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VIEWS: 6 PAGES: 8

									                                                UN EP




                              REPORT
                    on the Training Course on
 “Implementation of Economic Instruments
for a Sustainable Operation of Wastewater
    Utilities in the Mediterranean Region of
                     Bosnia and Herzegovina”


           (Sarajevo, December 20, 2002)




                                        EI/2003/TC-R/B&H
                                        Priority Actions Programme
                                        Regional Activity Centre
                                        Split, February 2003
                                                                                EI/2003/TC-R/B&H
Page 2



                                            REPORT
                                  on the Training Course on
                          "Implementation of Economic Instruments
                     for a Sustainable Operation of Wastewater Utilities
                                in the Mediterranean Region of
                                   Bosnia and Herzegovina"
                                (Sarajevo, December 20, 2002)




     BACKGROUND INFORMATION

1.     It is the fact that Bosnia and Herzegovina has been developing very slowly in economic,
political and legal sense and that all these aspects are loaded with key problems. This is why
very little attention, generally speaking, is paid to development of environmental policy.

2.    Participation of economic instruments in environmental protection, and especially in
protection of air and water, as well as in waste disposal management and protection of flora and
fauna in Bosnia and Herzegovina, is not sufficient. There are no simulative instruments in the
system of public revenues for investments into projects and programmes directed to fulfilment of
objectives in environmental protection.

3.    Bosnia and Herzegovina is trying to make progress in strengthening or development of the
system of economic instruments. Some forms of economic instruments used mainly in
environmental protection in Bosnia and Herzegovina are the user charges (for use of natural
resources and public utility services), discharge fees for pollutants discharged into the
environment and special taxes to products the consumption of which has detrimental impact on
the environment (oil derivations). The revenues attained by economic instruments in Bosnia and
Herzegovina are mainly the inflows of the state, entity, Cantonal and Municipal budgets, which
are later on used to defray public expenditure, and which are mainly not related to the
environment.

4.    Dynamical changes that marked the period of transition in Bosnia and Herzegovina,
create conditions and the need for new, more efficient policy of economic instruments, actually
by introduction of new economic instruments whose objectives will be clearly defined. But,
sometimes it is more efficient and easier to improve the existing economic instruments than to
introduce the new ones. Basic rates of charges and fines in the field of environmental protection
are too low to be able to give a more significant stimulus for reduction of pollution or to attain
more significant revenues. As an example, wastewater charges can be mentioned, that are so
low in the whole territory of Bosnia and Herzegovina that even the payment collection is 90% it
cannot cover the operational costs. Besides, such low wastewater user charges do not influence
changes of awareness of users to use the natural resource rationally and economically.

5.     With the adoption, by the Contracting Parties to the Barcelona Convention, of the
Strategic Action Programme (SAP) to address marine pollution from land-based sources and
activities in the Mediterranean, the Priority Actions Programme Regional Activity Centre
(PAP/RAC) in Split, Croatia, has been entrusted with the preparation and implementation of the
project "Development and Implementation of Economic Instruments for a Sustainable
Implementation of the SAP MED".

6.    The goal of the project is to identify economic instruments that will assist in developing a
sustainable financial platform for the continued implementation of the SAP MED in the long
term, to incorporate these economic instruments into National Action Plans (NAPs), and to
                                                                               EI/2003/TC-R/B&H
Page 3



assist in developing administrative, legal and fiscal mechanisms for the sustainable financing of
the implementation of the SAP MED at national level. In order to achieve this goal, PAP/RAC is
working in close co-operation with national partners, relevant international organisations and
institutions, and regional experts.

7.    The Pilot Project "A Sustainable Operation of Wastewater Utilities in the Mediterranean
Region of Bosnia and Herzegovina" has been proposed as a part of the project entitled
"Development of Economic Instruments for a Sustainable Implementation of the SAP MED". A
pilot wastewater utility in the Mediterranean region of Bosnia and Herzegovina has been
selected, for which the existing economic instruments will be adapted and implemented over the
two years of the Pilot Project's duration.

8.    The key problem identified by this project is the current low level of provision of
wastewater collection and treatment services and ineffective maintenance of existing
infrastructure for dealing with wastewater in Bosnia and Herzegovina.

9.     The training course on application of economic instruments for combating the land-based
pollution was held in Sarajevo, Bosnia and Herzegovina, on December 20, 2002. The training
course was organised within the overall project “Development of Economic Instruments for a
Sustainable Implementation of the SAP MED”, founded by GEF and generally managed by
PAP/RAC. The aim of the meeting was to present the project activities and the state of
development of economic instruments in Bosnia and Herzegovina in order to gather the views of
stakeholders on the subject.

      PARTICIPATION

10. Eighteen representatives of relevant stakeholders from Konjic Municipality, Cantonal
Ministry for Construction, Physical Planning and Environment, Cantonal Ministry of Economy,
Water Utilities, NGOs, Institutions for Public Health and Industries attended the meeting. The
List of Participants is given in Annex I of this report. The Agenda of the meeting is attached as
Annex II to the report.


      OBJECTIVE OF THE MEETING

11.   The objective of the meeting was to instruct the participants in:
      a)      General issues regarding the economic instruments in environmental protection;
      b)      Development and implementation of economic instruments;
      c)      Overview of economic instruments applied in Bosnia and Herzegovina; and
      d)      Pilot Project “Implementation of Economic Instruments for a Sustainable
          Operation of Wastewater Utilities in the Mediterranean Region of Bosnia and
          Herzegovina” (Expected results of the Pilot Project).


      Agenda item 1: OPENING OF THE MEETING

12. The meeting was opened by Mr. T. Kupusović (Co-ordinator of MAP for Bosnia and
Herzegovina and Director of Hydro-Engineering Institute) who welcomed the participants on
behalf of Hydro-Engineering Institute, and of his own. He presented briefly the SAP MED
project, as well as the project component “Sustainability of the SAP MED”, which is to be
implemented by Hydro-Engineering Institute.
                                                                                EI/2003/TC-R/B&H
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      Agenda item 2: AN INTRODUCTORY NOTE TO THE PROJECT COMPONENT
          “SUSTAINABILITY OF THE SAP MED"

13. Ms. D. Povh (PAP/RAC) gave an introductory note to the project component
“Sustainability of the SAP MED”. She described the objectives, needs and expected results of
the project, mentioning, among others, the countries eligible for the project and the time span of
the project. The objectives of the project “Sustainability of the SAP MED” were presented as
follows: to develop and implement economic instruments for a sustainable implementation of the
Strategic Action Programme for the Mediterranean Sea; to make actions for combating the land-
based pollution self-financing at national level through revenue generation; and to demonstrate
the economic benefits of more integrated approaches to management. For this purpose, the
project needs a sustainable financial platform for a continued implementation of the SAP MED
in the longer term, and incorporation of such economic instruments into National Action Plans at
national level, as well as the national professionals trained for economic instruments. The
expected results of the project are: development of administrative, legal and fiscal mechanisms
for a sustainable financing of the SAP MED implementation at national level; and enhanced
government capability to identify, develop and implement various types of economic instruments
suitable for a relevant country. The activities will be performed in the framework of the three
main phases of the project: Analysis; Pilot Projects; and Synthesis and Evaluation of the Project
Results. This presentation is contained in Annex III of the report.

      Agenda item 3: GENERAL INTRODUCTION TO ECONOMIC INSTRUMENTS IN
          ENVIRONMENTAL PROTECTION

14. The above-mentioned topic was introduced to the participants by Mr. N. Dale
(Metroeconomica Ltd., UK). He explained the definition of and a rationale for economic
instruments, the main types of economic instruments and their advantages and limitations. This
presentation is contained in Annex IV of the report.

      Agenda item 4: AN OVERVIEW OF ECONOMIC INSTRUMENTS APPLIED IN BOSNIA
          AND HERZEGOVINA

15. Ms. R. Alić (Hydro-Engineering Institute, Sarajevo) gave an overview of economic
instruments applied in the country, pointing out to their strengths and weaknesses. She spoke
about the existing and new legislation regarding environmental protection in the country,
institutional framework for economic instruments implementation, and public participation in
Bosnia and Herzegovina. This presentation is contained in Annex V of the report.

      Agenda item 5: DEVELOPMENT AND IMPLEMENTATION OF ECONOMIC
          INSTRUMENTS

16.   Mr. Dale, then, presented and explained the following issues:
       Evaluation criteria for economic instruments;
       Evaluation of user charges against criteria;
       Requirements for development and implementation of economic instruments; and
       Overview of operation of economic instruments in Central and Eastern Europe.

This presentation is contained in Annex VI of the report.

      Agenda item 6: PILOT PROJECT “IMPLEMENTATION OF ECONOMIC
          INSTRUMENTS FOR A SUSTAINABLE OPERATION OF WASTEWATER
          UTILITIES IN THE MEDITERRANEAN REGION OF BOSNIA AND
                                                                                 EI/2003/TC-R/B&H
Page 5



           HERZEGOVINA”

16. Mr. A. Ćerić and Ms. A. Perić explained the Pilot Project to be implemented in the
Mediterranean region of Bosnia and Herzegovina, and the results to be achieved by this project.
It was stressed that the key problem identified was the current low level of provision of
wastewater collection and treatment services, and ineffective maintenance of the existing
infrastructure for dealing with wastewater in the Municipality of Konjic. The following objectives
have been set out in the Pilot Project Implementation Plan:
           to set up sewage user fees in the utility that will recover costs of providing
          wastewater services; and
           to increase collection rates.

18. Thereafter, Ms. Perić presented the implementation procedure and supporting measures
for adopting economic instruments (wastewater tariff) for a sustainable operation of wastewater
utilities. Measures and procedures to increase the rate of revenues collections were also
explained. This presentation is contained in Annex VII of the report. The wastewater tariff model
for general use by all wastewater utilities, which was presented by Mr. Ćerić, is attached as
Annex VIII to this report.

      Agenda item 7: DISCUSSION

19. The discussion that followed presentations was focused on a possibility to implement the
proposed economic instruments for a sustainable operation of wastewater utilities and their
efficiency. The participants underlined the problems of the collection rate in existing social and
economic conditions. Issues like a high unemployment rate, the insufficient number of economic
activities and low wages issue, were emphasised. It was stressed that in such economic
conditions the Municipality was not in a position to provide the basic services like health
insurance, educational and social care. Most of the participants agreed that the existing
sewerage system in the Municipality required urgent reconstruction and development. In that
context, the participants raised the issue of financing costs of capital investments. The adequate
water and wastewater tariffs, as well as the sufficient collection rate were recognised as the best
way to reach the improvement in communal infrastructure. It was proposed that the wastewater
tariff be based on real costs for wastewater services covering also part of capital investments.
According to legislation in Bosnia and Herzegovina, the Municipality is responsible for the final
approval of water and wastewater tariffs. The authorities of Konjic Municipality expressed their
willingness to adopt the proposed changes of wastewater tariffs.

      Agenda item 8: CLOSURE OF THE MEETING

20.   The meeting was closed on December 20, 2002, at 17:00 hours.
                                                                            EI/2003/TC-R/B&H
                                                                                      Annex I
Page 1



                                           Annex I
                                     List of Participants



1. Ms. Ramiza Alić                                      Place:   Sarajevo
   Hydro-Engineering Institute                          Phone:   +387 33 21 24 66/67
                                                        Fax:     +387 33 20 79 49

2. Ms. Enisa Bašić                                      Place:   Mostar
   Hercegovačko - neretvanski Canton, Ministry of       Phone:   +387 36551 510
   Civil Engineering, Physical Planning and                      +387 36 324 324
                                                        Fax:     +387 36 551 051
   Environment
                                                                 +387 36 312 190

3. Mr. Emir Bubalo                                      Place:   Konjic
   Municipality of Konjic                               Phone:   +387 36 727 221
                                                        Fax:     +387 36 729 813

4. Mr. Admir Ćerić                                      Place:   Sarajevo
   Hydro-Engineering Institute                          Phone:   +387 33 21 24 66/67
                                                        Fax:     +387 33 20 79 49

5. Mr. Ivo Ćupić                                        Place:   Sarajevo
   Organisation and Economic Institute                  Phone:   +387 33 203 149
                                                        Fax:     +387 33 203 149

6. Mr. Nick Dale                                        Place:   London
   Metroeconomica Ltd.                                  Phone:   +44 1225 826954
                                                        Fax:     +44 1225 323423

7. Ms. Tihana Gašević                                   Place:   Mostar
   Public Enterprise for "Watershed Area of the         Phone:   +387 36 397 882
   Adriatic Sea"                                        Fax:     +387 36 397 883

8. Mr. Anton Jekauc                                     Place:   Sarajevo
   Organisation and Economic Institute                  Phone:   +387 33 203 149
                                                        Fax:     +387 33 203 149

9. Mr. Safet Kovačević                                  Place:   Jablanica
   Municipality of Jablanica                            Phone:   +387 36 752 954
                                                        Fax:     +387 36 753 215

10. Mr. Andrija Krešić                                  Place:   Neum
   Public Utility for Wastewater “MARECO”               Phone:   +387 36 880 225
                                                        Fax:     +387 36 880 136

11. Mr. Tarik Kupusović                                 Place:   Sarajevo
   Hydro-Engineering Institute                          Phone:   +387 33 212 466
                                                        Fax:     +387 33 212 466

12. Ms. Kadira Močević                                  Place:   Sarajevo
   Public Enterprise for Electricity “Elektroprivreda   Phone:   +387 33 526 503
   of B&H”                                              Fax:     +387 33 526 503

13. Ms. Emina Nikšić                                    Place:   Konjic
   Public Utility “Water and Wastewater” Konjic         Phone:   +387 36 727 576
                                                        Fax:     +387 36 727 576

14. Ms. Andja K. Perić                                  Place:   Sarajevo
   Hydro-Engineering Institute                          Phone:   +387 33 21 24 66/67
                                                        Fax:     +387 33 20 79 49
                                                                        EI/2003/TC-R/B&H
                                                                                  Annex I
Page 2


15. Ms. Daria Povh                                  Place:   Split
   PAP/RAC                                          Phone:   +385 21 340 478
                                                    Fax:     +385 21 340 490

16. Mr. Sulejman Sokolivić                          Place:   Mostar
   Hercegovačko - neretvanski Canton, Ministry of   Phone:   +387 61 385 958
   Economy                                          Fax:     +387 36 552 806

17. Mr. Suad Špago                                  Place:   Konjic
   Public Utility “Water and Wastewater” Konjic     Phone:   +387 36 727 576
                                                    Fax:     +387 36 727 576

18. Mr. Miralem Variščić                            Place:   Konjic
   NGO “Greens Neretva”                             Phone:   +387 36 728 470
                                                    Fax:     +387 36 728 470
                                                                      EI/2003/TC-R/B&H
                                                                                Annex I
Page 3
                                     Annex II
                                     Agenda


09:00 - 09:30   Registration of the participants.
09:30 – 9:45    Opening of the meeting.
9:45 - 10:00    An introductory note to the project component “Sustainability of the SAP
                MED" (Ms. D. Povh).
10:00 – 11:00   General introduction to economic instruments in environmental
                protection (Mr. N. Dale).
11:00 – 11:45   An overview of economic instruments applied in Bosnia and Herzegovina
                (Ms. R. Alić).
11:45 – 12:00   Coffee break.
12:00 – 13:00   Development and implementation of economic instruments (Mr. N.
                Dale).
13:00 - 14:00   Lunch break.
14:00 - 15:30   Pilot Project “Implementation of economic instruments for a sustainable
                operation of wastewater utilities in the Mediterranean region of Bosnia
                and Herzegovina” (Ms. A. K. Perić, Mr. A. Ćerić).
15:30 – 15:45   Coffee break.
15:45 –17:00    Discussion.
17:00           Closure of the meeting.

								
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