Environmental Fiscal Reforms

Saadullah Ayaz
IUCN, International Union for Conservation of Nature and Natural Resources
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 IUCN IN PAKISTAN

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Several offices, around 112 staff,
largest Country Programme of the Union in the World since 1996

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Gilgit-Baltistan Administration

Pak Env. Protection Found

Government of Balochistan

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 Banking with Nature
Introducing
Environmental Fiscal
Reforms

IUCN, International Union for Conservation of Nature and Natural Resources

 ENVIRONMENT AND POVERTY NEXUS

A healthy environment is crucial to poverty reduction and sustainable growth

With the degradation of ecosystems comes a decline in the quality of environmental

services that ecosystems provide

The annual cost to Pakistan’s economy of environmental damage and natural resource
degradation is nearly 365 billion rupees, or 6% of GDP (WB 2006)

Immediate and most severe effects of environmental degradation are suffered by the
poor

Strengthening environmental management can support economic growth, while

improving health and productivity. Financing pro-poor environmental management in
conjunction with other development activities is of the utmost importance

IUCN, International Union for Conservation of Nature and Natural Resources

 WHAT IS EFR?

Innovative policies are required to achieve development targets while ensuring

environmental sustainability. Environmental Fiscal Reform (EFR) is one such
approach, and allows fiscal resources to be managed in such a way that development
challenges can be tackled without sacrificing environmental conservation

BANKING WITH NATURE

EFR has been described as ‘a strategy that redirects government taxation

and expenditure programmes to create an integrated set of activities in
support of sustainable development and conserves environment’
The idea is to use fiscal instruments, directly or indirectly modifying the prices of
biodiversity related goods and services, to influence behavior in order to provide
incentives for environmental protection. The funds raised through these measures can
be channelled to specific priority sectors, such as environmental conservation and
poverty reduction
IUCN, International Union for Conservation of Nature and Natural Resources
 ENVIRONMENTAL FISCAL REFORMS

It is in this context that environmental fiscal reforms (EFR), and particularly pro-
poor EFR, can assist the government in broadening the revenue base, while
achieving both poverty reduction and environmental goals

The environmental benefits of EFR includes; pollution prevention and improved

natural resources management; mobilization of funds for investment in pollution
control and safe disposal of waste; and mobilization of funds for enforcement
activities

VIABLE EFR INSTRUMENTS FOR PAKISTAN

Charging appropriate prices and user charges for various natural resources
extraction activities and social services

Making polluters pay for internalizing externalities that polluters impose on the
society; rationalizing environmentally harmful subsidies and taxation measures;
and streamlining budgetary processes so as to further the goals of
environmental improvement and poverty reduction
Environmental Fiscal Reforms

IUCN, International Union for Conservation of Nature and Natural Resources

 BENEFITS OF EFR

Poverty Reduction
•Improving environmental quality e.g. better natural resource management
or provision of environmental infrastructure:
–poor depend on environment for health, livelihoods and vulnerability

•Fiscal revenues: revenues for pro-poor expenditure on health, education etc

•Protection or compensation to protect poor from price rises

Environmental
Benefits Fiscal Benefits
•Revenue mobilization
•Incentives for sustainable •Reduced distortions
natural resource management •Reduced drains on
•Incentives for curbing •public finances
pollution (air, water, soil)
•Funds for environment
agencies and investments

IUCN, International Union for Conservation of Nature and Natural Resources

EFR TESTING AND APPLICATION IN
PAKISTAN

IUCN, International Union for Conservation of Nature and Natural Resources

 EFR PROJECT PROFILE
AIM:
Poverty reduction and environmental improvement through undertaking a set of
environmental fiscal reforms initiatives.

FINANCIAL SUPPORT:
Swiss Development Cooperation (SDC)
DURATION:
May 2006 to April 2009- Extended till June 2010

PROJECT PARTNERS:
IUCN, Planning Commission, district Government, Abbottabad
RESEARCH PARTNERS:
Pakistan Institute for Development Economics & Sustainable Development
Policy Institute
PILOT DISTRICT: Abbottabad

IUCN, International Union for Conservation of Nature and Natural Resources

 PROJECT COMPONENTS

• Action Research and

Awareness Raising
• Enabling Institutional,
Legal and Policy Framework
• Capacity Building
• Piloting Select EFR Options
• Wider Dissemination for Replications

IUCN, International Union for Conservation of Nature and Natural Resources

Action Research
- Research reports on solid waste, drinking water, and quarrying and
mining, fiscal decentralization
- Five (05) fact sheets completed (for easy understanding)

- Sector wise recommendations translated into Urdu

- Situation analysis of solid waste management in Nawanshehr town

- Water analysis of natural water resources (survey by PCRWR)

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http://www.iucn.org/about/union/secretariat/offices/asia/asia_where_work/pakistan/projects/archived_projects/proj_arc_efr/

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Advocacy, Partnerships and Capacity Building

- Liaison with City District Government of Abbottabad (meetings with DCO

and Commissioner and other relevant departments)
- Partnership with COMSATS Institute for Information Technology
- Extensive awareness, community organization/ mobilization for
development participatory solid waste management system in
Nawanshehr (pilot)
- Trainings
(Community) PSWM, waste segregation, reduction, disposal,
composting)
(Local administration) solid waste management, efficient collection,
waste segregation, safe disposal, route planning/ mapping

IUCN, International Union for Conservation of Nature and Natural Resources

 PILOTING EFR
OPTIONS

(Case Study of Solid Waste

Management in Abbottabad)

IUCN, International Union for Conservation of Nature and Natural Resources

 Development and operationalization of a
participatory solid waste management system in UC Nawanshehr

- Social Mobilization~
community groups, youth associations,
school children and women folks
dialogue conducted (70 shopkeepers)
door to door campaign (725 houses)
Citizens seminar, youth forum operationalized

- Social Organization~

sixty two (62) community activists

School Environmental Clubs (09 established)
Mohellah Environmental Committees (06)

IUCN, International Union for Conservation of Nature and Natural Resources

Capacity building
training of staff of Town Committee on
participatory solid waste management,
mapping, segregation, recycling,
coordination with line agencies (district
government)- 16 staff members trained
training community groups on participatory
solid waste management system,
developing and sustaining primary collection
system, organizational management,
financial record keeping, coordination and
liaison development (62 activists trained)

Other ~ training of communities (& women)

on kitchen gardening and compositing (90
trainees)

IUCN, International Union for Conservation of Nature and Natural Resources

Improved measures for primary collection of waste
model system nine (09) ‘beads’ were developed in the area (each comprising
of around 120 households)- at source segregation of organic and
recyclables have also been introduced in 09 beads

(08) mohellahs where communities have hired their own waste

collectors through nominal contribution (pro- poor initiative)

IUCN, International Union for Conservation of Nature and Natural Resources

Development of secondary waste collection system
- Proper designed secondary collection points have been developed in
nine (09) mohellahs,
- Route planning for waste collectors (map developed)
- Repair of tractor and improvisation of existing trolley

IUCN, International Union for Conservation of Nature and Natural Resources

 the change…
IUCN, International Union for Conservation of Nature and Natural Resources
Application of Pro- poor fiscal measures
in solid waste sector

- Eight (08) mohellahs have hired waste

collectors (paid from revenue)
- Revenue from selling recyclables by
School Environment clubs
- Nineteen (19 kitchen gardens from
organic compost)
- (19) garbage merchants have been
registered in lieu of payment
of tax to the Town Committee
- A frame- work for scavengers is also
being devised to regulate
their working
IUCN, International Union for Conservation of Nature and Natural Resources
 ACHIEVEMENTS OF EFR PROJECT
• Progress achieved as per MTR recommendations
• Research work received high appreciation
• Chapter from EFR project was published in the Oxford University Press,
London
• Technical paper on EFR (Pakistan Engineering Congress 2010)
• Three papers on EFR presented in Special Technical Session on EFR at the
23th Annual General Meeting of “Pakistan Society of Development Economics
• Panel discussion were held on “Pro-poor Environmental Fiscal Reforms”
during Conference on “Peace and Sustainable Development in South Asia:
Issues and Challenges of Globalization” held at SDPI
• ‘EFR’ as subject at PIDE (M. Phil/ MSc. Env. Economics Programme
• Wider replication of EFR in IUCN’s on- going programmes (BPSD)
• Opportunities for up- scaling (district level)
• Strong urge from beneficiaries (community in Nawanshehr)
IUCN, International Union for Conservation of Nature and Natural Resources
 LESSONS LEARNT

• Efficacy of EFR proved (revenue, pro-poor support and env. sustainability)

• In-depth research. Findings to be tailored to create real understanding and
integration into policy and decision making process
• EFR being new concept~ putting in pace a self sustaining long term EFR
mechanism requires improved coordination mechanisms essential to obtain long
term results in this regard.~ local level consultations extremely important to develop
consensus among stakeholders to select and adopt EFR options
• Buy-in from policy-makers is only possible if the project is able to demonstrate
concrete changes on the ground~ dedicated attention to carry out work is of
essence, at least for a next couple of months till the system is effectively tested and
completely adopted

• Capacity building at all level is a must ~ since expertise not available anywhere
• Strong linkages with provincial and federal government tiers are required
• Up scaling and replication of EFR activities is essential

IUCN, International Union for Conservation of Nature and Natural Resources

 WAY FORWARD (RECOMMENDATIONS FOR PAKISTAN)

• Successful institutionalization of EFR (in complex socio- political situation)

• Support translation of learning form EFR research in to actions (elsewhere in
Pakistan)
• Long- term impact~ buy- in from policy makers~ integration into sectoral polices/
plans

• Ensuring self- sustenance of pilots~ continue provision of technical backstopping

• Capacity building/ awareness (at all levels)

• Up- scaling and wider replication of EFR is suitable areas in Pakistan in other
sectors (drinking water, eco-tourism, quarrying and mining etc)

IUCN, International Union for Conservation of Nature and Natural Resources

 Thanks

For more information, please contact:

Saadullah Ayaz
Coordinator Climate Change/
Environmental Fiscal Reforms/
Clean Air Initiative for Asian Cities
IUCN Pakistan
Email: saad.ayaz@iucn.org

IUCN, International Union for Conservation of Nature and Natural Resources