| Front page | | Contents | | Previous | | Next |

Environmental Assistance to Eastern Europe - Annual Report 2000

6. General comments on the appropriation

Breakdown of projects into countries and activity areas in 2000

In 2000, approval was given for grants for 238 projects to a total amount of DKK 572 million. Total expenses, including expenses for projects initiated earlier, amounted to DKK 390 million, cf. figure 2.

Figure 2
Approval for grants and expenses. In DKK million 1997-2000

Grants are made on the basis of either applications or tenders. In 2000, the tender projects¹ amounted to DKK 204 million or about 37 percent of the total amount made available.

In accordance with the overall strategy of the Government for environmental assistance to Eastern Europe from 1997, special emphasis has been put on providing assistance for the Baltic Sea region, which has received 51.5 percent of the total assistance granted to Eastern Europe, cf. figure 3.

Figure 3
Geographical distribution of approvals.
Percentage distribution 2000

In 2000, projects to a total amount of DKK 45 million have thus been initiated in Latvia, DKK 34 million in Lithuania, DKK 39 million in Estonia, DKK 74 million in Poland, DKK 76 million in Russia. In the rest of Eastern Europe, approvals have been granted for projects in Romania (DKK 62 million) and Ukraine (DKK 53 million), while projects amounting to DKK 43 million have been initiated in the Czech Republic and Slovakia, and projects amounting to DKK 19 million have been initiated in Bulgaria. The remaining DKK 98 million has been spent on cross-border projects, including also the Baltic Sea region, e.g. as contributions to the Nordic Environmental Finance Facility² and regional projects.

By a resolution passed by the Danish Folketing on 4 May 1999, the Danish government was requested to strengthen initiatives in the SNG-countries (the association of formerly Soviet republics) and to strengthen the environmental efforts by the recipient countries by involving civil society. In the former Soviet republics, but also in the EU applicant countries, there is a large financing need within the environmental sector. DEPA continues to work with a number of initiatives to map this need, e.g. by developing national and regional financing strategies for selected countries and regions. These strategies in combination with environmental action plans for the areas in question are intended to attract further assistance to help solve the prioritised environmental problems.

Assistance has been given to the SNG-countries in connection with activities related to the Environment for Europe-process³ and to the resolutions passed at the latest Pan-european Environmental Ministerial Conference held in Aarhus in 1998. This assistance includes, among other things, development of the above financing strategies, some of which, at national as well as regional level, were presented at a ministerial conference held in Almaty, Kazakhstan in 2000. Initiatives to ensure concrete implementation of citizens' environmental rights (the Aarhus Convention) by involving civil society in the form of NGO's have been further strengthened (in the same way as it was strengthened in 1999) in a number of SNG-countries in the context of the Environment for Europeprocess.

Made up by activity areas, the water sector accounted for about 30 percent of all initiatives in 2000, cf. figure 4. The primary purpose of these activities has been to limit pollution of the Baltic Sea in the context of the international agreement on the Baltic Sea, the Helsinki Convention, and to comply with the EU Directives within the water sector.

Assistance granted within the air sector accounted for about 10 percent in 2000, cf. Figure 4, and the purpose of this assistance has been to limit transboundary pollution and reduce the release of greenhouse gases, while assistance in the waste sector aims at settling the "sins of the past" in the form of deposits of chemicals, etc. Besides, higher priority continues to be given to nature projects and institutional projects. The latter should be seen in the light of the EU applicant countries' preparations for accession to the EU and is reflected in assistance towards institutional capacity building.

In 2000, the nature resource sector was subsidised with about 13 percent of the total environmental assistance granted. This assistance, which is planned by the Danish National Forest and Nature Agency in close co-operation with DEPA, is aimed at protection and management of nature, sustainable forestry, and environmental and nature education. In addition, assistance is granted annually for a cultural environmental project, and an attempt is made to integrate the cultural environment issue into other projects. In the EU applicant countries, the assistance granted focuses primarily on implementation of EU Directives, including the Birds and Habitats Directives, and on the establishment of the joint Natura 2000 network of protected nature areas. In both applicant and non-applicant countries, high priority is given to implementation of international conventions in the nature sector. Many projects thus support compliance with the Biodiversity Convention and more specific conventions like Ramsar (wetlands for birds), Washington (CITES for trade in endangered animals and plants) and Bern (such as establishment of a pan-european EMERALD network of protected areas). The nature resource projects focus on capacity building, information and education with a view to assisting the countries involved in handling the future protection. NGO's (in Denmark as well as in the recipient countries) are involved in many of the projects as driving forces in the implementation of projects. Initiatives in the nature sector have so far been concentrated on the Baltic Sea-area, but in 2000, project co-operation within this area has been initiated with Slovakia and Bulgaria, partly as a result of the two countries' wish for accession to the EU.

Figure 4.
Distribution of grants by activity areas. Percentage distribution 1997-2000

As mentioned earlier, in the administration of the Danish Support Programme for Eastern Europe, great emphasis has been put on assistance to EU applicant countries in Eastern Europe. Denmark supports a large number of investment and institution-building projects with focus on implementation, inspection and ratification of EU demands on the applicant countries within the nature and environment sector. The majority of these projects belong under the Directives on air, water, waste and industry, the so-called investment-heavy Directives, and the nature Directives.

Information activities regarding environmental assistance to Eastern Europe received high priority in 2000, both internally in the Ministry and through participation in the cross-ministerial information activity in the context of The Cross-ministerial Committee for Eastern Europe. These activities will be continued as part of the future assistance.

Development in investment and technical assistance projects, 1991-2000

Background

From 1991 to 2000, the annual framework for assistance to Central and Eastern Europe has increased from DKK 75 million in 1991 to DKK 541 million in 2000. This framework is fixed in connection with the annual Budget negotiations, whereas the application of the funds is laid down in strategies and country programmes prepared by DEPA. Strategies and guidelines reflect the criteria formulated from time to time by the Danish Government and the Folketing for application of the funds. Besides, the external evaluation of the Support Programme in 1998, the report by the National Audit Office of Denmark in 1995 and again in 1999 and the ongoing co-operation with the Advisory Committee to the Danish Environmental Support Fund for Eastern Europe have influenced the use of funds and the day-to-.day management of the support to Eastern Europe.

As the environmental support for Eastern Europe is organised in the form of co-operation between Denmark and the individual countries, also the countries' own prioritisation of how Danish support can be put to best use has greatly influenced the use of the funds. Often the use of the funds is the result of a compromise between the recipient country's wish to utilize the Danish grants in a special way and a Danish wish to achieve coherence and visibility in activities.

When the support was politically adopted in 1991, it was in the light ofan acute pollution situation in Eastern Europe, and it was necessary to begin by solving these serious environmental problems first. It was also clear that the Danish support in itself was not sufficient to solve the problems and that co-operation with international financing institutions, with other donors and,above all, with the recipient countries themselves was necessary in order to secure sufficient funds for reducing pollution to an acceptable level.

The strategy for Environmental Support for Eastern Europe from 1993 focused on ensuring that the support should contribute to reduction of especially the acute pollution situation in Eastern Europe and that this should be effected through the transfer of technological solutions from Denmark. It was also part of the strategy that Danish funds should be used to initiate activities that could attract funds that are substantially larger than the Danish funds. As will appear from the following review of how the framework has been used, support for investment projects continues to be at the heart of the environmental support given to Eastern Europe.

It was also clear, however, that environmental problems in Eastern Europe had been allowed to develop to such a degree because of a lack of awareness from political quarters. Another factor contributing to the seriousness of the problems was the fact that existing laws and administrative procedures and the staff charged with implementing them did not have sufficient clout and knowhow to solve this task. Based on experience gained from e.g. eveloping countries, this entailed the risk that new acute problems would arise unless efforts were made to establish administrative procedures and knowhow in these areas.

In the strategy for the Environmental Support for 1993 and in the most recent strategy, it was therefore emphasized that Danish technology as well as knowhow should be transferred to the recipient countries and that the weighting between these should reflect the current environmental situation and the needs for knowhow and capacity-building.

Development in investment and technical assistance projects

The development in investment and technical assistance projects is followed closely by DEPA, as the projects are categorized according to whether a project is an investment or a technical assistance project. The categorization is stored in a datbase, and the distribution between these categories appears from DANCEE's Annual Reports.

Investment projects are characterized by involving construction of physical plants and transfer of technology - as a main rule Danish equipment - to a recipient country. Investment projects usually comprise both consultancy and equipment, but can also be pure investment projects, with the funds for hardware coming from other sources. The investment projects fall into three categories comprising preparation, implementation and follow-up on the transfer of technology.

Technical assistance projects comprise four categories: support for developing plans and studies; support for setting up monitoring systems; preliminary studies for projects that can be either investment projects or technical assistance projects and transfer of knowhow in the form of training and capacity-building. The effect of this assistance is more long-term and can often be calculated only as an indirect environmental effect.

Figure 1 shows the development in investment projects and technical assistance projects from 1991 to 2000 for the total environmental support, comprising both EU applicant countries and countries in the former Soviet Union.

It can be seen that the part of the framework going to investment projects increases with the increasing framework up to 1997, and after that year, support for investment projects is by and large maintained, but with a slight downward tendency in 2000. It also appears that the increased focus on investment projects introduced with the strategy in 1993 made itself felt the very same year.

The fall in investment projects in 1999 and 2000 is offset to some degree by an increase in technical assistance projects in preparation for investment projects (TA3), however. An analysis of these projects shows that some of them involve preparation of projects financed by an international financing institution such as EBRD or preparation for financing via the EU's pre-accession facility ISPA. The preparation of these ISPA-projects financed via Danish assistance has led to a quicker approval and launching of more ISPA environmental projects to a total value of several hundred millions of Danish kroner. These projects are disposed by invitation to tender by the EU, and Danish companies can submit their tenders. And sinc also these projects have direct and great environmental effects, they contribute to maintaining the focus of the environmental support on assistance towards solving the most serious and most highly prioritised pollution problems in Eastern Europe.

Up to and including 1994, all projects for which assistance was granted, were so-called application projects, with a Danish project owner applying for support for a project in the recipient country. From 1995/96 the recipient countries began increasingly to demand more strategic projects, and the Danish funds often formed part of the preparation for major investment projects in co-operation with international financing institutions and the EU. This requires a greater initiative for preparation of projects from DANCEE, and this is the background to introducing a tender model, where DANCEE can prepare and invite tenders for these more strategic tasks. As a consequence, a larger share of the funds from the framework is now spent on developing plans and preliminary studies, so category TA1 increased steadily from 1996 until 2000. There have been fluctuations, however - typically in some years there was more focus on preparation of projects, which were then submitted to tenders the following year.

In 1997, a number of the countries DANCEE co-operates with, applied for EU accession. The EU posed a number of demands on the countries in this connection, which greatly influences not only the way these countries prioritise their own efforts in the environmental field, but also the way they prioritise support from donors like DANCEE. In response to this, DANCEE prepared a report on the need for support to these countries, a report (Enlargement of the EU towards East, Environmental Perspectives) showing not only large investment needs, but also large needs for support for incorporating EU legislation into the countries' own legislation, capacity-building to implement the legislation and control that it is complied with.

Starting in 1997, the recipient countries have increasingly requested support from DANCEE in these areas , and as can be seen from figure 1, DANCEE has complied with this request, reflected in the increase in support for category TA4 since 1997 (institutional building, capacity-building and training). DANCEE developed a model project for establishing an EU approximation strategy, which was implemented in several countries and helped them identify which directives it would be most difficult for them to comply with and to prioritise the initiatives they would need to take. As a result of DANCEE's initiative, several countries increased their administrative manning and intensified their efforts to prepare for EU accession.

At the same time, this approximation strategy serves as a framework also for projects supported by DANCEE, where DANCEE has focused on the legal framework and the conditions for the private sector, especially industry's environmental activities in the recipient countries, on the legal framework and planning in the waste sector , in the air sector, etc. Especially in the waste water area, several countries have taken initiatives centrally and decentrally to build up capacity to prepare and implement investment projects, a capacity which is an absolute necessity if these countries are to receive their share of the many pre-accession funds from the EU. DEPA is of the opinion that this support is very visible in the recipient countries, and that the Danish support has greatly affected the progress made in accession negotiations and in establishing the administrative systems needed to manage EU environmental legislation after accession. DEPA is also of the opinion that this support helps ensure that environmental demands are made on the public and private sectors in Eastern Europe, and that this will lead to the development of a considerable export potential for Danish consultants and suppliers.

The technical assistance has only to a limited extent led to the transfer of Danish technology, but there have been examples of information and data processing systems, model systems and laboratory equipment. On the other hand, the Danish consultancy industry has been able to build up networks and contacts to local co-operation partners, which will mean nye markets in future.

In addition to requiring the applicant countries to comply with environmental directives, the EU has further required that all new investments made in the countries have to live up to EU environmental standards for waste water, drinking water, waste, large incineration plants, etc. This factor together with a number of other aspects has made it increasingly difficult for Danish firms to live up to the quality standards set by DANCEE and the EU applicant countries in application projects. One application round initiated by DANCEE in the summer of 1999 thus resulted in only a limited number of good projects, primarily in Russia and Poland.

In 1998, the EU decided to support the accession of the EU applicant countries primarily in the investment area by establishing ISPA (Instrument for Support to Pre-accession). As ISPA makes grants of up to 75 percent of the costs of environmental projects exceeding DKK 40 million, this means that loans from the international financing institutions are no longer demanded, and that they are used almost exclusively to finance projects that the countries cannot find room for in their budgets.

DEPA chose to enter into co-operation with the EU and, as one of the few donors, now co-operates closely on preparation and, for a few projects, on implementation of ISPA projects. The establishing of ISPA means that the finance ministries in the recipient countries have become more aware of the environmental area, and as a result, the central management of national funds for co-financing of investment projects has been increased. As a result of this, the possibilities of DANCEE or of the applicants for funds within the framework of identifying suitable investment projects with a high degree of co-financing in these countries have been reduced in recent years. The way DEPA evaluates the situation is that the decision to co-operate with the EU was the right strategy, as it has contributed to maintaining DANCEE's profile as an agency supporting projects with a visible environmental effect. The disadvantage has been that it has not in all cases been possible to ensure that DANCEE could invite tenders for an investment project, but has had to accept that this was to be done in the form of an EU call for tenders.

Another factor that has increased assistance within institutional strengthening and capacity-building TA4 is the decision to increase initiatives in the nature area. Up through the 90's, there is an increased awareness that Eastern Europe has great natural assets and resources that need to be protected and managed more effectively., and a strategy is drawn up for this sector in 1996. A substantial share of the assistance goes toward stregthening the implementation of EU Directives in the recipient countries and towards complying with international conventions in the nature area, but also initiatives to improve the sustainability of the infrastructure in nature parks are included- Assistance to infrastructure in e.g. nature parks is provided by supporting e.g. the setting up of visitors' centres and thus gives very visible results, which can rightly be regarded as investment measures. The total nature resource assistance, which in 2000 amounted to about 13 percent of the environmental support is categorized as capacity building TA4, however.

In 2000, there was a further increase in TA4. In addition to the factors mentioned before, an important factor contributing to this increase is that efforts to involve civil society in environmental support in accordance with the resolution by the Danish Folketing in 1999 were intensified. From this time on, more assistance has been granted to environmental organisations, to measures to follow up on the Aarhus Convention, etc.

Figure 2 gives an overview of the development in the former Soviet Union, where EU accession is not on the agenda. It appears from the figure that support for investment projects has been rising steadily during the whole period, and that support for this category of projects accounts for 50 percent or more of the total support. If TA3 is included, the percentage of investment projects is more likely to be between 60 and 70 percent. As mentioned earlier, application projects still represent a substantial part of the investment projects in the SNGcountries.

For the SNG-countries, there has been no increase in technical assistance projects since 1997, the same as was the case in the EU applicant countries. The SNG-countries continue to request primarily investment projects, and the reform process, which really got off the ground in the EU applicant countries in 1997, still remains to be seen. As DEPA evaluates it, it is more difficult for the SNG-countries to benefit from a technical assistance project than it is for the EU applicant countries.

The further development for investment and technical assistance projects

The changed conditions for Danish environmental support reflects to a great extent the fact that a reform process is underway. There is no point in stating that we wish to return to a situation where we were allowed to decide which type of assistance we wanted to grant. The recipient countries have got too far for this in their own planning of activities. It is important that also the Danish resource base prepares itself for this changed situation, which will entail that at least once in a while, Dansh grants are spent on preparing and implementing projects, for which tenders are invited internationally by the EU or by the international financing institutions.

It is part of DANCEE's strategy for future support to maintain investment assistance at the present level. The recipient countries have to agree, however, if this objective is to be maintained.

In connection with country programming, which is being carried out these years, the aim is to maintain a balance between investment projects and technical assistance projects with an even distribution between the two types of projects. A higher share of investment projects is planned in the SNG-countries and in countries that are far from accession, i.e. Romania and Bulgaria, and in the Balkans there is a great, not yet utilized potential for DANCEE for investment projects.

In applicant countries that are closer to accession, the "window" to investment projects has been closed somewhat in recent years, as a result of the increased central management of co-financing funds, so continued co-operation with EU's ISPA Programme seems to be the best possibility for ensuring that Danish investment projects continue to achieve a high degree of co-financing. The strengthened initiatives on the part of DANCEE towards the private sector and promotion of the environmental support programme are other initiatives which can maintain visible projects with direct environmental effects in the EU applicant countries.

For the technical assistance projects, the situation for the EU applicant countries is such that the countries that have proceeded the furthest in the accession process have by and large fulfilled the legislation requirements and also live up to most of the requirements in the international conventions that the EU is a co-signatory to. Most of the countries lack administrative capacity, however, to implement and control and monitor whether the legislation is being implemented and enforced. Moreover, the issue of environment still does not rank so highly on the agenda in the private sector that has to comply with the law. The intention is to strengthen the involvement of civil society in the environmental area, both in the EU applicant countries, in the SNG-countries and in the Balkans. These efforts are beign supported actively by DANCEE, e.g. by supporting the ratification and implementation of the Aarhus Convention in the countries.

Look here!

Figure 1
Activity types under DANCEE - all countries

Figure 2
Activity types under DANCEE - SNG-countries

Please note the different scales along the two y-axes

| Front page | | Contents | | Previous | | Next | | Top |