• to complement direct regulation;
• to provide incentives for pollution reduction;
• to make a major contribution to the financing of environmental improvements.

To meet these targets, charge rates were increased about 18-20 times in 1990 and are now among the highest in the world. Charge rates are adjusted annually to projected inflation in the next year. Charges are now rather based on actual emission/discharge levels than on allowable levels which gives enterprises a clear incentive to lower emissions more than the allowable levels. Specific charges for air pollutants, solid and hazardous waste, discharge of waste water including saline mining water, surface and ground water extraction, and tree cutting are in place. A detailed survey on the different types of pollutants which are subject to the charges, the charge rates and other characteristics of the charges can be found in the appendix of the report.

All point sources have to apply at the regional environmental authority for facility permits, which specify the allowable discharge of every regulated pollutant from every pipe, stack or other type of conveyance. When setting allowable discharge levels ambient air and water quality levels are taken into account. Facility permits for water intake and discharge are separate but always issued together. For large combustion sources special technology-based emission standards were set (exceeding ambient quality levels), and they are obliged to comply with technology standards by January 1, 1998.

The regional state inspectorates for environmental protection are responsible for the enforcement of permits. During facility inspections they determine the extent of permit violations, levy fines, approve requests for deferral of fines and monitor enterprises' progress in addressing violations. A problem is that continuous monitoring is not required and so the extent of violation can only be estimated ex post, on the basis of emission factors, level of production, technology data and use of inputs. Fines are levied when pollution levels exceed allowable levels in the facility permit. The fine rate is a multiple of the charge rate and its level depends on the difference between actual and allowable level. They can be up to 10 times the charge rate. If an enterprise commits itself to implement measures to attain compliance, they have the right to ask for a deferral of the payment of fines for 3-5 years. If the company succeeds to attain compliance, a part or the whole amount of the fines are forgiven, but if they fail, the deferred fines plus a 50% surcharge are collected. This amount of surcharge is not a much of a punishment for a firm, considering the recent inflation rates. In other words there is a considerable incentive to apply for a deferral of the payment without willingness to implement any measures. The regional inspectorates are also empowered to shut down enterprises, which chronically violate allowed levels or operate without valid permits.

The revenues from charges and fines are distributed to the national fund, 49 regional (voivod) funds and 2400 local (gmina) funds according to a special key: Charges and fines for air emission (except NO_x), for surface and ground water extraction, for waste water goes to 36% to the national, 54% to regional and 10% to local funds. Water and air related charges represent the largest part of revenues. Charges and fines on NO_x, on saline mining waste water is distributed by 90% to the national and by 10% to local funds. Charges and fines on solid and hazardous waste goes to 20% to national, 30% to regional and 50% to local funds. This reflects the local nature of waste management. All revenues from charges and fines distributed to the national and voivod funds are earmarked for investments and other expenditures to reduce pollution. The funds disburse the money by soft or subsidized loans, grants or interest subsidies on commercial loans.

Poland made very good experiences with the so called "List of 80". This list contains the worst polluters in the country. The enterprises included in the list have been selected by the Polish Ministry of Environment. Criteria for the selection have been the frequency of pollution discharges in excess of environmental standards, the degree of concentration of discharges, the location of enterprises and the range of negative impacts. The State Environmental Inspectorate set performance criteria for all listed enterprises. The enterprises were required to prepare implementation programs describing the actions to be taken (technological changes, restructuring of production process, construction and modernization of environmental controls), which would enable them to meet the established requirements. A date was set by which the enterprises were expected to meet the performance criteria. In addition, Voivod lists existed which included nearly 800 enterprises in addition. These enterprises had to prepare environmental audits and develop compliance strategies. 5 years after introducing the "List of 80" and similar Voivod lists, considerable results in reducing emissions have been achieved. According to a report of the State Environmental Inspectorate conducted in 1993, relative to the 1989 level, emissions of particulate matter decreased by 67%, emissions of gases by 44%, discharged sewage by 37% and stored waste by 42%. Of course, part of these reductions is simply due to the decreased economic output of these enterprises during 1990-1993. 7 enterprises of the "List of 80" have been closed permanently and the production of 22 others was partially of temporarily interrupted. The lists helped mobilizing the public in the neighborhood of listed enterprises to take interest in solving environmental problems. In May 1994, several enterprises were removed from the list and a few new ones were added.

The Polish system turned out to be very effective, but of course some problems still remain or new ones arose. According to the authors one of them is rather low collection rates of charges and fines during the last years since the rate increase in 1990: In 1990, the rate was nearly 100% , 4 years later it decreased to 64.9%. In the same period, the amount of imposed charges and fines increased by 20 times due to the rise in charge rates. There are some striking differences between collection rates for charges: While the collection rates in 1994 for water withdrawals and air pollution were 96% and 90% respectively, the value for waste disposal, waste water and tree cutting was much lower. One should not forget, however, that low collection rates can be partly attributed to the possibility of deferring fines.

Another problem is insufficient coverage of the system of facility permits. It is estimated that half of the facilities operate without valid permit. One reason for that are limited local authority resources to process permit applications, also, there is uncertainty about future permitting requirements resulting from harmonization with EU environmental law.

The authors give four main recommendations for improving the Polish system of environmental charges:

1. Fine-tuning of charge rates: under the current system there are too many pollutants with separate charges and it is difficult for authorities to monitor actual emissions. Streamlining and simplifying the system of charges could be considered.
2. Introduction of product charges: When charges severely affect firm's profits, they may respond by under-reporting emissions or refusing to pay charges rather than investing in abatement. Social problems during the transition period may also contribute to the evasion of charges. Product charges (for instance, a fuel charge) may be a more effective revenue-raising instrument than pollution charges.
3. Clarify responsibilities for meeting ambient quality standards: Much of the problem stems from overlapping authority over jurisdiction between voivods, municipalities and gminas. The situation for water pollution was particularly unclear at the time of writing the report. There is a possibility that with the new Water Law water charge revenues are given to new regional water funds which would result in the voivod environmental funds loosing almost half of their current working capital.
4. Increased flexibility in permits: Currently, facility permits do not accommodate the use of economic instruments such as offsets, bubbles, or emission trading. Permits specify emissions and discharges for each individual process and emission/discharge source.

Anderson, Glen, D. and Fiedor, Boguslaw: Environmental Charges in Poland, Environment Discussion Paper No.16, Harvard Institute for International Development, January 1997, 20 pages, price US$5. International Environment Program, Harvard Institute for International Development, One Eliot Street, Cambridge, MA 02138, USA. Tel: +1-617-4965176, Fax: +1-617-4968040, Internet: http://www.hiid.harvard.edu/pub/ddps90no.htm