Experiences and Lessons from the Transition Period

I. Political, economic and social impacts on environmental protection at the spring of 1994

Background

1. The Central and East European (CEE) countries are called "the countries in transition" because of their challenging and pressing task to reorganize their political, social, and economic systems. These countries must transform centrally planned and managed societies into democratic, market-oriented ones. The term "social market economy" has been used to describe the ultimate goal of the transition process, the details of which, however, have not yet been fully elaborated. The notion of a social market economy serves as the basic concept from which an implementation strategy for truly sustainable development can evolve. The maintenance of a healthy environment is inherent in such a development strategy and must figure prominently on the relevant agendas of the transition period.

2. The CEE countries do not have a common blueprint for the transition process. They are not developing in exactly the same ways or at the same pace. Instead, some countries have progressed more than others. Building a democratic society after several decades of a totalitarian system is a task which these countries are compelled to face on their own. While each of these countries faces similar challenges, there is little evidence of cooperation and mutual support given by the more advanced CEE countries to their struggling neighbors. This does not help the overall transformation and could lead to further fragmentation of the CEE region.

3. A similar lack of cooperation among the governmental bodies within each CEE country during the transition period has led to difficulties in developing a cohesive transition in policy, economy, and social life. Thus far, the incoherent transition process has revealed that the necessary political changes initiate economic reforms, which tend to cause social problems. Political initiatives followed by economic actions lead to social stresses. The core areas of change (policy, economy, and society) have not been integrated during the transition period so as to strengthen, rather than inhibit, the process and success of reform. The rapid rate of transformation has overwhelmed the capacities of these countries to handle the problems that arise from the process. One lesson learned from the transition period is that it is crucial to carefully measure and plan for the impacts of social and economic programs on the whole system.

Political changes

4. The environment was a high civil priority in the CEE countries on the eve of the political breakthrough. There had been long-lasting concern over the health effects caused by environmental pollution, especially in industrial areas. The environment was used by the public as a political weapon aimed at showing the mistakes of the previous political and economic systems. Indeed, pressure from environmentalists contributed substantially to dismantling the previous political systems.

5. A plural and open society emerged after the establishment of democratic governments in the CEE countries. Freer access to environmental information allowed for improved assessment of damages and provided support for the creation of Green Parties and other pro-ecological organizations. However, environmental problems, perceived as isolated, have since lost importance in comparison with more acute economic difficulties. This drop in concern for environmental issues was unintentionally helped by pro-environment politicians who, in the course of their campaigns, presented environmental programs in isolation from the serious economic and social problems which confronted most citizens. Decreases in real wages, high inflation rates, unemployment, and other social and economic problems have pushed environmental issues down on nearly all agendas. One result has been that green parties were voted out of the Parliaments because their highly political programs simply failed to recognize other significant needs or to integrate social, environmental, and economic goals.

6. Clear evidence that solutions to environmental problems depend heavily on acceptable progress in economic development has resulted in less attention being given to political arguments for environmental protection. An active "ready to pay" attitude in the citizenry must be stimulated in order to successfully implement environmental programs. Instead, environmental groups and politicians have usually exhibited a "wait and request" attitude. Environmental problems have become obscured by social and economic difficulties. Environmental protection has turned out to be a complex and demanding task in this region. Thus, environmental issues have ceased to be perceived as a vehicle for a quick political career.

7. One lesson learned from the above-described experience is that a new perspective for dealing with environmental concerns will have to be established. Environmental thinking and activities should focus on practical achievements. Political debates on environmental needs should be more professional and solution-oriented. These debates should also be supported by economic arguments which show the impacts of proposed actions on social welfare and economic development.

Economic changes

8. Democratization of the political systems in CEE has instigated a liberal path in economic policy. The CEE countries are attempting to restore market mechanisms based on private ownership and profit maximization. A successful transition to a well-established 'social market economy' (no-nonsense capitalism) is requiring a radical restructuring of the existing industrial systems as well as improvements in technology and managerial practices. An influx of foreign capital, technology, and experiences will be crucial in order to accelerate the transition process.

9. The cost of introducing a liberal market-oriented economy, after years of bureaucratic market control, has to be paid by all social sectors, and primarily companies and individuals. Implementing economic changes also has environmental consequences. The decrease in physical output of heavy industry, due to competition and market constraints, has caused an overall reduction in pollution discharges by about 20-30 percent. Restructuring of industrial sectors has also resulted in pollution reduction due to the retrofitting of existing plants and replacement of obsolete production technologies. Furthermore, increased market prices for energy and raw materials, as well as the implementation of policies gradually withdrawing government subsidies from industrial production, have created incentives for more efficient production practices and resulted in reduced waste discharges.

10. The CEE countries are also relying upon the privatization of state owned enterprises for increased efficiency and productivity. Many countries have recognized that the privatization of production facilities should go hand in hand with solving past and future environmental problems. The rule of law should be re-established for dealing with past pollution and regulating future discharges of contaminants to the environment. Pollution problems must not be ignored, but rather addressed in line with the "polluter pays" principle. For this principle to be effectively implemented a well-established enforcement scheme is required. The realization that privatization is a complex and inter-governmental issue should be seen as a positive signal with respect to environmental protection as it provides the opportunity to include environmental considerations in the process.

11. As free markets develop in the region its citizens are fulfilling dramatically expanded roles as consumers. Economies are increasingly driven by market incentives, where the demand for products and services guides production strategy. Thus, consumer choice now significantly influences the state of the environment, contributing to environmental improvements and environmental degradation. The net impact of economic reforms on the environment will greatly depend on conscious consumer preferences. This should be recognized as a new and important phenomenon in the region, the implications of which need to be properly addressed.

12. The positive environmental consequences of economic changes occurring in the region have been offset by a variety of adverse impacts resulting from these same changes. Market reforms have set free a strong entrepreneurial spirit in the region and a great many small, aggressive businesses have rapidly appeared. To this point such development has often proceeded in a largely unregulated fashion. Landscapes have been marred and natural resources abused in the process. In such circumstances appropriate physical (land-use) planning laws should be formulated and enforced, however, such regulations have apparently been forgotten by many governments. With most commercial ventures, both large and small, now being forced to achieve economic viability, maximization of revenues has become the dominant motivating factor. The "profit now" attitude has become pervasive among much of the business community and poses very real challenges for environmental protection in the CEE countries. As prices for raw materials and energy rise, competition intensifies, and state subsidies disappear, incentives to produce as cheaply as possible grow and environmental protection expenditures are sometimes foregone, with the costs of environmental degradation being externalized onto society. Moreover, short-term thinking and planning have become common as pressures to profit build, and as politicians, government officials and citizens try to cope with the immediate day-to-day stresses of the transformation. Such an emphasis on the here and now is unsettling as it sacrifices existing natural capital and allows environmental liabilities to mount and become evermore costly.

13. Measures aimed at creating a competitive economic system in the CEE countries have resulted in some negative social consequences as well. The most visible and acute are the relatively high unemployment rates and the decreases in real income. Cuts in environmental programs have been suggested in some cases to balance economic and social requirements for financing. Mutually beneficial, positive relationships between social and environmental programs have not been examined and assessed in the CEE countries. The possibility of such relationships warrants concerted attention as many types of environmental protection efforts are labor intensive, and such efforts could provide "win-win" solutions to both environmental and employment dilemmas.

Social changes

14. The new democratic and open societies are allowing and contributing to the creation of different consumption patterns. Consumers now have the possibility to purchase goods and services which they previously did not have access to. Wide-spread and aggressive advertising of new goods and services (a recent phenomenon in the CEE countries) is engendering western values and consumption habits. This is leading to visible, negative social changes and environmental impacts. For example, the rapid growth in private passenger car use has resulted in the existing transportation infrastructure being overwhelmed. This is requiring the construction of expensive new roads and highways, and thus western transportation practices, widely recognized as unsustainable, are being mimicked. Public transport is being replaced by private transport, and commercial transport is shifting to the highways as goods are increasingly shipped by truck instead of train. To complicate matters, the services of the more economically efficient and environmentally friendly mass transit systems currently existing in the region are becoming evermore expensive and less convenient as State subsidies are cut and funds diverted towards the development of automobile infrastructures.

15. The results of another change in consumer behavior can be seen along streets and in wild garbage dumps throughout the region: plastic bags and bottles, one use razors, cardboard/foil drink containers, and innumerable other forms of short-life disposable packaging. New access to, and booming popularity of western products featuring throwaway packaging have created an almost entirely new, and rapidly growing waste stream. Domestic producers, trying to keep up with foreign competition and to supply new local demand, have also begun to utilize these materials. This waste stream, laden with plastics and much less bio-degradable than traditional household waste of the region, is putting a major burden on the already underdeveloped and overburdened waste management systems of the countries. In many other ways as well, CEE citizens are adopting consumption patterns along the lines of yesterday's western standards, and they are already encountering the environmental problems created by such models.

16. While the former political systems of the region did not succeed in creating egalitarian societies, the social stratifications which did exist were probably not as extreme or conspicuous as those being created today in the CEE by the establishment of capitalism. Additionally, today's social strata are being defined according to source and level of personal income. Under capitalism, a very visible wealthy upper class, and an equally visible poor lower class is developing. In the CEE, the magnitude and overtness of such extremes in wealth, coupled with previously unexperienced employment and economic insecurity, are inspiring sentiment to reintroduce extensive social welfare guarantees like those associated with the previous political system. The implementation of such guarantees, while defensible, can adversely effect environmental programs as they require a diversion of funds from State budgets which are already under strain in the region.

17. The average CEE citizen is also facing serious economic difficulties. Heretofore unknown (officially) unemployment and job insecurity, falling real wages, and high inflation have pushed issues of economic welfare to the top of nearly all agendas. People are pre-occupied with their day-to-day needs and are not prepared to make judgements based on their long term needs, including that of a sound environment. Citizens are more concerned with price increases and reductions in working places than environmental protection needs. Environmental preservation is simply not a high priority for many people, even though political changes have set the stage for citizens to be more involved in determining the future of their societies. The decrease in public interest with respect to environmental protection activities is limiting the impact of public participation, which should otherwise promote proactive pro-environmental behavior. The potential and importance of public participation itself are still not fully appreciated or utilized in the region and training possibilities in this area go untapped. As with many other issues, strong leadership is crucial at this time, especially within citizen organizations, if the full benefits of participatory democracy are to be realized and environmental goals given their due commitment.

II. Assessment of environmental assets and damages

Environmental assets

18. The heritage of the past system looks more favorable if measured by the environmental assets which are still intact in the CEE countries. Environmental assets are those natural resources which are, or can be, used for economic activities. Mineral resources, forests, arable land, etc., constitute a significant value. The environment provides assets which are part of the national wealth. Apart from mineral deposits, energy sources, fertile top soil, clean water, and forest resources, there are additional assets such as scenic landscape, hospitable climate, genetic diversity, and others which can contribute to economic prosperity.

19. Certain features of the previous political and economic system, such as strict centralized authority and forced movements of some local populations, have left large areas of the CEE region untouched by industrial activity and sparsely inhabited. Traditional, low input and labor intensive agriculture (private or collective) allowed for the largely undisturbed development of natural ecosystems. Pristine nature is still estimated to cover about 30 percent of the area in the CEE countries. This region contains the greatest biodiversity in Europe.

20. Preservation of European biodiversity located in the CEE region is a task of international importance. It can't be accomplished solely by the efforts of countries in the CEE region. A subsidiary principle should apply to the preservation of environmental heritage because of its common importance. Those who benefit from the preservation of biological richness in the CEE countries should contribute to the opportunity costs which are incurred due to restrictions imposed on economic activities in the region. Nature restoration and conservation is a labor intensive activity. Therefore, it can be an important source of employment, new opportunities for which are urgently being sought throughout the CEE countries. In addition, steps toward the responsible use of the environment (a precautionary principle) by industry can prevent the creation of environmental refugees. This issue is extremely important in the CEE region as several hot spots exist posing severe environmental threats to local residents (i.e. mining areas, chemical and metalworking facilities, and power plants including obsolete nuclear installations).

Environmental damages

21. Apart from environmental assets that include pristine areas, the past economic system left environmental damages which create the region's liabilities to nature. The evidence of environmental degradation harmful to human health was used as a political argument against the previous political system. The previous system's emphasis on heavy industry and lack of advanced technologies, along with the substantial absence of a conservation ethic in society and government restrictions on pro-environment movements which did exist, resulted in some areas experiencing severe air, water and soil pollution of varied and numerous types. The assessments of material losses caused by excessive pollution discharges were the first evidence of costs incurred from this degradation. While the legacy of these old problems remains to a large extent, new damages resulting from changes associated with the transition period, such as those related to growing amounts of communal waste, the rapid increase in automobile use, and largely unregulated new commercial development, pose emerging challenges to be overcome.

22. More attention is being given to environmental hot spots than to environmental assets. As a result, the picture of environmental catastrophe in the CEE countries is widespread. Environmental hot spots also gained more attention and financial assistance because of being located in highly populated industrial areas. However, this approach should not compromise the importance of preserving pristine natural areas. Protection of pristine nature should especially be considered a high priority at this time because of the trend to locate new industries in these areas.

23. The demand for natural resources decides, to a certain extent, how much the environment will be changed. The use of modern technology reduces the impact of industrial activities on the environment. This is a promising "at source" type of tool for environmental protection. Management measures that mobilize and discipline the use of natural resources and promote waste minimization and recycling practices are additional technology-based solutions. This way of acting and thinking is still not a habit in the CEE countries. "Responsible care" programs declared by some western companies, as well as other self-regulating environmental protection programs (voluntary environmental code of conduct), are not employed by the same companies while operating in the CEE countries. Damages are going to accumulate. For example, these countries are still far from achieving the goal of a net reduction in wastes disposed to the environment.

24. The amount and impact of wastes released into the environment depends on the scale and method of production and on its environmental intensity. The lesson learned from the transition period is that the intensity factor should be examined first, before considering the scale of production. This approach can help to combine environmental and economic concerns. This can also be the starting point from where the CEE countries can begin to undertake future development as a sustainable process.


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