All four countries have made substantial reforms to their environmental legislation since 1989. The Czech Republic, Hungary and the Slovak Republic enacted framework environmental protection laws after 1989. Poland is in the process of revising its framework environmental law enacted in 1980 (Statute on the Shaping and Protection of the Environment of 31.01.1980). These framework laws aim to integrate progressive economic incentives into environmental protection, generate badly needed funds and improve compliance.
Hungary issued one of the most progressive new pieces of framework legislation in June 1995 when its Parliament passed the Act on the General Rules of Environmental Protection. This Act, in force since January 1, 1996, places reporting requirements on polluters and prepares the framework for levying 'green' taxes and product charges on environmentally harmful goods and activities. Enforcement has begun with the enactment of the Act on Environmental Product Charges and the Environmental Product Charges of Certain Products (passed June, 1995). With environmental impact studies already required by law, these new economic instruments allow the government to assess environmental damage and deal out appropriate permits, fines, charges and fees to compensate for it.
Each country has also incorporated economic incentives into many new laws related to specific media such as water, air, waste and packaging. These new laws not only help improve the environment, but also provide opportunities and jobs in the environmental business sector. Strict environmental legislation existed in the past, but was often impossible to enforce. This was because the state was both regulator and polluter and because many industries and factories were 'exempted' from the law in order to fulfill strict production quotas. Though the region's track record of enforcing environmental legislation is poor, officials in all four countries are confident these new mechanisms will complement traditional command and control policies.
All four governments are preparing various pieces of legislation that may impact the environmental market. The following list includes some of the important legislative developments recently enacted or underway in each country:
To provide some guidance on this issue, the European Commission produced the White Paper in May of 1995 that presents the current situation in the associated countries and outlines the priorities for obtaining membership. Membership, and the promise of free trade that it brings, will soon become the most significant driver behind increased environmental protection activities and legislative reforms in Central Europe.
Representatives from all four countries stated that most of their domestic legislation was in principle, harmonized with EU legislation. However, the governments are still in the process of adopting or revising many of the required implementing regulations and enforcement actions. Workshop discussions in all four countries highlighted the following challenges that require more attention:
Although stating commitments to the harmonization process, businesses identified the following challenges:
The National Fund for Environmental Protection and Water Management in Poland, for instance, now provides more than 25 percent of the over USD 1 billion the country spends on environmental protection annually. The situation is improving in the other three Visegrad countries as well, as funds generated by fines, product charges and green taxes continue to grow as economies expand.
Although these funds cannot finance all environmental projects, they do act as catalysts to encourage commercial investment. The healthiest indication that this encouragement is working is the increasing level of foreign investment for environment-related projects. At the Czech workshop, a representative of Mees Pierson announced they are teaming up with EBRD to establish the Central and Eastern European Infrastructure Resources Partners Fund. This environment-focused venture capital fund, worth USD 40-65 million, will look to invest in companies undertaking environment-related projects in the Visegrad countries and the Baltic states.
The combination of reformed regulations and increased investor confidence has finally produced the fertile environmental market that many expected five years ago in Central Europe. Environmental investments from the private sector and government, estimated at USD 2.5 billion in 1995 for these four countries alone, are expected to grow at an annual rate of 20 percent.
A study by the REC estimates that approximately 2000 companies provide environmental services and products in this market [3]. The current status and rate of growth are different for each sector and each country. Overall, Poland has the largest market for environmental goods and services followed by the Czech Republic, Hungary and finally the Slovak Republic. On average, companies in the region are small-to-medium in size and most active in projects related to water protection. Furthermore, on average these companies earned most of their income from the sale of technologies and products (44 percent). This was followed by income from the sale of technical services (40 percent) and (16 percent) laboratory activities.
Although the situation is far from perfect, forecasts of continued economic expansion, the promise of free trade with Europe and reformed regulations provide an optimistic outlook for continued environmental business opportunities. Industry experts expect the greatest growth in the following three areas:
Specific information about the activity in this market and the information needs of environmental professionals can be found in the REC publication, The Emerging Environmental Market. Also, each country overview provides related details.
One of the most promising certification initiatives is the International Standards Organisation's environmental quality standards (ISO 14000 series) for industry. ISO is hoping these standards become a mark of excellence as did their quality certification for manufacturing operations (ISO 9000).
It was, however, difficult to locate case studies of companies that have already adopted progressive environmental management practices. Many local companies have accepted the need for good environmental management, but few have adopted specific environmental management systems.
This can be attributed to the fact that the international environmental management standards (ISO 14000 series) are still at least one year from being finalized. Furthermore, the draft ISO 14000 standards have received criticism from environmental groups because they do not require certified companies to publicly report environmental performance.
Two other promising 'voluntary' environmental management systems were presented during the workshop series: the EU's Eco-Management Auditing Scheme (EMAS) and the Environmental Management System (EMS). The European Commission developed EMAS as an environmental auditing standard for companies within the EU. The EMS is a set of environmental management guidelines established by a collaborative effort involving the International Federation of Consulting Engineers, the United Nations Environment Program and the World Business Council for Sustainable Development. Many local environmental consultants attending the workshops expressed a desire to learn more about ISO 14000, EMAS and EMS certification and training programs.
Currently all four governments offer certification and licensing programs for various activities to include conducting an environmental audit and preparing environmental impact assessments. Although the certification situation is different in each country, the following general deficiencies were highlighted during the workshop discussions:
Various programs exist or are planned in each country to address these deficiencies. They include:
1. A summary of the specific compliance for each country can be found in the REC report, Approximation of European Union Environmental Legislation: Case Studies in Select CEE Countries.
2. Environmental Standards and Legislation in Western and Eastern Europe: Towards Harmonization, (page 28 - Table 3.2a), December 1993, prepared by Environmental Resources Management.
3. The Emerging Environmental Market: A Survey in the Czech Republic, Hungary, Poland and the Slovak Republic, August 1995, Regional Environmental Center