| While only a few elements of the overall reform process in the SILAQ countries have been highlighted in this Report, the changes in political, economic and social systems and their impact on the environment has been a far-reaching process. The removal of subsidies and the respective increases in energy prices to realistic market values is one such example. In most of the transition countries this policy is now at an advanced stage, especially in the Czech Republic, Poland and some of the Baltic states. While this policy creates incentives to promote energy efficiency in all sectors of the economy, even in these countries there has been serious concern for the increasing social problems for the average household resulting from rising energy prices. Nevertheless, the policy helps to decrease the energy intensity of the national economy and industrial production, increases the penetration of renewable energy technologies and results in substantially lower levels of emissions from combustion processes.
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| Privatization | Another element of reform is the change in ownership and property rights through privatization. In the past environmental regulation failed to meet its objectives because enforcement was poor, even meaningless, since the state was the regulator and the regulated. With privatization, both enterprises and land have become the property of individuals and firms, ensuring that the owners have to be responsive to market conditions and incentives, thus creating a fundamental mechanism for the rational use of energy and other resources. Privatized enterprises are now forced to ensure compliance with emission standards.
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| Decentralization | Decentralization of political power and the delegation of limited rights and responsibilities to local governments is another element of reform with impact on environmental issues. In this way, infrastructure decisions, waste treatment policies and trade-offs for various environmental controls can be made at the local level with the necessary knowledge and local understanding missing from government decisionmakers at the central level. Another characteristic of transition countries is their integration into international economic markets, which, combined with internal processes, is leading to the decline of heavy industry and on increasing light industry and service-sector activities. In this regard the economic make-up of transition countries is approaching those levels of OECD countries. More importantly, however, new high-tech and less polluting technologies are rapidly penetrating the market. For example, the food processing, furniture and apparel industries in Poland have been growing by some 10-20 percent a year since 1990. Nevertheless, there are still many other barriers to overcome on the path to reform and, therefore, further improvements to be made in terms of the environment and air quality. Transition countries are recognizing that the shift to a new political system, which includes a restructuring of the economy and privatization, is not only painful, but also slower than expected. Even in those countries that lead in reform, such as Poland and Hungary, the share of state-owned enterprises is still substantial, delaying those foreign direct investments that bring in modern pollution control technologies and which support the development of less polluting sectors of light industry. In addition, those transition countries which have lost access to their traditional markets under the Council for Mutual Economic Assistance, struggle to gain access to international markets, thus hindering much needed economic development.
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