As with the first survey, the objectives of this report were to examine the environmental policies and priorities in each country, to review the most pressing environmental problems and to identify the demand for environmental technologies and the major end-users. The secondary objectives were to examine the purchasing preferences of domestic buyers and to present the main competitors active in the local markets of Estonia, Latvia and Lithuania.
The content of this report is largely based on formal personal interviews with a cross-section of senior-level actors from the environmental technology market, including representatives of industry, municipalities and environmental businesses. Up to 100 professionals were interviewed in each country. The research was carried out between October 1997 and April 1998.
While poor quality drinking water and air pollution are the most frequently cited environmental problems, wastewater and solid waste management, and pollution from transport remain significant challenges. Environmental pollution is particularly heavy in industrialized areas.
In the Baltic countries, the major environmental priorities outlined by the respective governments are water protection and air pollution prevention. National environmental policies focus on air emissions, specifically from power generation facilities and other large industrial sources, and tend to be the main targets of environmental regulations. The goals within the water protection sector are to increase the number of residences served by sewage disposal facilities and potable water systems, to protect groundwater resources, and to construct and manage adequate wastewater treatment facilities.
In the near future, air pollution control and water protection will remain a high priority, although there will likely be a shift in focus toward regulating emissions from small and medium-sized enterprises and the treatment of waste discharges. Air pollution from transport is expected to grow as the number of road vehicles continues to rise. Although the transport sector is not currently regulated, this is likely to change in the future. Water management, specifically wastewater treatment, will most likely remain a priority focus in the coming years. The construction of modern wastewater treatment facilities is a priority in all three countries, while waste management, a significant problem, is expected to remain a growing concern. The majority of landfills in the Baltic countries do not have the capacity to handle hazardous waste.
The distribution of expenditures within the environmental sector corresponds with the national priorities of Estonia, Latvia and Lithuania. Environmental expenditures in Estonia have remained greater than 1 percent of GDP for the past few years, while Latvia and Lithuania's have fallen below this level. The expenditure for all three countries totaled USD 136 million in 1996, with Estonia's spending accounting for more than half of this figure. It is expected that the environmental expenditures for the region will grow at a rate of between 4 and 8 percent in the coming years, with a change anticipated in the sources of funding for environmental projects. Currently, most financing comes from the state budget (including state environmental protection funds), municipal budgets and investors' own funds. Over the next few years, however, a greater amount of funding is expected to be made available from business contributions while state budgets are expected to decrease.
The bulk of environmental expenditures are channeled into water-related projects, followed by air protection. Waste management activities are the third largest priority area. Most state financing tends to concentrate on the construction of wastewater and sewage treatment facilities and public water supply projects. The remainder is allocated to air protection and waste management, although to a large extent, the costs incurred in the latter categories are met by industrial plants and municipalities.
The demand for environmental technologies tends to be driven by national priorities in each country. Overall, demand for environmental technologies is moderate to relatively high. Most technology categories show moderate levels of demand with a few areas identified as being high in demand. Technologies related to water, for example, were moderate in all three countries. Estonia indicated high demand for wastewater technologies, Latvia indicated high demand for waste and energy technologies and Lithuania indicated high demand for all categories except water. Technologies related to power generation, and municipal, industrial and hazardous waste management were rated high in demand in all countries.
In the coming years, the focus of pollution reduction measures will remain on the use of end-of-pipe technologies, although an increase in demand is expected for pollution prevention and waste minimization technologies.
Each country has recently enacted legislation regarding public procurement and tendering procedures. This requires the formal announcement of tenders for all planned acquisitions involving the use of public money. However, at this point, most of the surveyed experts were skeptical as to its usefulness in ensuring the availability of information on project opportunities.
The major barrier to purchasing a foreign technology is the high price, according to the majority of respondents. Other barriers include the lack of reliable product information and a scarcity of information concerning suppliers. However, this concern is not exclusive to foreign technology providers; a similar response was received regarding local providers as well.