1. 1 Progress in Environmental Policy Reform in EECCA Introductory Remarks Multi-stakeholder meeting Brussels 13-14 March 2007 Brendan Gillespie Head, EAP TF Secretariat OECD

2. 2 Progress Mixed 200 positive examples; 12 countries; 15 policy areas No acceleration of progress since Kiev; some regression Long time required for convergence with CEE Challenge is to scale-up, broaden and deepen environmental reform, and establish a stronger set of incentives for environmental improvement

3. 3 Weak Drivers Weak market incentives for efficiency; affordability an important concern Weak public and political demand for stricter environmental requirements Weak international drivers: –Trade and investment –Lower donor support compared to CEE and SEE

4. 4 Economic Context Per capita income: –4 countries > USD 3,000 (RF, Kaz, Tur, Bel) –4 more > USD 1,000 –4 countries < USD 1,000 7 countries qualify for IDA 40% of population in poverty, particularly in rural areas; 70% in Tajikistan 7% average growth 2003-06, but have not recovered 1989 income levels yet; GDP less than half 1989 levels in Georgia and Moldova

5. 5 Growing Diversity Income Access to resources Size Environmental challenges Politics Yet: all EECCA countries inherited the Soviet administrative tradition So: what is the scope for treating environmental policy reform at national, sub-regional and EECCA-wide levels?

6. 6 Environmental ministries and agencies General challenge of public sector reform Systemic challenges in environmental institutions –Leadership and strategic objectives –permanent revolution –Process not results-orientation –Weak link of information to policy –Shortages of strategic skills Environmental policy tools –EIA/SEA –Permitting –Standards –Market-based instruments and finance –Compliance assurance

7. 7 Integrating environment into sectoral policies Poor understanding of economic benefits of environmental policies, or costs of inaction Weakens the ability to make an economic case for the environment And to develop win-win strategies Failure to address the political economy of environmental reform: issues of winners and losers Opportunities for using SEA?

8. 8 Working with stakeholders Need to transform relations with industry and provide incentives for better environmental performance –Modern, realistic policy instruments –Shift from revenue-raising to incentives –Carrots as well as sticks Representative business associations needed for dialogue with government Government cooperation with NGOs –Should move beyond culture of resistance –Remove obstacles to NGO activity NGOs need to establish a stronger financial and political base

9. 9 Working with donors Bilateral assistance lower than in 2001; EC increasingly most important donor IFI loans have increased since 2003 50% of bilateral and 75% of multilateral assistance went to RF and KAZ Questions about aid effectiveness linked with shift to budget support Underlines the importance of: –Integrating environment into national strategies –Identifying areas of mutual interest –Better donor coordination