Environmental Law Addresses Romanian Challenges

August 19, 1999

SEARCH THE GAZETTE

HARVARD GAZETTE ARCHIVES

By Catherine Gorodentsev
Special to the Gazette

A piece of landmark legislation that puts environmental protection on a sound financial basis was passed this June by the parliament of Romania.

The law was developed by a team of specialists led by Clifford Zinnes at the Harvard Institute for International Development (HIID). Developing and approving the law took more than three years of research, design, and patient coalition-building.

Romania’s 41 environmental protection agencies (EPAs) have been fighting to stay afloat in recent years due to severely reduced budgets and ministerial downsizing that left the country's Department of Environmental Protection with fewer than 15 employees. The situation was so dire that each EPA was forced to conduct business in its county on only 40 gallons of gasoline per month. Staff morale and environmental protection have continued to decline as a result.

Given the environmental state of Romania, the country can ill afford the disintegration of the EPAs, says Zinnes. A flood of new environmental rules instituted since the mid-1990s has further exacerbated matters by increasing the level of regulatory responsibilities required of the EPAs. The new law will provide the critical financing to enable the struggling EPAs to rebuild their institution and strengthen environmental regulatory efforts, fulfilling their legislative mandate.

The new law authorizes the EPAs to charge a fee for issuing environmental permits and, more importantly, to keep those fees and use them to finance the operation of the permitting system.

Like the gate at a parking lot, the permitting system ensures that the environment is used only up to capacity. It is also the primary way of collecting information needed for the making of environmental policy.

Zinnes, who served as resident advisor in Romania from 1993 to 1998, noted that this is landmark legislation because it places environmental protection on a sustainable financial basis.

"Until now, the EPAs were financed by increasingly smaller contributions from the State budget, leading to a profound degradation in the quantity and quality of staff and equipment and, therefore, enforcement," he said. "Without enforcement – either through market-based instruments or through command and control – environmental policy will not stimulate investors to view environmental investment as profitable. This would be particularly serious since the country is presently engaged in a mammoth restructuring of its economic sectors."

As an additional benefit, the new law's method of fee-setting will put pressure on EPAs to be managed more professionally, leading ultimately to more cost-effective government, says Zinnes.

Zinnes conceived the idea of self-financed EPAs in 1996 after realizing that better environmental enforcement would be needed to ensure that investors "saw the proper price" of the environment as the country embarked on its ambitious restructuring program in its transformation to a market-oriented economy.

Says Zinnes, "In the 1980s, energy prices were set artificially low and Romania developed an excessively energy-intensive industry as a result. I didn't want the same to happen again with the environment."

It was not until May 1997, however, that the Romanian government was willing to consider seriously the HIID financing concept for EPAs.

As Zinnes tells it, "I found out in the most unusual way that our idea was now on the government's screen. I got a call from the Minister to go to his office. When I opened the door I found myself facing a delegation of disgruntled EPA directors threatening to strike. The Minister turned to me and asked me to tell the directors about the self-financing law I was preparing!"

Though it only took a month to draft the law, a task accomplished by Zinnes and HIID's Marilena Patrascu (herself a former Romanian EPA director), it took another year for the government to introduce the bill into Parliament, where it was debated, and then passed by both chambers.