognized, isolationism has proved an obstacle. Despite the recent easing of conditions under which foreign enterprises may operate in the USSR, there are still many obstacles to doing business. These, together with the uncertainties about the reform process, are likely to discourage environmentally beneficial foreign investment for some time to come.

3. POLICY AND INSTITUTIONAL RESPONSES

The severity of environmental problems in the USSR has in recent years stimulated a political response, in spite of the dominant anti-environmental interests within the state apparatus. The motive force for change has been provided primarily by two interrelated forces: grassroots environmental activism and glasnost. Environmental concerns, particularly related to Chernobyl, were important for glasnost; subsequently, as information circulated more freely in the country, environmental groups grew in strength.

The two most important changes among governmental institutions have involved the establishment of the State Committee for Environmental Protection, Goskompriroda, in January 1988, and, with the reform of the parliamentary system, the establishment of a Committee on Ecology and the Rational Use of Natural Resources in the USSR Supreme Soviet. In addition, there have been important developments at the level of republics where environmental and nationalist sentiments have reinforced one another.

Any examination of the institutional and political response to environmental degradation must keep in view the fact that the economic system is administered, with no distinction between the public and private sector. This has created an underlying ambiguity about production and environmental protection responsibilities. Since the state is responsible for the two, it is both polluter and regulator. Thus, the state may impose financial penalties for exceeding pollution standards, but it is also the state which must pay the fine. There is a confusion of responsibilities, and environmental measures have come to be treated as a financial transfer among rival ministries. This lack of separation between production and environmental protection responsibilities has further supported the dominance of production over environmental values.

A second fundamental factor is the hierarchical structure of decision-making in which central, all-union ministries dictate what happens at the local level. This means, for example, that republican authorities do not have jurisdiction over the activities of centrally controlled enterprises. From the environmental perspective, this has the important consequence that local and regional tiers of government often have little or no say in controlling the environmental impacts of production-related activities. The environmental authorities consider this to be the most important institutional obstacle to an effective environmental policy.

a. Government institutions

Until the establishment of Goskompriroda, the main coordinating body for environmental protection was Gosplan. It determined the strategic plans, established the capital investments which would be made and allocated the financial and material means for achieving them. Gosplan still performs many of these functions today and as long as the central planning system continues, it will have an important role to play in determining the scope and magnitude of centrally-supported capital investments for environmental purposes.

Prior to 1988, responsibility for environmental and natural resource management was fragmented among a variety of ministries in addition to Gosplan. The way investments are decided is dependent on complex negotiations among Gosplan, Goskompriroda, production ministries and the republics. Goskompriroda makes proposals based on available environmental information, which, as explained below, may not always be reliable. It also requires information from enterprises and production ministries, particularly on emission levels, but this frequently is not forthcoming. Goskompriroda’s proposals are expressed as targets for reducing pollution to national standards. These targets are allocated to production ministries and republics. Production ministries, in turn, allocate them to enterprises and republics allocate them to republican ministries, municipalities or local regions. The key issue then becomes whether the environmental expenditures will come out of the ministry or enterprises’ “normal” budget or whether they will be centrally financed.

Since its establishment in 1988, Goskompriroda has been required to submit proposals to Gosplan for environmental protection measures for inclusion in the draft concept and the basic guidelines for five year plans. Each of the 15 republics as well as the localities and regions are to set up subsidiary counterpart committees. These committees, together with Goskompriroda at the union level, have the power to prohibit any new or ongoing activity which violates environmental rules, and to impose fines and sanctions. They can conduct investigations and “state ecological expert analysis,” which is a form of environmental impact assessment. All other agencies are directed to cooperate.

Goskompriroda is directed to establish a system whereby users of natural resources are supposed to pay for what they use, and polluters are to pay for the discharges of wastes and emissions of pollutants which exceed permitted levels. The price mechanism is to be used to stimulate the production of ecologically clean output. The fees collected under these programs are to be used to finance environmental restoration and maintenance programs.

Goskompriroda’s performance has not matched initial ambitions. A variety of reasons have been advanced: difficulties in recruiting senior managers; problems in establishing an effective new organization with staff from other ministries; lack of resources (its central staff numbers 450); and inadequate support from the republican and local levels. The most important reasons for Goskompriroda’s lack of effectiveness, however, have been the obstructive tactics of other ministries, the continuing dominance of production targets over environmental objectives and, related to this, the power of central ministries to dictate developments at the local level.

The bureaucratic obstacles which Goskompriroda has encountered has led its supporters to call for a strengthening of its position vis-à-vis production ministries. Various suggestions have been advanced: that the Environment Minister should be made Vice Chairman of the Council of Ministers; that a Special Commission for the Environment should be established within the Council of Ministers; or that Goskompriroda should be subordinated to the Supreme Soviet. Whatever institutional arrangements are established, the introduction of effective mechanisms to make production ministries and enterprises accountable for the potentially environmentally damaging consequences of their actions remains a fundamental element in any process of environmental reform.

Environment and natural resource management issues are elements in the constitutional discussion between the all-union and republic governments. At stake is control over important resources, the power to oversee the location of potentially environmentally damaging facilities, and control over environmental management schemes, including the collection of charges for using natural resources and exceeding pollution limits. The electoral changes and the establishment of an environment ministry at the national level are mirrored at the regional levels. Competitive elections are now held in soviets at all levels, and regional committees similar to Goskompriroda have been established to develop and implement environmental policy on that level. However, several forces may work in the opposite direction. First, regional authorities may not have jurisdiction over all-union facilities. Second, the same political struggles between production and environmental interests occur at regional levels, not infrequently with the same result—victory for more powerful production interests. Third, the political orientation and professionalism of staff in the local committees has been called into question. Fourth, many problems remain to be resolved concerning the institutional and operational framework of action. As with most new activities, practical experience is seriously lacking. Fifth, resources are very scarce.

Of the 15 republics, the Baltic republics have advanced the most in establishing government institutions to deal with environmental issues. However, the land area and populations involved are relatively small and, as explained below, a number of exceptional conditions apply. The RSFSR, by contrast, serves a population of more than 150 million and has the largest volume of production and a huge natural resource endowment. Yet its committee for environmental protection has a staff of just 50, inadequate to mount an effective environmental program. The distribution of resources for environmental expenditure among republics is highly skewed. In 1985, per capita spending on environmental protection equipment was, rub 11 in Tadzhikistan, rub 21 in Uzbekistan, rub 77 in the Ukraine and rub 100 in Estonia. The devolution of responsibility to environment agencies at the regional and local level is a necessary but not a sufficient condition for environmental improvement. Very few republics would be in a position to assume their responsibility in the near future without substantial infusions of resources and assistance. The evidence suggests that these needs will be greater in the poorer Central Asian republics than in the western republics.

The political reforms introduced at the 19th Conference of the Communist Party in 1988 involved the transfer of power from the party and the Council of Ministers to a reconstituted, democratically-elected parliament. Until this change, the legislature performed a rubber stamp function, endorsing the proposals of the Council of Ministers and legitimizing the policies of the ministries.

The elections for the reformed Supreme Soviet resulted in the election of many deputies who campaigned on environmental issues. A group of 200 deputies now form an ecology bloc in the parliament. The real focus of environmental concern in the Supreme Soviet, however, is the Committee on Ecology and Rational Use of Natural Resources. The Committee has 50 members and works through 10 sub-committees (some of which have two or three working groups). The Committee on Ecology has been one of the Supreme Soviet’s most active committees. In November 1989, it passed its first resolution on environmental matters, “On Urgent Measures to Promote the Country’s Ecological Recovery.” The resolution is very ambitious and sets objectives which commentators assess as unrealistic. It reiterates the critical state of the Soviet environment, particularly regarding the Aral Sea, air pollution issues and nuclear power and calls for draft laws to be prepared in a number of specific areas. The Committee also has tried to ensure that the environmental consequences are taken into account in legislation developed in other policy sectors. Thus, it has intervened in discussions on land ownership and foreign investment. The Committee also held highly publicized hearings on Chernobyl and other nuclear incidents.

It is difficult to assess what role the Supreme Soviet and its Ecology Committee might come to play. It will depend on the outcome of the constitutional discussions currently underway and eventual allocation of responsibilities between the union government and the republics. If the union government’s role is restricted to interrepublican programs, the Supreme Soviet’s role may be more to identify and monitor major environmental problems rather than to develop and oversee the implementation of the legislation needed to address them. So far, its most important role seems to have been consciousness-raising rather than lawmaking or calling the executive ministries to account for their environmental actions.

b. Environmental policies and implementation

Although many ministries have responsibilities for the implementation of environmental policy, Goskompriroda has the leading role. However, its ability to ensure effective implementation is undermined by its weakness vis-à-vis the production ministries, and the fragmentation of responsibilities for environmental information, enforcement and investment. The State of the Environment Report acknowledges that there has been “a chronic and widespread lack of implementation of plans in this area.”

(1) Investment

In the 1990 state plan, a total of rub 4.5 billion was allocated for environmental expenditures, which represents about two percent of total state investment. Rub 2.2 billion comes from the central fund and rub 2.3 billion from the budgets of production ministries and republics. This represents a 25 percent increase from the 1988 budget of rub 3.6 billion. However, with the overall increases in capital spending, this still represents a modest increase in total central investment on the environment; and judging from past experience, even these targets are unlikely to be achieved. In 1988, only 55-65 percent of air and water pollution targets were achieved. There was considerable variation among ministries and republics in achieving environmental targets. For example, the two largest targets in 1988 for recyclable water were set for the Ministry of Power Engineering and Electrification and the Atomic Energy Ministry. The former achieved 88 percent of its target and the latter only 26 percent. One important factor in the non-attainment of targets has been failures in the production and supply of pollution control technology. Moreover, insofar as pollution control technology is supplied, it is generally end-of-pipe control. The level of investments and the structure of incentives in the production system have discouraged investment in more radical process redesign which would be cleaner and more efficient.

Environmental investment is targeted principally on water pollution (cleanup to provide potable water and sewage treatment, particularly in recreational areas) and, to a lesser extent, air pollution. Solid waste treatment, for example, does not feature to a significant extent in environmental investment plans. Water treatment accounts for 70 to 80 percent of the total environmental expenditure. This has been explained, in part, by the power of the water-related ministries and the absence of a comparable lobby for air pollution. Ironically, it was the powerful Ministry of Water Management which, with high level political support, was also responsible for so many ecologically damaging water projects in the 1970s and 1980s. Thus, bureaucratic interests rather than assessments of relative costs and benefits, or even concern for the environment it would seem, have driven the priority-setting process and led to an unbalanced environmental investment strategy.

The primary source of finance for environmental investment is the revenues collected by the central authorities from production activities. There is much discussion in the USSR of using pollution charges as a means of financing environmental investments. To date, these schemes are in an experimental phase and account for a negligible fraction of environmental investment funds.

There can be no doubt that environmental investment is insufficient in comparison with the magnitude of the problem. An environmental plan to the year 2005 is currently in preparation which proposes investment of rub 140 billion over this period. If implemented, this would more than double the current annual expenditure. However, this must be set against the costs of environmental damage which are estimated at some rub 100 billion per year. The impact of the investment program is no more encouraging. The 1988 State of the Environment Report states: “an analysis of the results of conservation activities and the state of the environment for 1988 reveals that no substantial improvements in such [environmental investment] efforts nor any significant positive changes in the ecological conditions in the country have occurred.”

(2) Environmental information and monitoring

There are three major institutions responsible for environmental information. Goskomstat collects all environmental data, analyzes it and issues an annual compendium on the subject. As well as drawing upon information from other ministries, Goskomstat compiles its data by means of a questionnaire sent to enterprises. The State Committee for Hydrometeorology (Hydromet) is responsible for monitoring. It coordinates the all-union Service for Monitoring of Environmental Pollution, which covers pollution at the local, regional and global levels. Drawing upon data generated by other ministries. The monitoring system has air pollution stations in 450 cities and covers 4000 water bodies, Goskompriroda also conducts some monitoring and works with Goskomstat, Hydromet and other agencies to publish environmental information.

The two government bodies with primary responsibility for environmental matters, Goskompriroda and Hydromet, have frequently not coordinated their efforts closely and as a result have found it difficult to present a united front to the production ministries. At the local level, some production ministries are responsible for monitoring. Like Hydromet, a number of these ministries have resisted efforts to establish a centrally-controlled monitoring scheme and information is frequently not fully shared with Goskompriroda regarding monitoring and environmental conditions.

In addition to these institutional problems, there are important methodological and practical problems associated with the compilation of environmental data. Ambient environmental levels are measured, rather than emissions at source. Monitoring equipment is in short supply, often antiquated, not properly calibrated and is operated by personnel without sufficient training. An examination of data for comparable environmental situations in the USSR and in the former GDR and FRG, as well as the results of monitoring carried out by Western scientists, suggest that some of the published environmental data are not credible. Uncertainty about the reliability of some of the data tends to invalidate the use of the whole for practical purposes. A comprehensive and independent verification effort would be necessary before the published environmental data could be used with confidence. These problems have important implications for Soviet environmental policy: the data may give misleading signals about priorities and the allocation of environmental investments; and no yardstick is available for reviewing the implementation of policy measures.

(3) Environmental standards and pollution charges

Standards for releases to air and water are set by Goskompriroda. These are based to a large extent on World Health Organization values for “acceptable daily intake” (ADI), when such values exist. When they do not, standards are set for maximum permissible level (MPL) of release, based on “no observable (adverse to humans) effects level” computations. As such, Soviet MPLs tend to be comparable to those established in the West. The problem has been with implementation.

In practice, the official standards are not necessarily those to which industry is required to work. When industry branches or enterprises do not have the financial means to make the necessary investments, temporary or provisional standards are agreed between the inspection bodies and the ministry concerned. Problems frequently arise with the supply of spare parts and the maintenance of pollution control equipment. The production ministries have managed to retain the inspectorates under their own authority and enterprises frequently operate without control. As a result, air, water and radiation levels, often in densely populated areas, exceed MPL values by an order of magnitude, with all the consequences for human health which this entails. It is estimated that air pollution controls succeed in removing less than 2 percent of sulphur oxides and 20 percent of nitrogen oxides.

Even when inspectorates implement standards and penalize enterprises for exceeding standards, this does not necessarily lead to an improvement in environmental conditions. It is not uncommon for resources allocated to enterprises for the purchase of pollution control technology not to be used for that purpose because managers find it more in their interest to continue paying environmental fines than to interrupt production and install control technology. Indeed, production ministries have made provisions within their budgets to pay their enterprises’ environmental fines, and it has been known for environmental budgets to be diverted into more “productive” uses.

From its establishment, Goskompriroda has been committed to employing economic rather than traditional planning methods to protect the environment. An experimental scheme has been in operation for two years in fifty different regions; the approach followed in different regions varies. The available evidence suggests that the charges are being set at a level which will be too low to generate a significant amount of revenue; presently, they represent a virtually negligible fraction of total environmental investment. The level of charges will not attempt to reflect full environmental damage costs, but Goskompriroda nevertheless intends that they will be set at a level which provides a stimulus for environmental investments. The charges are not intended to replace environmental standards but to operate in conjunction with them; they would be set in proportion to the amount by which pollution exceeds standards. Charges are also envisaged for the usage of natural resources.

The experiment has excited opposition in the production ministries. As enterprises move to self-financing, charges would come from their profits. It is not clear, though, how these charge schemes will be implemented, particularly in the case of pollution charges, where production ministries continue to monitor compliance with standards. If the central planning system continues, ministries may incorporate pollution charges into their budget and compensate enterprises for the fines they must pay, as they do under the traditional regulatory approach.

The viability of such market-based approaches must also be questioned until the structure of fines is established on a more rational basis. There is evidence that charges for natural resource usage may be easier to control than for pollution. Water charges have been levied in the manufacturing sector, but not in the agricultural sector. As a result, water usage in the manufacturing sector has stabilized but in the agricultural sector it has continued to increase.

(4) Environmental Impact Assessment (EIA)

EIA is a powerful tool of environment policy, widely used in Western countries and recommended by international organizations. The experience gained with this tool suggests that it is most valuable when used early in the planning process, whether for a specific project, like constructing a new factory, or for a program comprising a number of such projects. Practitioners also emphasize the broad participation of all parties involved and the importance of not “fixing” conclusions in advance. When properly employed, EIA can help ensure that the environmental consequences of development activities are examined before the project is implemented, that mitigation measures are built into the project or program design and that the activity commands the assent of the local population.

Goskompriroda inherited the responsibility for “state ecological expert analysis” from Gosplan. When there is a proposal to establish a new facility (such as a factory, farm, dam or road) the sponsor is required to prepare a report identifying the likely environmental impacts and their consequences. Goskompriroda reviews the report and when necessary convenes an independent panel to consider whether or not the proposal should go ahead. In principle, it can block a proposed development; in practice, however, its voice is one among many and it must compete against the more powerful production ministries.

Even if the power balance were redressed, the practice of “ecological expert analysis” diverges in important respects from the recommendations of Western environmental practitioners. Investment programs of the major production ministries are never reviewed at an early stage from an environmental perspective. Goskompriroda’s review of the proposals comes late in the process and there seems to be no established methodology for reviewing and assessing plans.

In recent years, local “green” activists have grown in strength and have blocked projects which they considered harmful to the environment. The ecological expert analysis approach has not succeeded in developing a convergence of views among the various parties of interest and it does not enjoy the confidence of environmental groups. Unless procedures are established involving the provision of timely and appropriate information to the public and providing meaningful opportunities for participation in the decision-making process, environmental opposition may become an important impediment to development activities. There is evidence that this is already happening. Moreover, the opposition is not confined to domestic initiatives but also affects foreign investment. Indeed, in areas where nationalist feelings are running high, and where projects do not yield local benefits, foreign investment projects may receive even more critical attention and opposition.

(5) International cooperation

As the scale of environmental problem becomes clearer, the USSR has looked abroad for assistance in devising a strategy. International and global environmental interdependence and cooperation fit squarely into this approach. The need to include the environment in this dimension was graphically demonstrated by the Chernobyl incident in 1986, which resulted in widespread radioactive contamination throughout Europe.

This shift in Soviet thinking has manifested itself in a greater willingness to participate in multilateral environmental agreements. By early 1990, the USSR had signed 55 of the 140 existing multilateral agreements on the environment. Similarly, the USSR has stepped up its bilateral environmental activities, having concluded eleven bilateral agreements with Western countries. The United States established the first bilateral environmental agreement with the USSR as long ago as 1972. It, too, has been strengthened and now ranges across twelve areas, from prevention of air pollution to legal and administrative measures and education and training. The agreement’s emphasis has been on basic research, with guarantees of equality, reciprocity and mutual benefit.

Given their geographical proximity, it is perhaps not surprising that the Nordic countries, especially Finland and Norway, have substantial cooperative programs with the USSR concentrated on environmental problems in the border regions. Cooperation includes financial assistance in the form of soft loans, technology transfer, training and scientific cooperation. A major part of the cooperation is centered on the development of an action plan for the Baltic Sea which is due to be concluded at the end of January 1991.

Germany established a bilateral agreement in early 1989, with a strong emphasis on private sector cooperation. A working group has been established to develop detailed work plans for joint R&D, technological development, and marketing of new technologies. France has had an agreement in place for some time, and new agreements have recently been concluded with Canada and Switzerland. Australia’s agreement was concluded with Hydromet and concerns monitoring. Belgium and the United Kingdom are in the early stages of re-establishing their bilateral cooperation which was suspended as a result of the war in Afghanistan.

The USSR is not covered in the G-24’s PHARE program. Within the European Community, however, based on the Agreement of the Trade Committee, the European Commission and the USSR have established a sub-committee on environment and nuclear safety. The Commission is also planning to send an inspection team to review the safety of nuclear reactors. A number of Western countries also have specific bilateral agreements on nuclear safety issues (including France, Finland, Germany and the United States).

The USSR also has bilateral agreements with Poland, Hungary, the Czech and Slovak Federal Republic and Bulgaria, although no concrete steps have been taken to implement them. While the CMEA is being replaced by the Organization for International Economic Cooperation, it is not clear at this time whether it will provide a forum for environmental cooperation among the former CMEA member countries. There clearly is a need for strengthened regional cooperation, since there are important transfrontier pollution problems. Shared environmental resources continue to degrade, and technologies (including nuclear technology) with the potential to cause environmental harm are often shared. Moreover, the changing economic relations among these countries may be exacerbating environmental problems, for example, in connection with transfrontier movements of radioactive and hazardous wastes.

Joint ventures and technology transfer could be important in solving environmental problems as part of the overall restructuring of the Soviet economy. In this connection, Goskompriroda works closely with two recently established bodies: Ecolas External Economic Ecological Association (an independent commercial enterprise working in the environmental field) and Ecoprom (the biggest syndicate in the USSR, incorporating many independent companies from different ministries).

c. Non-governmental responses

(1) The environmental movement

Public concern about the state of the Soviet environment was one of the catalysts for glasnost and for reform more generally. The Chernobyl incident in particular marked an important change in official practices concerning official information and public discussion. The greater openness has, in turn, fueled the expansion of strong, vocal environmental groups. The State of the Environment Report states that since environmental “information has now finally become available and has left no room for optimism, the population has begun to actively oppose the construction of new facilities and the expansion of existing plants, particularly chemical, metallurgical, and power plants. Demands for the most severe and radical measures, up through closing and modifying facilities that represent major sources of environmental pollution, are becoming increasingly common.”

Environmental groups generally have strong local orientations. Although there are several umbrella groups (the Social-Ecological Union, Ecological Union, Ecology and Peace and the Green Movement), the connections among the local groups are too loose and the structure too horizontal for them to be an effective political force at the national level. They lack resources and experience, although growing links with Western environmental groups are providing some support in these respects.

Environmental groups have blocked new developments and closed down polluting activities, thereby creating additional uncertainty and economic dislocation. Three cases in particular have received widespread publicity and inspired other, locally-based initiatives. In the Ukraine, pressure from the citizens’ movement led to a resolution adopted by the Ukrainian Parliament launching a five-year moratorium on nuclear plant construction, and calling for the immediate closure of the operating units of Chernobyl. Expansion of the industrial activities that were polluting Lake Baikal, the world’s largest freshwater inland sea, was blocked and even reversed. Moreover, plans to divert rivers flowing north into the Arctic through canals to the southern regions were defeated. To these could be added many other examples: in Cheliobinsk, Siberia, construction of a facility to dismantle chemical weapons was stopped; in Tadzhikistan, the authorities were forced to revise plans to build a dam across the Vokhash river; in Latvia, a number of factories have been closed following environmental campaigns; and in Tallin, Estonia, construction of an oil shale mine was prevented.

In some republics, nationalism and environmentalism have tended to reinforce each other. The exploitation of natural resources and the location of polluting industries have frequently been seen as centrally, Russian-imposed policies and this has given momentum to movements for republican autonomy. This tendency is most pronounced in the Baltic republics. The first green party was formed in Estonia in the spring of 1988 and, by the end of 1989, green parties had been formed in Latvia, Lithuania, Moldavia, Belorussia and the Ukraine. They have acquired political legitimacy for opposing environmentally damaging projects and by forcing closure of polluting facilities.

Goskompriroda has prepared a registry of environmental groups with a listing of about 1,000. The emergence of the green movement suggests the need for Goskompriroda to establish a dialogue with these groups. Yet there is an ambiguity in the relationship: on the one hand, these groups are arguing for environmental objectives and therefore can lend practical support to Goskompriroda; on the other hand, their diversity, radicalism and lack of involvement in the bureaucratic decision-making process make them difficult and uncertain allies.

(2) The Academy of Sciences

The Academy of Sciences has provided a strong, independent source of analysis, criticism and proposals. Academicians have worked with both the legislative and executive branches of government. In fact, the Academy’s influence is particularly strong because several of its members hold senior positions in both branches. Members of the national and regional academies also have worked closely with environmental groups. The Academy has been preparing a study of the environment to the year 2005 in parallel with Goskompriroda. No doubt it will continue to exert an influence through its analysis, advice, educational programs and the involvement of its members in the policy process.

4. CONCLUSIONS AND RECOMMENDATIONS

a. Integrating environmental protection into the economic reform process

Although environmental issues have been an important force for reform, there is a danger that they may be put to one side during the detailed discussion of economic reform. If this happens, critical and growing environmental problems and their associated costs would be accumulated in the hope that future generations would be in a position to tackle them. This was the attitude which prevailed in most Western countries in the early 1970s: economic development and environmental protection were seen as mutually exclusive policy objectives. Now, there is growing recognition that it is possible to have a healthy economy and a healthy environment. Thus the challenge for the USSR is to find ways in which environmental considerations can be factored into the broader reform process, to find ways of promoting economic efficiency and environmental policy goals at the same time. The emergence of radical environmental groups provides a further motive for paying more attention to environmental issues. At a time when regional and local decision-making is likely to grow, siting issues, heavily polluting enterprises and management of natural resources could become important sources of political conflict. Unless appropriate measures are taken, environmental opposition could become an important impediment to the reform process itself.

A radical economic reform of the Soviet economy provides good opportunities for pursuing economic and environmental objectives at the same time. In many cases, the mechanisms responsible for inefficiency and wastage are also responsible for pollution; these include central planning based on quantitative production targets; a pricing system which subsidizes the use of energy and raw materials; an investment bias for heavy industry; and lack of any incentive to use “clean” technologies. From the policy perspective, market-based reforms of these policies and practices can help achieve environmental goals. In the longer term, the modernization and reorganization of the Soviet economic structure has the potential to bring substantial gains in productivity and for the environment.

At the same time, it must be emphasized that market forces by themselves will not solve all environmental problems; indeed, left to themselves, market forces will generate their own kinds of problems. A major reform of environmental policies and institutions also is required concurrently with economic reforms. Market-based approaches could have an important role to play but, as in Western countries, they will need to be deployed as one element of an environmental strategy in which public authorities set medium- and long-term objectives. From the institutional perspective, there is a fundamental need to break the control of the central production ministries and to devolve decision-making authority to the regions and localities most directly concerned with economic activities and their environmental consequences.

There is a need for quick and decisive action to tackle environmental problems. There is evidence that the uncertainties presently associated with the reform process are having a detrimental effect on the environment. For example, the confusion of responsibilities between the union- and republic-levels of government is creating obstacles for Western bodies in both the public and private sectors, which otherwise would be willing to provide assistance in tackling environmental problems. It has been reported that factories closed in the past for environmental reasons are being reopened to ensure the supply of urgently needed goods. So far, a coherent if inefficient system has been replaced by one which is neither coherent nor efficient. As more reform policies are implemented, there are fears that even the few environmental measures which are currently in place will be swept away.

For all these reasons, a two-phase approach to environmental reform, closely integrated with a transition to a market-based economy, is recommended:

Phase 1. The key reforms needed to promote both greater economic efficiency and environmental protection are price reform, privatization and the establishment of a competitive industrial structure. The reduction and eventual abolition of subsidies would significantly reduce demand for energy, raw materials and other production inputs like pesticides and fertilizers. The establishment of enterprises operating within a competitive environment under market conditions would create a continuing pressure to reduce wastage and to make productive processes more efficient. In some cases, plants would close with the attendant problems of unemployment and the need for a safety net. Increasing efficiency in the use of inputs per unit of output would lead to reductions in some pollutants, but it would not eliminate the threat from the extensive use of inherently backward technologies. Nevertheless, recent experience in Poland and the former GDR suggests that significant reductions in pollution could be achieved while moving to a market economy and stabilizing economic conditions.

Economic reform is a necessary but not sufficient condition for environmental improvement. Steps to reform environmental institutions and to provide them with adequate powers and means must be made at the same time. An important part of this reform should involve making other public bodies accountable for the environmental consequences of their policies. Another critical element in environmental reform is the allocation of responsibilities between the union and the republics. A variety of models are provided by federal constitutions in Western countries. Nevertheless, experience from those countries suggests that the responsibilities which should be assigned to the union level include: managing trans-republican environmental problems; establishing minimum ambient and other environmental standards; harmonizing measures which may distort trade or investment; and coordinating efforts to ensure cost-effective use of resources. At the same time, however, a considerable part of environmental decision-making authority must be devolved to the regional and local levels, particularly the application of union-wide standards to local conditions and the implementation and enforcement of policy. The absence of effective institutions at these levels at present indicates that this will not be an easy or quick task.

A new decentralized set of environmental institutions would face formidable problems. Budgetary pressures would severely constrain resources and in the first stages of reform it may be assumed that there will be a shortage of capital available for major environmental investments. In these circumstances, environmental policy should focus on: (1) establishing the mechanisms needed for the development and implementation of environmental policy measures including an adequate monitoring system, effective standard-setting and enforcement procedures; pollution fees and fines which will help finance administrative costs; user charges on environmental services like water and sewage treatment to help fund future environmental investments; (2) establishing priorities among the problems to be tackled in the major economic sectors and regions, focusing particularly on environmental health risks and degradation of critical natural resources. In this connection, special attention should be paid to reducing particulate and toxic air pollution, hazardous waste management and nuclear safety; (3) steering industrial restructuring in an environmentally favorable direction, particularly through environmental audits of production facilities with the aim of improving the design, operation and maintenance (input efficiency) and the quality of output (output efficiency); (4) establishing environmental management schemes in priority areas, e.g., river basin management; (5) promoting local initiatives (particularly to prevent accidents at production facilities and to develop emergency response procedures); and (6) elaborating and implementing a conservation strategy in conjunction with the privatization of land.

A more balanced strategy for environmental problems needs to be developed based on relative risks and cost-effective use of resources. This suggests that air and especially waste management issues require more attention vis-à-vis water pollution issues. Nuclear safety issues also should be a priority. The IAEA and bilateral agreements would be useful in reviewing and identifying priorities in this area. Consideration also should be given to how to address global environmental issues within an overall environmental strategy.

In the industrial sector, emphasis should be placed on those processes which can be redesigned at little or no cost in order to achieve efficiency and waste/pollution minimization. In cases of heavily polluting, economically viable plants, retrofitting or end-of-pipe technology may be considered in order to combat priority problems, if the investments can be shown to be cost-effective. In the energy sector, promoting efficiency and ensuring that the relative prices of energy reflect environmental costs should be the principal objectives. Based on Western experience, savings in energy and reduction in pollution by substitution into cleaner fuels could be at least 20 percent by the end of the decade. Other low-cost actions such as fuel switching could also help to reduce environmental burdens. In the agricultural sector, subsidies for inputs such as fertilizers and pesticides should be withdrawn. Estimates put current overuse of these inputs at 30 percent annually. Natural resource use should be based on opportunity costs including the external cost of provision, use and disposal and depletion costs. At present, over 40 percent of irrigation water, provided free or at very low cost, is wasted.

Phase 2. The second phase of an environmental program could be developed as foreign and domestic capital becomes available for new productive (and thereby environmental) investment. This would require establishing a climate of confidence in the durability of the reform process. In addition, for foreign capital this would require overcoming the obstacles to investment which presently exist. Recent changes in the conditions applying to foreign firms are steps in the right direction. Important obstacles, however, still exist and recent developments in the USSR only serve to emphasize them (see Chapter IV.4). Assuming that the reform process continues in a market-oriented direction, one important environmentally related obstacle which will need to be tackled is the issue of liability for environmental damage when a foreign firm acquires the majority share in a domestic company.

It is estimated that close to half of industrial production assets are worth little more than salvage value. This creates incentives to replenish the capital stock. The challenge will be to establish conditions that are favorable for investment in modern technology which is both “clean” and capable of significantly increasing productivity. In this phase of activity, the objectives of environmental policy would be to implement progressively the management approaches initiated in Phase 1, to promote “clean” investments and to initiate clean-up through investment in environmental infrastructure (water treatment and sewage plants). The generation of revenues, for example from environmental financial mechanisms such as pollution fees and fines, and from charges for water and other resources, could make an important contribution.

This phase of environmental policy will be conditioned by the structural changes described in Phase 1. Thus, it will be important to ensure that investment is targeted on new plants or on existing plants which are not likely to be liquidated as the reform process unfolds. Wherever possible, incentives should be provided for process change rather than retrofitting; though in some cases, retrofitting will be the more practical option. Effective environmental impact assessment procedures will need to be in place at the local level to ensure that new developments take account of environmental considerations in a manner which is acceptable to the local communities concerned.

b. The presidential guidelines

The presidential guidelines address the issue of environmental protection in the context of the “non-market sector”, which also includes public health, education and science. The document states that “this is the only sector of the economy to which financial and other constraints are in principle not going to be extended, even in the period of economic stabilization.” The key points concerning environmental protection in the plan may be summarized as follows: (1) restoring the environment requires the radical modernization of production technology and environmental investment becoming “one of the main burdens on the economy”; (2) the republics will delegate to the union administrative agencies responsibility for “developing and implementing measures of all-union significance for the ecological protection of the people”; (3) local authorities will play a “vital role” particularly by implementing a regime of pollution charges and fines; (4) a system of charges for environmental resources (land, non-renewable resources, water, forests) will be introduced, with a share of the revenue generated allocated to local budgets; (5) the safety and reliability of “economic facilities” must be implemented “without delay” in order to reduce “the high probability of a growing accident rate due to the anticipated aging of facilities and production surges.”

The guidelines demonstrate explicit recognition of the need to link environmental improvement with the more general process of economic reform. However, further analysis is needed and some difficult policy options need to be confronted in order to translate this recognition into a practical action plan. There is no indication in the guidelines where the capital needed for investment either in “clean” production technology or environmental infrastructure will come from. As indicated above, there is likely to be a shortage of such capital, particularly in the early stages of reform. This contrasts with the rather optimistic statement in the guidelines that environmental protection will be one of the sectors which “in principle” will not be subject to financial or other constraints. The guidelines recognize the need to devolve environmental responsibilities from the union to the republics. As noted earlier, however, there are a variety of ways in which this could be done and agreement on an appropriate division of labor deserves priority attention.

Establishing a more decentralized institutional framework will have important implications for policy development and the instruments for policy implementation. The presidential guidelines only discuss economic instruments (pollution charges and fines) in relation to implementation. Interest in such instruments is high in Western countries, but experience has shown that their theoretical advantages are often difficult to achieve in practice. They generally need to be deployed in conjunction with more traditional regulatory approaches and, so far, they have been more useful in generating revenues than in changing polluters’ behavior or promoting the development of cleaner technologies. In brief, economic instruments are one means of achieving environmental objectives and their use must be evaluated within an overall policy strategy and in conjunction with other instruments.

The identification in the guidelines of accidents at production facilities as the priority environmental problem is interesting, and underlines the need to replenish the aged capital stock. Audits of potentially hazardous installations have been conducted in Western countries and experience has accumulated on how to employ limited resources cost-effectively, while addressing priority problems. Moreover, the UNEP APELL system (described below) was launched specifically to improve accident prevention and emergency response capabilities.

c. Western assistance

Successful implementation of the two-phased approach described above would benefit from and perhaps require substantial technical assistance. The experience gained through existing bilateral programs (see Section 3.b(5)) has established an important basis for consolidating and extending cooperation. As reforms are implemented, existing bilateral environmental programs probably will be strengthened and their number increased. The effectiveness of these programs no doubt could be enhanced by better coordination. Experience gained with the PHARE program, which has been coordinating environmental assistance to Poland and Hungary, has shown some of the difficulties and limits involved in coordinating such programs. Experience more generally with bilateral environmental programs shows that in some cases they can have a distorting effect on the environmental policy of the recipient country and they may involve up-keep obligations which are difficult or costly to meet. This suggests that in any discussion of assistance, serious consideration should be given to strengthening the USSR’s capacity to “manage” bilateral and multilateral assistance.

It is worth emphasizing that Western economic assistance cannot solve the USSR’s environmental problems: the problems are too big in relation to the resources available. Failure to observe the polluter-pays-principle, in the long run, will undermine the development of domestic financing mechanisms. Moreover, until the structural and institutional reforms described above are implemented, there is a real risk that assistance would serve to perpetuate inefficiency.

The main need is for technical assistance to help in the redesign of environmental institutions at both union and republic levels. Technical assistance beyond this should be considered in relation to the two-phase reform strategy described in section a.

Phase 1: In order to achieve the policy objectives outlined in Phase 1—for illustrative purposes—two models are described below: the World Bank’s Environmental Management Project for Poland and UNEP’s APELL System (Awareness and Preparedness for Emergencies at Local Level).

Environmental Management Project for Poland. The purpose of the project (approved by the World Bank in April 1990) is to help finance technical assistance and the acquisition of specialized scientific equipment to accelerate implementation of the Polish Government’s environment programs. The project aims to act as a catalyst for immediate corrective actions and to provide an umbrella management framework so that concessional resources from bilateral and multilateral agencies will be used efficiently.

A strategy based on this model could be developed for the USSR including: a) support for the move towards an appropriately decentralized system of environmental management; b) technical assistance to establish mechanisms (institutional, regulatory and informational) for setting short- and long-term priorities; c) an emphasis on the role of efficient process design, maintenance and operation (before considering investment in end-of-pipe clean-up). Resources should be targeted on priority environmental objectives (mostly heavily polluted regions and mitigating health damaging activities), with an emphasis on cost-effectiveness.

Following the Polish example, there could be four project components:

  • (1) Policy, management and program coordination. Technical assistance would be provided by internationally recruited specialists for three subcomponents: management and policy (budgeting, monitoring strategy, economic incentives, legislation, project evaluation, aid management); environmental health (monitoring of food and soil, analysis of health data, training of epidemiologists); municipal, solid and hazardous wastes (inventories, case studies, least-cost investment and policy strategies).
  • (2) Industrial efficiency and environment reviews. A program of voluntary reviews would be carried out to assist economically viable industrial enterprises in three environmental “disaster areas” to identify least-cost ways to move towards compliance with environmental standards. This component would include training in industrial pollution management.
  • (3) Air quality management. Technical assistance, monitoring and data analysis equipment, and training could be provided to help develop an air pollution management and abatement strategy for the highly-polluted regions, including: real-time ambient air monitoring equipment; mobile emission monitoring equipment; dispersion modelling; health risk assessment; and development of least-cost investment strategies.
  • (4) Water resource management. Support would be given to the relevant authorities for improved planning and management in a major river basin (such as the Volga or the Don) as a model for integrated river basin management, including: strengthening the water management body and its investment planning; monitoring and metering equipment; field investigations; upgrading of laboratories; establishing a geographic information system.

UNEF’s APELL System. In 1988, the United Nations Environment Program (UNEP) launched a worldwide system entitled Awareness and Preparedness for Emergencies at Local Level (APELL). As conceived by UNEP, the APELL system calls for local officials and citizens to cooperate with managers of production facilities such as power stations, large agricultural undertakings and manufacturing plants in order to: (1) understand past, current and potential environmental impacts of all activities of the facility; (2) ensure that potentially hazardous materials and practices in the facility are minimized; (3) provide a coordinated plan of action in the event an accident and/or major release of contaminants occurs; (4) strive for constant improvement in the management of potentially hazardous materials and reduction of releases of contaminants; and (5) monitor releases to all environmental media and attempt to reduce these to a practical minimum.

Effective implementation of the APELL system requires environmental auditing of facilities whether these are chemical production plants, large farming enterprises, power stations, mines, or oil fields. Thus, under the aegis of APELL, training of inspectors to audit these facilities properly and of environmental managers for the facilities themselves would be necessary. In implementing the APELL system, the monitoring system for environmental quality would almost certainly have to be upgraded with modern equipment, trained meteorologists and analysts.

APELL is being introduced into many countries, some with problems similar to those of the USSR, and implementation could draw upon this experience. The APELL Handbook already exists in the Russian language and is under study by Goskompriroda and by citizens’ groups within the USSR. Initially, pilot projects could be established in one or more industrial sectors.

Phase 2 In Phase 2, private sector investment would come to play the dominant role. This applies also to environmental infrastructure investments like sewage plants. Foreign financial institutions would have an important role to play in ensuring that environmental considerations are taken into account in any project which they fund. They might also look for ways to support the development of an “environment industry” which will be needed to assist the private sector in achieving environmental objectives in the most effective manner.

NOTES
1.Neither of the estimates of environmental degradation includes damage attributable to the Chernobyl accident.

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