100. The special arrangements made to establish State Funds for Environmental Protection illustrate the urgent need for a stable flow of funds for environmental protection measures. However, it also demonstrates a lack of integrity in the overall economic and environmental programs. Funds earmarked for environmental protection are excluded from any use except direct environmental improvements. Thus, direct environmental investments are considered a higher priority than sustainable investments which satisfy and integrate vital economic and environmental needs simultaneously.
101. The separate financial system which provides funds for environmental improvements is a consequence of the segregated approach to economic and environmental considerations. As the idea of sustainable development is still in its initial phase, a special system for funding priority environmental projects is justified, and will continue to play an important role in the CEE countries during the transition period.
102. Procedures for disbursing and replenishing environmental funds need to be improved. Priorities should be based on an established environmental policy, but realistic and balanced environmental policies remain pending in most of the CEE countries. The management of State Environmental Funds also requires improvement. Professional, financial management backed by an in-depth understanding of environmental problems are the most frequently mentioned needs in this regard. A stable staff and transparent procedures for the operation of the State Funds are highly recommended by experts, as well.
104. Economic instruments are also seen as a tool for motivating companies to reduce pollution. In the CEE, however, environmental charges and non-compliance fees are often ineffective as incentives to reduce pollution because it is usually cheaper for polluters to simply pay the fines than to implement abatement measures. The bigger the savings from not treating waste, the lower the incentive role economic instruments play. Experts assess that charges imposed for pollution discharges in the CEE countries are many times lower than the waste purification costs. Thus, there is little incentive to reduce pollution from a company's financial point of view.
106. The general concept of funding environmental protection needs to be changed in the CEE countries. Environmental protection measures should be paid for by those who benefit from using the environment for their business purposes. Users of the environment must be more involved in and responsible for solving local environmental problems. Communities should also be prepared to provide funds for environmental protection activities.
107. The "polluter pays" principle must be fully adopted and enforced in the CEE countries. Income generated at the expense of the environment should be reverted to restore the damage. The polluter pays principle should improve the impact of economic instruments on investors' decisions. It should also allow for profitable production, while eliminating negative environmental consequences of that production.