Russia: Success and Failure
Now I would like to briefly outline the major environmental problems in the country. Of course there are many assessments from various institutes; they define environmental problems according to their own perceptions. Among them, we can say that one of the main problems is the drinking water quality. There is a problem with air pollution in the big cities, especially pollution originating from cars, which, it is estimated is similar more or less around the world. There is a serious problem of industrial accidents with a serious environmental impact. For example with pipelines and you know about some problems in the north with our pipeline system which is aging and decaying. This is a problem with toxic pollution and radioactive waste.
The scale of the problem differs across the territory. But even according to official environmental data, it is thought that about 15 percent of the territory can be considered as zones of environmental catastrophe, like the area of Lake Baikal, the Aral Sea. Official statistics show a decrease in pollution emissions, like during the 1990s, the decline in air pollution was about 37 percent, and water pollution discharges declined by 20 percent, which might be considered as a great achievement and a good indicator for an amelioration of the environmental situation. But the major problem is that the real situation is camouflaged. As you know, the major reason for the decline in emissions is the decrease in industrial production during the economic crisis. It appears that the economic depression has become an important tool in solving environmental problems in the country. Sometimes, compliance with domestic or international norms occurs without implementation. So you can do nothing but still reach the target.
A compound problem is that the rate of emission reduction was not proportional to the decline in industrial production which was about 50 percent. A crucial issue here is aging purification facilities or sometimes the purification facilities are even switched off or some accidental releases of pollutants occur. The question emerges how emissions will be controlled when economic growth returns. The environmental management system, as it works today, would not be adequate to deal with this problem. As I was saying, the drinking water quality issue is our number one issue on the agenda because 70 percent of water in the country does not meet the established norms. Only 15 percent of the sewage discharged is purified according to the norms. But 28 percent, about 1/3, is discharged without any purification. It is a really serious problem, especially for big cities or industrial areas like Moscow Oblast, like Leningrad, and industrial regions Sverdlosk, Irkutsk, and Dagestan. Of course, serious health problems also emerge because the drinking water is of quite poor quality. Even according to official statistics, about half of the population is consuming drinking water which does not meet standards.
As I was saying, the major decline in water emissions was due to a decline in industrial production, but what was alarming was the household sector was at a stable level. So emissions from the household sector have not decreased. Household consumption is also at a high level. The problem is in the pricing, in the economic mechanisms of regulations because the prices are very low. For instance in Moscow, in my apartment, there are not any meters for the use of water. But now the situation is gradually changing and pricing mechanisms are being introduced and we hope that it will help to solve the problem.
Regarding air pollution, the major problem is the pollution from the cars in the big cities. Today, Russians are buying a lot of second-hand cars from the West, many of them are bought in Japan and exported to the country. Also, Russia can be considered as a source of trans-boundary pollution but I would say that there are some exaggerations in the Western sources about this problem. Due to the westward patterns, Russia is importing air pollutants five or ten times more than it is exporting in the opposite direction. This is a major problem for the northwest of Russia. It is a source of trans-border conflict, but I would like to say that the exports of NOx to Finland are higher than the flows form Russia to Finland. I am saying that to underline that there are stereotypes about perceptions of the situation in the country, but the situation is a bit more diversified or different.
Now I would like to discuss the major institutional reorganization in environmental policy which took place in the 1990s. This reorganization is a major result of environmental reform. In 1991 the Environmental Ministry was established. This was important, because previously the environmental protection functions were discussed among 16 or 18 industrial ministries which had special environmental departments, but in the complex of their priorities, economic priorities were always at the top and environmental ones were at the bottom.
The major problem is that we are facing strong bureaucratic competition within the structure of our government. Constant reorganization is taking place. Recently, like in 1996, the status of the newly established Environmental Ministry has been downgraded. Instead of a ministry, it became a State Committee. It meant that the head of the Ministry was not represented in the Council of Ministers, he did not have voting rights and the Ministry lost its power in the decision-making process at the governmental level. It was not lost completely, but it was downgraded. To a certain extent, it was the result of lobbying by powerful industrial and financial groups. It also demonstrated how environmental concerns are receding on the national agenda. They are receding in the priorities of the policy-makers and unfortunately, even at the non-governmental level among the public. At the beginning of the 1990s, we were in a kind of euphoria and environmental concerns were at the top of the public agenda, but now, according to polls, they have receded to the tenth place because of problems with crime, wages, social problems and economic problems.
What is alarming is that policy-makers are not attentive to environmental problems, and also the weakening in the position of the environmental agency took place and it also reflected in the fact that certain functions have been withdrawn from its purview. Previously, when it was established, it was expected to function as a ministry of environmental protection and natural resources, but the natural resources management function has been taken away and a special ministry for natural resources has been created. To a certain extent we are facing a situation similar to the one we faced in the previous decade when the Natural Resource Ministry was controlling both the economic views and environmental protection. It appears that economic priorities are much more stronger.
As the power of the state has weakened, so too has the power of the Ministry of the Environment. It has negative implications for enforcement of newly established progressive environmental legislation. It appears that many new progressive environmental acts are not being enforced.
Now I would like to introduce the system of new economic mechanisms. They were supposed to be the major regulators in environmental management policy. They were intended to create incentives for enterprises to shift to environmentally sound behavior. The system of payments for pollution has been introduced and these payments and fines have been accumulated in so-called non-budget environmental funds, which represent an innovation for this country. These payments were introduced at the beginning of the 1990s. At the moment, payments have been introduced for water discharges, air discharges, and there are intentions to spread this system to radioactive pollution, marine pollution and carbon dioxide emissions. According to this system, each company has the right to emit pollutants, but within certain allowable levels. Within the limits, a company has to pay a fixed rate; if the company emits more than the established limit, then the company has to pay five times as much. This system also incorporates charges in basic rates according to inflation, and during the 1990s several revisions were introduced.
This system was supposed to create incentives, as in the West, to get polluters to reduce their pollution. But in practice, it has not been as effective as was hoped. There are several reasons for this. One of the reasons is that the initial rate established for enterprises was quite low. Some enterprises preferred to pay the fines rather than implement environmental restructuring or technological processes to reduce pollution. Another reason is the lack of government enforcement of the whole system. Many companies exceed the allowable limits and pay the penalties, but many company also complain to the local or regional administration that the taxes will ruin them, causing them to go bankrupt or close. Quite often, regional administrators decide not to close the enterprise because of the socio-economic role it plays in the area. There have been certain exceptions introduced into the system. For instance, sometimes companies are exempted from having to pay the penalties for one or two years, especially companies that play a key role in the economy of the region.
Then so-called "off-sets" of environmental payments to the company against its investment in environmental protection were introduced. This system of off-sets is expanding, for example, in the mid-1990s, these off-sets were twice as big as the sum of payments collected for pollution. The problem is, the local environmental protection organs are quite weak and they are not able to control an enterprise. How do they enforce the system of off-sets and how do they introduce environmental protection measures on the enterprises? It does not really work. Some experts consider this system of off-sets as a concealed release from payments for pollution, which is quite alarming.
As I was saying, the government's authority just to collect taxes is weak. I am not saying that all enterprises are not paying taxes, but some are not. Some enterprises are not paying their workers, their suppliers, so not paying taxes is just part of this crisis situation in the country.
Another problem is that regional environmental organs, in some areas, are under strong control of local administration. In this situation, the local administration prioritizes local economic concerns; they control the financial payments for pollution and sometimes they use the funds which are accumulated from environmental payments for non-environmental purposes or they are just seized and so on.
A result of these distortions within this newly created economic mechanism is that the collection of payments is much lower than expected. It is about one-half of what it is supposed to be. By the mid-1990s, some industrial regions which are heavy polluters, have disappeared form the list of leaders for pollution payments not due to any decreases in pollution, but since they do not pay their taxes. Some regions do not transfer the required amount to the federal center. Some oblasts like Murmansk Oblast have not transferred the suggested ten percent from regional environmental funds to the federal environmental fund.
This system has three levels. Sixty percent of accumulated resources are left at the local level, thirty percent is transferred to the oblast or republican level, and ten percent goes to the federal budget. These environmental funds had been created in all subject states of the federation, in all 89 regions of the country. Each region has its own environmental fund. One of the problems with these funds is that they have been incorporated into the consolidated budget which contradicts the provisions of the national environmental law and it means that local administration can spread its control over the use of resources from these funds; not always for environmental purposes. These environmental funds were supposed to be the major source of environmental financing in the country. Unfortunately, this has not worked yet.
We can say that during the 1970s and 1980s, the traditional source of environmental financing in the Soviet Union was the state budget. It was a distant but stable source. Now the situation is quite different. Many experts assess the current environmental budget as anti-ecological, because in the 1997 budget the environmental protection item accounted only for 0.09 percent of GNP. Today, governmental support for already supported environmental programs is only about ten percent. The Environment Ministry is adopting new programs, but these programs are just "dead letters"; they cannot be implemented. It is somehow supplemented with a curtailing of industrial investment into environmental protection. The situation is not so good and has serious negative consequences for the future.
Now I will talk about the new role of Russia's regions and de-centralization of environmental management, as I understand it might be of interest to you since it will be discussed at the upcoming conference. I would like to point out that with the development of federalism in the country throughout the 1990s, the role of the regions has increased dramatically. During the Soviet-era, regional participation in environmental policy formulation was zero. Today, according to the national law, environmental protection is in the joint jurisdiction of the federation and the regions. The center is willingly sharing this authority with the regions. What institutions perform these environmental functions in the regions?
With the creation of the environmental ministry, the system of its territorial organs has been created in all the regions of the federation. Environmental committees have been established in all regions and, in turn, they have affiliations in the municipal organizations. With these reforms, a great deal of the responsibilities and control functions has been transferred to the regions because now these environmental organs are directly interacting with the enterprises. They are monitoring their environmental protection activities. They are deciding the limits for pollution. They are verifying what has been done or what should be done. This system is quite progressive and it works. At the start of the reforms a great deal of hope was associated for improvement of the environmental situation with this decentralization process. But, it appeared that during the 1990s certain distortions in the system took place.
It appeared, in practice, that formation of democratic institutions at the local or regional level was much more difficult than expected. We can talk much more about these regional elites; their influence on environmental policy, performance, and natural resources. It appeared that regional organs often eliminated federal control but they have not real accountability before their public. At the moment, unfortunately, control of the public at the regional level is extremely low. But is it very important, especially for the environmental sphere; it is important everywhere in the world but it is not so in Russia. According to some experts' estimates the level of corruption at the local level is high. This has negative consequences in the environmental sphere. The licenses for timber, use of pastures, etc, are being allocated, so regional elites have a free hand to deal with their natural resources. As I mentioned earlier, environmental organs today are under the strong control of local administration and, again, it does not help to solve environmental problems.
in Russian Environmental Policy during the 1990s
Dr. Elena Nikitina
Lecture at the Slavic Research Center on June 28, 1999
Back