The environment was not high on the political agenda, and is not included in the government's list of economic priorities.
As Lithuania enters the second stage of its transition to a market economy, the emphasis of economic policy will be shifted to address structural reforms to support economic recovery and sustainable development. The main focus will shift to promoting private-sector growth. Accordingly, the government will have to decrease its role in industry, agriculture and the housing sector, and increase spending on law and order and other public services. Education, health, and transport sectors will also be reoriented toward the needs of the burgeoning private sector. There are plans to redesign the social safety net, and for new investments in infrastructure, the environment, and basic health care. Thus, questions related to environmental protection are left for the "future political agenda". But in carrying out the first steps of economic reform, it is essential to avoid damaging the environment. Therefore, environmental protection authorities are creating policies which set limitations on industrial pollution; these are primarily based on European Union standards for environmental quality. One result of these limitations will be to discourage use of less-advanced technologies which cause considerable environmental damage. Also, assistance from international financial organizations to priority economic sectors indirectly improves the environmental situation, as their loan requirements include environmental obligations.
The MoE has regional environmental protection departments responsible for permits, environmental impact assessment, laboratory control, and enforcement.
Some local functions are carried out by local governments, many of which have environmental protection departments. They should help ensure the implementation of laws and government decisions on environmental protection and to prepare, approve and implement programs, plans and projects involving environmental protection and the utilization of natural resources within their jurisdiction; they are also responsible for allocating national resources within established limits.
There are environmental units in other sectorial ministries. They are responsible for coordination of environmental protection in their sector.
The Parliamentary Nature Protection Committee is reviewing the new environmental bill and is involved in strategy development.
Private businesses are represented by the Industrial Confederation. One component of this confederation, the Environmental Engineering Association, is active in the processes of drafting policy documents and environmental laws. The Association has participated in the preparation of the strategy paper, the action program, and the eco-labeling scheme.
The Green Movement was one of the first manifestations of the rebirth of Lithuanian national feeling in 1988. The Greens opposed the further invasion of massive industrial projects into Lithuania.
By 1990, all industrial operations were regularly inspected to ensure compliance with new environmental standards, which established emissions standards. In an attempt to assess the damage of fifty years of unchecked development, and to lessen the impact of existing environmental "hot spots", the new reformist government declared several areas and industries to be "ecologically dangerous locations" where the maximum permissible concentration of pollutants had been exceeded. Remedying these industrial sites was set as one of the national environmental investment priorities.
With the restoration of Lithuanian statehood in 1990, Lithuanian environmental authorities focused on several previously neglected areas in order to initiate a rapid transition to sustainable development:
These priorities, related to legal, institutional and human resources strengthening, remain more or less the same today. The new economic reform shifted priorities from one media to another, but the essential principles remained the same. The highest environmental priority in Lithuania is the reduction of water pollution through the construction of waste water treatment plants and the introduction of water quality standards and norms in line with EU standards. Experience has shown that water pollution problems are least sensitive to economic changes.
Though the amount of hazardous waste has decreased in recent years, it still poses a threat to the environment. Hazardous waste management is the second priority, and the main measures here are the construction of temporary storage sites, and the founding of enterprises to render waste harmless.
The third priority is the clean-up of those contaminated sites which pose the most serious threat to public health and the environment. This problem appeared after the withdrawal of the Soviet Army. Other contamination is due to economic changes (new goods, new packaging, new technologies etc.). Polluted sites (old landfills, specific production areas and military territories) are a threat to the quality of groundwater and limit the use of some territories.
Air pollution is linked to the overall economic situation. Recently, the amount of emissions has been reduced, giving time to take measures to stabilize the situation and to implement pollution prevention policies. The main measures here are the implementation of international conventions, decrease of transport pollution, and the introduction of new standards according to EU requirements.
The current environmental management system combines command-and-control with market-based instruments. Traditional administrative measures such as permits, limits, norms, and prohibitions are used. These measures are combined with the following economic instruments:
The above-mentioned management system is reflected in various environmental programs. Detailed plans have been made for territorial and nature protection, based on the formation of an inter-related system of zones with important ecological functions.
One of the first steps toward environmental planning after 1990 was the development of an Environmental Protection Program (EPP), the first draft of which was compiled at the end of 1992; the main actions were adopted in the 1994 General Government program. The EPP consisted of:
EPP targets and actions were broken down by environmental media (air, water, land, forest etc.) and categories of environmental pollutants (waste, chemical materials etc.).
The successful implementation of environmental policy largely depends on available financial resources. The annual financial plan is closely connected to the state budget. This plan forecasts monetary allocations from the state budget for both environmental measures and investments in wastewater treatment plants.
However, the newly adopted Lithuanian energy strategy, agriculture and transport development programs, etc. which are closely related to environmental protection, require revision of existing environmental programs to develop an integrated overall strategy. In 1994, the MoE initiated the development of the National Environmental Strategy (NES) and the translation of this strategy into a short and medium-term action program. This strategy seeks to strengthen Lithuania's institutional capacity, to address its existing environmental concerns effectively, and to ensure that the concept of environmentally sustainable development underpins Lithuania's current transition to a free market economy.
The drafting of a NES will (a) include deep analysis of various scenarios and forecasting, (b) allow a thorough evaluation of the current situation and the available resources; and (c) combine different programs into one strategic document. An important part of this strategy will be the formulation of policies and actions to reduce the generation of pollution at the source, thereby complementing ongoing efforts to construct waste water and hazardous waste treatment facilities.
The following objectives have been formulated for the first phase of the NES project:
A follow-up to the NES document is essential, both to fill gaps that have been identified during the NES project, and to integrate environmental strategy with those of other sectors, including relevant parts of the private sector.
The NES should be reviewed at set intervals. Feedback from implementation and changing external conditions should be incorporated into the revised document. Though one of the results of the NES project should be the establishment of structures for monitoring and evaluation, it will be necessary to assist in this part of the process.
The main normative act in the environmental sector is the Law on Environmental Protection adopted at the beginning of 1992, which ensures the right of citizens and public organizations to receive accurate and up-to-date ecological information. It states: "Citizens and public organizations shall have the right:
However, because of the absence of tradition and a lack of experience, the involvement of NGOs and the public in the decision-making process is imperfect in practice, and the legal system does not always give expected results in this field. Therefore, more attempts are now being made to engage public and non-governmental organizations in policy-making through informal discussion, various seminars and meetings, and providing opportunities for commenting on new legal acts, procedural and policy documents, etc.
One of the main instruments of public involvement in the decision-making process is Environmental Impact Assessment (EIA). According to the Law on Environmental Protection, governmental institutions shall inform the public about planned activities which are likely to have an adverse effect on the environment. The regulation on EIA which is undergoing revision will provide the opportunity for all citizens to participate in the EIA process, to present their opinions on planned activities and to comment on EIA documentation, ensuring that public comments are taken into account.
The main principle of the development of NES is to keep this process as participatory as possible. Various NGOs are asked to provide their ideas and suggestions on the structure and content of the Strategy. Experts from various organizations and institutions are being invited to participate in working groups for the elaboration of the NES.
The implementation of the new system of economic environmental management started with the adoption of the Law on Taxes on State Natural Resources and the Law on Charges on Pollution (1991).
The system of charges on pollution covers both the administrative and economic approaches to environmental management. Economic interest is related to two kinds of emission limits for enterprises. One limit is the Maximum Allowable Pollution (MAP) which is set for all legal and natural persons engaged in an activity which has a negative effect on the environment. If an enterprise lacks the technical resources to achieve MAP limits (e.g. absence of or poor capacity for sewage treatment or air pollution protection equipment, lack of treatment technologies etc.) then a second limit, the Temporary Allowable Pollution (TAP) will apply. Pollution charges are levied for air pollution (more than 100 different pollutants) and water pollution (51 pollutants).
Charges are determined according to the degree of deviation from the limits, and are defined as "basic", "increased" or "reduced." The charge according to a basic rate is paid for pollution not exceeding the limits. When limits are exceeded, a charge, based on an increased rate, is imposed. Charges based on a reduced rate are paid when the level of emissions is less than the MAP.
The pollution taxation system includes waivers; those polluters who implement pollution abatement measures which reduce pollution by more than 25% are exempt from payments up to the investment cost.
Seventy percent of collected charges go to local governments, and 30% to the state budget. Fees for exceeding limits are accumulated in the State Nature Protection Fund.
Another economic instrument used in Lithuania is state subsidies, which comprise approximately 3% of the state budget and are used mainly for the construction of waste water treatment plants.
Lithuania levies a system of taxes for the use of natural resources, and the taxes are based on the previously mentioned Law on Taxes on State Natural Resources. The taxes are imposed on exploitation of mineral resources, groundwater, surface water, and mineral water and the income supports the state budget. Their main objective is to increase the responsibility of the users of natural resources to use national wealth efficiently, and to generate financial support for the investigation and preservation of natural resources.
The Methodology for Assessing Damages Resulting from Environmental Non-compliance establishes fines for accidental pollution discharges and improper disposal of wastes.
So far, economic instruments have not played a considerable regulatory role in environmental protection. The main reason is that the dislocations caused by the ongoing economic changes had reached a peak when implementation of the previously mentioned laws began. More concretely, inflation, indexing pollution charges not by the full general index, privatization, a shortage of human resources and time, and insufficient data all compromised the work of the system of environmental economic instruments.
Therefore, enlivening of the main functions of environmental economic instruments is the main task at present.
With the restoration of Lithuanian statehood, a new structure of environmental administration has been created. The Supreme Council (now Seimas) established the Environmental Protection Department, and in 1990 passed the Law on the Department of Environmental Protection. The Department was to serve as the primary state institution regulating environmental administration. The Department was made subordinate to the Supreme Council, and not, as in most other European countries, to the government. By keeping the main regulatory agency for environmental matters independent of government policy, legislators hoped to avoid conflicts of interest. Because the operation of all the main industries was under the jurisdiction of the Cabinet of Ministers, legislators felt that the main regulatory agency for these industries should be free to act without interference from respective sectoral ministries. The Director General of the Environmental Protection Department had an advisory vote and participated in cabinet meetings.
The law which restructured the Environmental Protection Department into the MoE was passed in mid-summer 1994. The aim of this restructuring is to better integrate environmental protection into the general decision-making process, emphasizing the prevention of pollution. Now the MoE is operating according to the regulations which are passed by the government.
This environmental protection institution has broad powers:
The structure of the central office of the MoE mixes media and management instruments: there is a water protection division, an air protection division, waste management, a dangerous chemicals division, a biodiversity protection division, a landscape division, and divisions for environmental impact assessment, economics, public information and education. The central office concentrates on environmental policy elaboration and the creation of management instruments (permits, EIA, economic instruments), while implementation is left to the regional and local institutions.
The MoE consists of a central body and eight regional environmental protection departments, each of which has jurisdiction over six or seven districts. The main responsibilities of regional departments are:
To carry out these functions, regional departments have a central staff (situated in the regional capital) and district Environmental Protection Agencies. There are 44 district and 11 urban Environmental Protection Agencies responsible for ensuring that environmental protection requirements are met.
The system of the MoE is financed from the state budget. At the same time, the MoE is responsible for management of the State Nature Protection Fund, which is used to support activities of environmental protection authorities and the implementation of comparably small environmental projects. The State Nature Protection Fund supports about 1-2% of all state environmental investments. Other financing resources (municipal environment protection funds, other municipal funds) are rather scarce.
At this time local governments do not have clear responsibilities in the field of environmental protection. This may explain why the commitment of municipalities to environmental issues varies so widely. Usually local governments have environmental protection divisions that are not subordinate to the MoE.
The powers of state institutions and local authorities in the field of environmental protection are determined by the Law On Environmental Protection and Law on Self-Governing Principles.
According to the Law On Environmental Protection, local governments shall:
Local governments may, with government approval, set local standards which are stricter than the national standards and may establish protected areas and monuments of local significance.
A similar situation can be seen in agriculture. As a result of privatization, a number of small-scale farms were created which do not have enough resources to ensure environmental compliance. At the same time, a dramatic increase in the number of units makes it difficult for environmental protection authorities to enforce regulations, and leads to weakened control.
No regulations have been enacted on liability for past environmental damages, and environmental auditing is not required in privatization deals. It is expected that these issues will be dealt in the NES and the NEAP.
In general, this situation can be characterized by a decrease in the environmental capacity of polluters. It will take several years before polluters or end-users will be in an economic position to increase their environmental capacity.
Bearing in mind this situation, pollution prevention instruments have the utmost importance at this time.
There has been a Cleaner Production Center established at Kaunas University with support from the World Environment Center. The center focuses on education and information dissemination (e.g. preparation of guidelines on cleaner production methodology). Moreover, in eight selected companies pilot projects have been carried out.
Proper use of EIA is also of special importance. To strengthen this direction the Law on EIA was prepared and is expected to be adopted this year. The establishment of good practices in enterprises and farms could also be a cheap and effective solution.
Reduced demand for environmental services is the main reason that this sector is undeveloped. There are very few companies oriented towards environmental business. The main source of revenue available to those environmental service companies that do exist are foreign aid-financed development projects.
These early successes were reflected in the 1990 parliamentary elections, in which the Green Party earned several seats. Members of Parliament have had a great influence on the formation of the administrative structure of environmental protection, on some important development decisions, and on the execution of other controversial projects (for example, the construction of an oil terminal.)
After some time, the influence of the Greens has started to decrease. It can be explained by several reasons: lack of experience in decision making and management, weak scientific background of some of their decisions, and a general decrease in public activity and interest, etc.
After the 1992 elections, neither the Green Party nor any other environmentally oriented movement has earned seats in the Parliament. The "green lobby" is extremely weak, and economic interests guide most legislative decision-making.
The following inter-sectorial priorities have been set, taking into account the above-mentioned issues, and other criteria, such as the impact on human health, loss of productivity, the amount of irrevocable damage, and the ecological and economic efficiency of investment expenditures:
Based on set priorities, the main part of the environment protection fund is allocated for the construction of waste water treatment facilities. Environmental investments account for a considerable part of the state budget: in 1990 - 1.9%, 1991 - 1.4%, 1992 - 2.45%, 1993 - 2.95%, 1994 - 5%. In a decision of the former Supreme Council, the construction of waste water treatment plants in Vilnius, Kaunas, Klaipëda, ºiauliai and Palanga are considered to be of national significance, and were given priority status. 66% of all environmental funds allocated in 1994 were for the construction of these facilities.
Priorities are largely set by the use of quantitative criteria. The Ministry of Environmental Protection is making efforts to establish important new criteria, such as risk assessment. It can be expected that the use of this criteria will lead to an extension of the list of priorities to include some air pollution problems.
The drafting of a NES is under way, which will allow a thorough evaluation of the current situation and available resources, and which will provide a program of short and long-term actions. Much of this document is devoted to investment-related solutions.
Together with the national policy of priority-setting, Lithuania's commitments to international organizations play a very important role. One is the obligation to fulfill the recommendations of the Helsinki Commission. In order to restore the ecological balance of the Baltic Sea, the Baltic Sea Joint Comprehensive Environmental Action Program was prepared. This document contains a list of the "hot spots" in countries around the Baltic Sea, and is considered one of the basic documents in the investment-related decision-making process.
During recent years, the number of waste water treatment plants still under construction has been reduced. This allows a concentration of funds, which should speed up the construction process at existing plants.
There are some good examples of funds for accumulating environmental financing, such as for the construction of waste water treatment plants in Kaunas and Klaipëda. The main objectives of the Klaipëda Environment Project are to reduce wastewater discharges into the Baltic Sea, to enhance the water quality in Klaipëda, to improve the water supply, to improve the management of the Klaipëda State Water Supply Enterprise, and to develop a management plan for adjacent coastal and protected areas. The project is carried out in co-operation with the EBRD, the Ministry of Environment of Finland, and EU- PHARE. Local funding is expected to come from the state budget and the budget of the municipality of Klaipëda. For the construction and maintenance of the Kaunas waste water treatment plant, the Kaunas municipality will set up a joint venture with NEFCO and a Swedish enterprise, "Stockholm waters." In addition to these contributions, it is expected that a loan will be obtained from the European Bank for Reconstruction and Development.
The Public Investment Program prepared last year has contributed a great deal to the improvement of the investment planning process. This program will be in effect for three years, and allows the combination of different possible sources of financing: the state budget, municipal budget, loans with state guarantee, or grants.
One of main problems at this time is that investments to the environmental sector are being made mainly from the state budget. Other funding resources are rather scarce, but their role must be increased in the near future. It may be possible to raise funds through service tariffs. Under current laws, municipalities only set tariffs on maintenance costs and cannot accumulate funds for plant construction or repair. Normally residential tariffs are smaller than those for industrial enterprises. Regulations on a new tariff system are under preparation and will be introduced to accumulate additional funds for investment purposes.
Major concerns exist about the inefficient use of allocated funds. One of the possible solutions could be a gradual transition from subsidies to a system of soft loans. Such a system will increase the responsibilities of municipalities to regulate spending and would encourage them to look for additional sources of funding.
Together with institutional capacity-building, another important process - environmental policy planing - has been developed. It started from the development of environmental programs for various sectors, and is now concentrating on the development of long-term policy documents.
The process of developing the NES will be a very good starting point for public participation in policy formation. The approach used for the development of the Strategy should make it possible for the public to participate directly in the process through various NGOs. On the other hand, the NES and the accompanying action plan will set forth the procedural mechanisms for public involvement in policy formation.
Public participation in institution-building is rather weak at this time. The public had more influence during the early stages after independence when green parties and movements were much stronger. They played an important role in institution-building. Public opinion was taken into account when the environmental administrative structure was created.
The environmental investment programs are mainly prepared by municipalities and the central ministerial bodies; procedures for public participation have not been set. However, the public had some indirect influence through political parties and interest groups. Public participation will be addressed during the development of the NES and action program.
Bearing in mind the scarcity of financial resources, Lithuania intends to implement low-cost - high-benefit measures, "win-win" investments, and good housekeeping will be supported, and the focus will be on pollution-prevention rather than end-of-the-pipe controls.