Developing a Priority Environmental Investment Programme...

Developing a Priority Environmental Investment Programme

for South Eastern Europe

THE REGIONAL ENVIRONMENTAL CENTERfor Central and Eastern Europe

Written byJoanna Fiedler, Grzegorz Moorthi

and Lubomir Paroha

Szentendre, HungaryAugust 2003

Funded by the European Commission

THE REGIONAL ENVIRONMENTAL CENTERfor Central and Eastern Europe

Developing a Priority Environmental Investment Programme

for South Eastern Europe

About the REC

The Regional Environmental Center for Central and Eastern Europe (REC) is a non-partisan, non-advocacy, not-for-profit international organisation with a mission to assist in solving environmental problems in Central and EasternEurope (CEE). The center fulfils this mission by promoting cooperation among non-governmental organisations, govern-ments, businesses and other environmental stakeholders, and by supporting the free exchange of information and publicparticipation in environmental decision-making.

The REC was established in 1990 by the United States, the European Commission and Hungary. Today, the REC islegally based on a charter signed by the governments of 28 countries and the European Commission, and on an interna-tional agreement with the government of Hungary. The REC has its head office in Szentendre, Hungary, and countryoffices and field offices in each of its 15 beneficiary countries which are: Albania, Bosnia and Herzegovina, Bulgaria,Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, FYR Macedonia, Poland, Romania, Serbia andMontenegro, Slovakia and Slovenia.

Recent donors are the European Commission and the governments of Albania, Austria, Belgium, Bosnia andHerzegovina, Canada, Croatia, the Czech Republic, Denmark, Estonia, Finland, Germany, Hungary, Italy, Japan, Latvia,Lithuania, FYR Macedonia, the Netherlands, Norway, Poland, Serbia and Montenegro, Slovenia, Sweden, Switzerland,the United Kingdom, and the United States, as well as other inter-governmental and private institutions.

The entire contents of this publication are copyright©2003 by the Regional Environmental Center for Central and Eastern Europe

No part of this publication may be sold in any form or reproduced for salewithout prior written permission of the copyright holder

ISBN: 963 9424 38 2

Published by:The Regional Environmental Center for Central and Eastern Europe

Ady Endre ut 9-11, 2000 Szentendre, HungaryTel: (36-26) 504-000, Fax: (36-26) 311-294, E-mail: [email protected], Website: <www.rec.org>

This and all REC publications are printed on recycled paper or paper produced without the use of chlorine or chlorine-based chemicals

The views of the authors in this publication do not necessarily reflect the views of relevant governmental organisationsor the Regional Environmental Center of Central and Eastern Europe. The presentations of national studies and best

practice cases reflect the opinions of national experts.

Executive Summary 5

Authors and Acknowledgements 9

Chapter 1: Introduction 11

REReP and the REReP initiative 11

Scope of the document 11

Structure of the document 12

Chapter 2: Background Information 13

Political and economic situation 13

General environmental situation 15

Environmental financing in SEE 20

Conclusions 22

Chapter 3: Methodology 25

Regional priorities 25

List of priority projects 27

Process of PEIP development 30

Chapter 4: Regional Environmental Priorities 33

Environmental indicators 33

Hot spots 49

National environmental priorities 59

Set of environmental priorities 66

Chapter 5: List of Priority Investment Projects 69

Collection of national priority investment projects 70

Clustering projects into programmes 73

Conclusions 82

Chapter 6: Overall Conclusions 83

Main achievements 83

Main limitations 84

The way forward 84

D E V E L O P I N G A P R I O R I T Y E N V I R O N M E N T A L I N V E S T M E N T P R O G R A M M E F O R S O U T H E A S T E R N E U R O P E 3

Annex 1: Logical Framework for theMethodology of the PEIP Development 85

Annex 2: Project Identification Form for Waste Sector Projects 87

Annex 3: Full List of Hot Spots 93

Annex 4: Results of the Prioritisation Exercise 123

Annex 5: Environmental Indicators Used in Chapter 4 135

References 138

Assessment of Institutional and Policy Framework for Priority Environmental Investments in South Eastern Europe 139

Chapter 1: Introduction 139

Chapter 2: Methodology 140

Chapter 3: Regional overview of national assessments 142

Chapter 4: Regional recommendations 157

Appendix 159

4 D E V E L O P I N G A P R I O R I T Y E N V I R O N M E N T A L I N V E S T M E N T P R O G R A M M E F O R S O U T H E A S T E R N E U R O P E

This report was prepared by the RegionalEnvironmental Center for Central and Eastern Europewithin the framework of the Regional EnvironmentalReconstruction Programme for South Eastern Europe(REReP). As the main output of the REReP 1.2 project,Assistance in Priority Environmental InvestmentProgramme (PEIP) Development and Implementation,it presents the results of the PEIP’s development to date.The PEIP is a regional institutional strengthening andcapacity building tool that provides technical assistancein strategic environmental investment planning.

The project was financed by the EuropeanCommission. The main aims of this report are to presentthe SEE regional environmental priorities, to present thelist of priority environmental investment projects for theSEE region, to identify the conclusions and lessonslearned from the PEIP’s development and to set the wayforward for future activities leading to the implementa-tion of the PEIP. The PEIP is foreseen to be of primaryinterest to SEE decision makers responsible for thestrategic environmental investment planning, as well asto donors and international financing institutions (IFIs)as a support tool that gives a regional context to invest-ment planning.

The PEIP covers the SEE countries of Albania,Bosnia and Herzegovina, Croatia, FYR Macedonia, andSerbia and Montenegro. Data and information for thisreport were collected at the country level for all coun-tries except for Serbia and Montenegro, where separatedata and information were collected for the Republic ofSerbia, the Republic of Montenegro, and Kosovo (terri-tory under UN interim administration).

SEE countries have struggled with the legacy of thebreak-up of the former Yugoslavia and numerousarmed conflicts. The region is highly fragmented andcharacterised by a complex economic and social situa-tion. The launch of the Stability Pact for South EasternEurope in 1999 and the Stabilisation and Associationprocess has given the SEE countries a perspective forfuture integration into EU structures. From an econom-ic point of view none of the SEE countries are regardedas a functioning market economy.

Air quality in the region has benefited from the clo-sure or diminished use of many industrial facilities.However, those facilities still in use generate significantpollution from the use low quality fuel, the lack end-of-

pipe treatment and the highly intensive use of energy. Pressures from the waste sector are caused mainly

by old, contaminated industrial sites, the lack of facili-ties for hazardous waste management, the use of land-fills (many unsanitary) as the main waste managementpractice, the high number of illegal dumpsites and thelack of waste management facilities, including recyclingand composting facilities.

Water supply systems in SEE are often underdevel-oped, which results in a low quality of supplied water.Sewage systems are also underdeveloped, resulting indirect discharges of untreated water and a lack of waste-water treatment facilities for both municipal and indus-trial sewage.

In recent years, SEE countries have been dependentalmost exclusively on international assistance providedin relation to the financing of environmental investmentprojects. In the second half of the 1990s, this assistancegrew, and individual bilateral donors provided thelargest share of environmental assistance channelled tothe region.

Taking into account the existing situation in the SEEregion, a relevant methodological approach was need-ed to develop the list of SEE environmental prioritiesand the list of priority environmental investment proj-ects. The project was implemented in close cooperationwith relevant ministries of environment. Focal pointsfrom these ministries approved the methodological con-cept, as well as all data and information about theircountries to be analysed and presented in this report.The SEE regional environmental priorities and the pri-ority environmental investment projects were alsoapproved by the focal points.

The set of SEE regional environmental priorities wascompiled from the analyses of the environmental indi-cators, which compared the environmental pressuresfrom different indicators. The environmental indicatorsused are based on the core set of indicators from theOrganisation of Economic Co-operation andDevelopment (OECD). The averages for the SEE regionin relation to the particular indicator were then com-pared with a baseline average for the Visegrad countries(the Czech Republic, Hungary, Poland and Slovakia).The results of the gap analyses outlined the priorityenvironmental sectors for the SEE region (i.e. whereenvironmental pressures are highest). In addition, hot


Executive Summary

spots were identified to pinpoint the geographic loca-tion of environmental problems in the SEE region.Lastly, national environmental priorities of the SEEcountries were collected in order to see whethernational policy responses take into account the currentand actual political context.

The list of priority environmental investment proj-ects was compiled through the following steps:

• collecting investment projects on a unified projectidentification form for projects in the air, water andwaste sectors;

• screening the projects’ eligibility and prioritising eli-gible projects; and

• clustering projects into the investment programmes.

Several stakeholders were involved in developingthe PEIP. The core project team was responsible for theoverall management of the project, as well as for devel-oping the methodology and results and presenting theresults. Focal points from the ministries of environmentwere active members of the process in both facilitatingaccess to the relevant information for the local consult-ants, and in approving the methodology, data andinformation to be presented and the results of theanalyses. Local consultants in all SEE countries wereresponsible for providing country-specific data andinformation in cooperation with the ministries of envi-ronment. REC country offices were responsible forfacilitating communication between the core projectteam and the stakeholders and in some cases for col-lecting data and information.

Donor and IFI representatives were involved in theprocess in two ways. On one hand, the project teamtook into account the donors’ preferences and prac-tices, and on the other hand, donor and IFI representa-tives gave their feedback on the results of the PEIP’sdevelopment and identified and discusses the futurepossible activities in order to implement the PEIP.Involving public representatives was also an importantpart of the development process. The results of thePEIP’s development have been presented to severalNGOs in the region, and they provided their feedback.In order to communicate effectively with all stakehold-ers involved, team meetings, regional meetings andmissions to the SEE countries were organised.

As mentioned above, the first component of the SEEregional environmental priorities was the identificationof the priority SEE environmental sectors. The follow-ing environmental indicators have been analysed; car-bon dioxide, sulphur dioxide (SO2), nitrogen oxides,municipal solid waste generation, industrial waste gen-eration, hazardous waste generation, and sewage treat-ment connections. The indicators were analysedaccording to gross domestic product (GDP) and percapita denominators. Analyses of the indicators and

subsequent gap analyses between the SEE region andVisegrad countries showed that the highest dispropor-tions in environmental performance can be noted forSO2 emissions, municipal waste generation and sewagetreatment connections. These gaps were used to deter-mine the regional SEE environmental priority sectors.

In the process of collecting hot spots for the SEEregion, a total of 238 environmental problems were col-lected, out of which 143 were located on maps as hav-ing multiple problems connected to one and the samelocation. The highest number of hot spots was collect-ed for Bosnia and Herzegovina (39) and the lowest forKosovo (territory under UN interim administration) (8)and Albania (9). Forty-five percent of all hot spots wererelated to the water sector, 31 percent to the waste sec-tor and 24 percent to the air sector. The majority of air-sector hot spots were located in Serbia, Bosnia andHerzegovina and FYR Macedonia. The majority ofwaste-sector hot spots were located in Albania, Bosniaand Herzegovina and FYR Macedonia, and the majorityof water-sector hot spots were located in FYRMacedonia, Croatia and Serbia. A total of 26 hot spotsrelated to the nature conservation and biodiversitywere also collected.

An analysis of the national priorities in relation to theair, waste and water sectors reveals that the individualcountries have adopted quite different approaches tothese concerns. In the case of the air sector, all countriestreat all air-sector pollutants equally, but the countriesgive different priorities to different types of pollution. Forexample, in Albania urban road traffic is seen as the toppriority sector, while in FYR Macedonia reducing pollu-tion from industry, energy production and the transportsector is a top priority. The national environmental pri-orities of Bosnia and Herzegovina contain no investment— related priorities. Montenegro lists energy efficiencyand clean technologies as a priority.

In the case of the waste sector priorities, the coun-tries give industrial and municipal waste managementequal importance. Serbia uses human health risk as acriterion for developing and implementing projects forwaste dumps. In Albania, hot spots are indicated as apriority, while Croatia and Serbia indicate hazardouswaste as a priority. Bosnia and Herzegovina and Croatiaidentify specific locations for priority investment proj-ects in the waste sector.

In the national water-sector priorities, the countriestreat all pollutants equally. Urban wastewater treatmentis a priority for all countries. Bosnia and Herzegovina,Serbia and Kosovo all consider water supply a priority.Albania, and Bosnia and Herzegovina identify speciallocations for priority investment projects.

The compiled list of priority environmental invest-ment projects gives a regional picture of investmentneeds at this stage of the PEIP’s development. Pipelinesof investment projects enable the prioritisation process

E X E C U T I V E S U M M A R Y


to be conducted. It is believed that a harmonised invest-ment process with priority investment projects identi-fied is a precondition for attracting external funding andfor supporting national investment planning.

National investment project ideas were compiled forthe first time ever for the environmental sector in SEEcountries. The process of developing the list of priorityenvironmental investment projects was therefore amajor learning exercise for the SEE countries on plan-ning investments, identifying projects, gathering rele-vant data on projects, developing criteria for prioritisa-tion, programming and prioritisation.

As a result of the project collection process, 18 proj-ects were submitted from Albania, eight from Bosniaand Herzegovina, 14 from Croatia, 31 from FYRMacedonia, 17 from Serbia, 8 from Montenegro and sixfrom Kosovo (territory under UN interim administra-tion). The majority of projects are in the early stages ofdevelopment, and therefore it is more appropriate totreat them as project ideas.

The majority of projects were submitted for thewater sector (44), followed by the waste sector (35) andthe air sector (23). After conducting the prioritisationexercise, the high priority projects came to represent 77percent of all projects submitted. According to the crite-ria applied, the focus in the prioritisation exercise wasplaced on strategic criteria (strategic, geographical andhealth criteria — 45 percent of total weight assigned). Itcan be therefore concluded that the high priority proj-ects submitted target the most demanding environmen-tal problems of the region from a strategic point of view.From the sectoral perspective there are 17 high priorityprojects for the air sector, 26 for the waste sector and 36for the water sector.

Four major programmes were identified:

• air pollution control and monitoring;

• efficient energy use and conservation;

• integrated solid waste management; and

• reconstruction and modernisation of water andwastewater systems.

The abovementioned programmes were dividedinto seven sub-components, into which priority envi-ronmental investment projects were clustered.

The results of the development of the PriorityEnvironmental Investment Programme show that its mainachievements are related to the set of regional environ-mental priorities and the list of priority investment proj-ects, which were developed for the SEE region for the firsttime on a regional scale and based on a unified method-ology with active participation from stakeholders. Thisregional picture is particularly important when looking atthe contributions of the SEE region to the pressures on theenvironment in Europe and, more generally, to the pres-

sures on a global scale. The unified approach towardsstrategic investment planning highlighted the regionalaspect of the environmental protection over the politicaland historical divisions. It also provided objective, long-term strategic directions in the investment planning forthe SEE region, which shall complement the nationalinvestment planning. The agreed criteria and system ofweights and scores provided an objective and systematicapproach towards priority setting.

The process of developing the PEIP has played animportant role in stimulating information exchange andcooperation between SEE countries. The regional and,consequently, transboundary context of investmentprojects seems to favour the intensification of coopera-tion between particular countries. It is important to notethat the results of the PEIP’s development were linkedto the intensive efforts of SEE countries aimed at achiev-ing practical results. Therefore the PEIP is an excellentopportunity for networking activities on the road todeveloping effective mechanisms for identifying andimplementing environmental initiatives.

It can be concluded that the results of the PEIP’sdevelopment are a good basis for long-term investmentplanning, especially in relation to the challenges con-nected to the Stabilisation and Association process andthe implementation of EU requirements.

At the same time, the main limitations that influencedthe development of the PEIP should be kept in mind.These hurdles include the lack of reliable data and infor-mation on proposed investment projects. It also provedimpossible, due to the limited time and resources avail-able, to verify the information provided by the invest-ment projects proponents. These limitations influencedthe prioritisation exercise, where particular criteria couldnot be used at this stage of the process. It should benoted that the results of the PEIP’s development, whichare presented in this report, are part of a long-termprocess of capacity building for strategic investmentplanning. From this standpoint, the findings should notbe treated as final, but rather as a summary of the exist-ing information at this very moment of the process,which sets the way forward for future activities related tothe programme’s implementation.

Future activities regarding the PEIP’s implementa-tion should be linked to the Stabilisation andAssociation process, which aims to bring the SEEcountries closer to integration into EU structures.From an environmental investment point of view, thefocus shall be placed on the investments related to thekey investment-heavy EU directives. Implementationof these directives will require the majority of finan-cial resources allocated for environmental reform.Several areas of activities in the field of capacity build-ing and institutional strengthening have thereforebeen identified, including:



• providing training on investment planning in rela-tion to the key EU heavy-investment directives;

• transferring best practices and lessons learned fromthe accession countries on implementing the keyEU heavy investment directives;

• assisting the upgrading of the list of priority invest-ment projects for SEE countries;

• furthering work on identifying hot spots and formu-lating project ideas;

• providing information on available financial assis-tance through the development and disseminationof SEE donor profiles;

• assisting the SEE countries’ efforts to exchangeinformation on best practices of implementing eco-nomic instruments;

• providing assistance on the instructions for launch-ing and implementing the investment programmes;

• facilitating the regional exchange of information oninvestment planning and stimulating transboundaryinvestment activities.

• providing assistance to the project proponents forbetter formulation of investment project ideas;

• assisting the development of domestic financingmechanisms, which need to be developed by gov-ernments in order to support environmental expen-ditures, especially in environmental infrastructuredevelopment; and

• providing capacity building for implementing pub-lic-private partnerships.

The future activities of the PEIP should also belinked to other processes taking place on the nationallevel, which include developing national environmen-tal financing strategies, creating a market for environ-mental services and identifying project ideas on nation-al and local levels.

Together with providing capacity building assis-tance on a national level, a bottom-up approach shouldbe employed to enable local levels of administration(local governments) to participate throughout the PEIPprocess. It is important to provide training to localadministrative levels on investment planning, as themajority of the investments will be implemented on alocal scale.



Joanna Fiedler (project manager) of theEnvironmental Policy Programme at the REC, GrzegorzMoorthi (project team consultant) and Lubomir Paroha(project team consultant) prepared this report.

It was prepared in close cooperation with the min-istries of environment of the SEE countries. For theiractive involvement in the process of information gath-ering and assessment, the authors wish to give specialthanks to:

• Besnik Baraj, Narin Panariti and Mirela Kamberifrom the Ministry of Environment in Albania;

• Fethi Silajdzic and Esma Kreso, advisers to theFederal Ministry of Physical Planning andEnvironment of the Federation of Bosnia andHerzegovina;

• Mirjana Papafava, Dubravka Prelec and RolandGajsak from the Ministry of EnvironmentalProtection and Physical Planning in Croatia;

• Dragoljub Matovski and Konstantin Siderovski fromthe Ministry of Environment and Physical Planningof FYR Macedonia;

• Luka Mitrovic, Milenko Perovic, Ana Pajevic andDragutin Grgur from the Ministry of Environmentand Physical Planning of the Republic ofMontenegro and Valentina Mileusnic Vucic, JelenaProdanovic and Slavica Lekic from the Ministry forProtection of Natural Resources and Environment ofthe Republic of Serbia; and

• Tush Markaj, Sebiha Ahmeti, Luka Manunta andBehxhet Shala from the Ministry of Environment andSpatial Planning in Kosovo (territory under interimUN administration).

We would like to thank Anna Bramwell and AndrewMurphy of the European Commission for supportingthis project and for their continuous advice during theproject’s implementation.

For compiling data and information from their coun-tries, we would like to thank our local consultants:

• Lirim Selfo from Albania;

• Jasminka Bjelavac and Ramiza Alic from Bosnia andHerzegovina;

• Jelena Budak and Srdjan Selanec from Croatia;

• Gjoko Dinev and Pece Nedanovski from FYRMacedonia;

• Marina Markovic and Zoran Njegovan from Serbiaand Montenegro; and

• Driton Balaj from Kosovo (territory under interimUN administration).

We would like to thank to the following REC staff:

• Oreola Ivanova (head of the Environmental PolicyProgramme and project director) for her guidanceand valuable comments throughout the projectimplementation; and

• REC country office staff from Albania, Bosnia andHerzegovina, Croatia, FYR Macedonia, Serbia andMontenegro and Kosovo (territory under interim UNadministration) for their involvement in compilingdata from their countries.


Authors and Acknowledgements

This report has been prepared by the RegionalEnvironmental Center for Central and Eastern Europe(REC) within the framework of the RegionalEnvironmental Reconstruction Programme for SouthEastern Europe (REReP). It is the primary output of theREReP 1.2 project Assistance in Priority EnvironmentalInvestment Programme (PEIP) Development andImplementation. This report presents the results of thePEIP’s development.

The PEIP is a regional tool for institution strengthen-ing and capacity building that provides technical assis-tance in strategic environmental investment planning.

This report intends to:

• present regional environmental priorities for SouthEastern Europe (SEE);

• present the list of priority environmental investmentprojects for the SEE region;

• identify the conclusions and the lessons learned forthe SEE countries on strategic environmental invest-ment planning; and

• set the way forward for the actions leading to theimplementation of the Priority EnvironmentalInvestment Programme.

This report is foreseen to be of primary interest to:

• SEE decision makers responsible for strategic envi-ronmental investment planning as a supportive toolpresenting the regional context of investment plan-ning; and

• donors and international financial institutions (IFIs)as an important tool supporting the design of theirassistance programmes for the SEE region.

REReP and the REReP initiativeThe Regional Environmental Reconstruction Programme

for South Eastern Europe (REReP) was endorsed bythose SEE ministers of environment who were membersof the Stability Pact for South Eastern Europe1 in January2000. It was widely acknowledged at the time that aftera decade of war, instability and slow post-communistreform in the Balkans, a regional approach was neededto foster and facilitate reconstruction efforts and coop-

eration between the countries. Environmental coopera-tion is considered a politically neutral area for formingcommon agreements and transboundary networks.

The environment in SEE is seriously neglected. It hassuffered from war, insufficient institutional structures,decaying industrial infrastructure and years of uncheckedpollution. Integrating environmental considerations intothe regional reconstruction process was seen as a priori-ty in the goals of the Stability Pact, and this priority isreflected in the commitment of the SEE governments toimplement the programme. In the framework of REReP,the donor community provides funding to specific proj-ects in environmental priority areas.2

The first priority area — institutional strengtheningand policy development — is focused on assistance inbuilding credible and democratic institutions as a pre-condition for smooth integration of the Balkan coun-tries into the international forum. It was noted thatstrong national institutions play a critical role in deter-mining the success of foreign aid programmes and thattechnical measures like investment projects are onlysuccessful if management capacity has been establishedat various levels within the country.3 The REReP 1.2 proj-ect is part of the first priority area.

The main objectives of the project are to providetechnical assistance in strategic environmental planningand integrated financing in SEE, and to strengthen theinstitutional capacity of SEE countries in this field.REReP 1.2 is a long-term process of institutionalstrengthening and capacity building.

Scope of the documentThe report covers the following countries: Albania,

Bosnia and Herzegovina,4 Croatia, FYR Macedonia,Serbia and Montenegro5 and Kosovo (territory underinterim UN administration).

These countries are referred to as South EasternEuropean (SEE) countries6 in this report. The infor-mation and data presented in this report were com-piled by local consultants and cross-checked andapproved by the ministries of environment of the rel-evant SEE countries.

The results of the PEIP’s development are shown inthis report, including SEE regional environmental prior-ities and a list of priority environmental projects for the


Chapter 1Introduction

SEE region. The report then lists conclusions and futureactions needed to implement the PEIP.

Structure of the documentThe structure of the report is as follows:

• Chapter 1 presents the aims of the report followedby the scope and structure of the report.

• Chapter 2 outlines the political, economic and envi-ronmental situation in the SEE region, as well as thesituation regarding environmental financing.

• Chapter 3 presents the methodology for identifica-tion of the regional environmental priorities and thelist of priority environmental investment projects.

• Chapter 4 presents the regional environmental pri-orities of the SEE region.

• Chapter 5 presents the list of priority environmentalinvestment projects.

• Chapter 6 outlines the overall conclusions, includingmain achievements, main limitations and the wayforward.

• Annex 1 presents the LogFrame for the PEIP development.

• Annex 2 presents an example of the project identifi-cation form for waste projects.

• Annex 3 presents the full list of hot spots.

• Annex 4 presents the results of the prioritisationexercise.

• Annex 5 sumarises the data used in this report.

Endnotes

1 The Stability Pact was established in 1999 by the international com-munity at the EU’s initiative. It seeks to encourage stability in SEEthrough support for regional projects and is implemented throughworking tables. The initiative was addressed to all SEE countries,including Bulgaria and Romania. Serbia and Montenegro (thenYugoslavia) was allowed to join the Pact only in October 2000, fol-lowing the collapse of its autocratic regime and after demonstrating astrong commitment to implement structural reforms.

2 Initially there were five priority areas within REReP: (1) institutionalstrengthening and policy development; (2) environmental civil societybuilding; (3) emergency assistance for environmental infrastructure andremediation of war damage; (4) reinforcement of existing cooperativemechanisms and structures, and development of regional cross-borderprojects; and (5) support to priority national and local environmentalprojects. In 2001 the priority areas were revised to reflect the new polit-ical situation in the region in relation to the Stabilisation andAssociation process. The areas are now: institution building, support toenvironmental civil society, support to existing environmental regionalcooperation mechanisms and cross border projects, as well as thereduction of environmental health threats.

3 REC 2001.

4 There are two entities in Bosnia and Herzegovina: the Federation ofBosnia and Herzegovina, and Republika Srpska. In this report all infor-mation refering to Bosnia and Herzegovina covers both entities.

5 For the purpose of this report, data was collected separately for theRepublic of Serbia, the Republic of Montenegro and Kosovo (territoryunder UN interim administration). The results are therefore presentedin sub-chapters of the country Serbia and Montenegro.

6 Although Bulgaria and Romania are often considered within the regionof South Eastern Europe and are part of the REReP Programme, they arenot covered in this report because their environmental investments aredirectly focused on the EU accession process.

C H A P T E R 1 : I N T R O D U C T I O NS T R U C T U R E O F T H E D O C U M E N T


This chapter provides background information aboutthe countries of South Eastern Europe (SEE), including:

• the political and economic situation;

• the general environmental situation; and

• the environmental financing situation in relation toboth domestic and international financing.

Political and economic situationDuring the second half of 1990s, the SEE region

struggled with the legacy of the break-up of formerYugoslavia and numerous armed conflicts. Today, theregion is fragmented and characterised by a complexeconomic and social situation, with a large number ofrefugees and displaced persons.

In June 1999, following the armed conflict in Kosovo(territory under UN interim administration), the StabilityPact for South and Eastern Europe was launched underthe initiative of the European Union. It was the first seri-ous attempt by the international community to replacethe reactive, crisis-intervention policy in SEE with acomprehensive, long-term conflict prevention strategy.More than 40 partner countries and organisationsundertook to strengthen the countries of South EasternEurope “in their efforts to foster peace, democracy andrespect to human rights and economic prosperity to allthe countries of the region.”1 The Stability Pact is basedon experience and lessons from worldwide internation-al crisis management. It is believed that the conflict pre-vention and peace building can only be successful ifthey start in parallel in three different sectors: the cre-ation of a secure environment, the promotion of sus-tainable democratic systems and the promotion of eco-nomic and social well-being. The initiative wasaddressed to all SEE countries, including Bulgaria andRomania, but Serbia and Montenegro was allowed tojoin only in October 2000, following the collapse of theautocratic regime and after showing a strong commit-ment to implement structural reforms.

The Stability Pact is a political declaration of com-mitment and a framework agreement on internationalcooperation in order to develop a shared strategyamong all partners for stability and growth in SouthEastern Europe. The founding document of the StabilityPact states that the EU undertakes to draw South Eastern

Europe “closer to the perspective of full integration . . .into its structures,” including eventual full membershipafter meeting its precisely described conditions.

The interim step towards membership was the startup of the Stabilisation and Association process (SAP) forSouth Eastern Europe. The process is seen as an entrystrategy that introduces European values, principles andstandards to the region and serves as an anchor forreform in the SEE countries in the same way that theaccession process has in Central and Eastern Europe.The Stabilisation and Association agreements (SAAs) areaimed at five SEE countries, which had no previous con-tractual relationship with EU: Albania, Bosnia andHerzegovina, Croatia, FYR Macedonia, and Serbia andMontenegro. The first SAA was signed with FYRMacedonia in 2001, with Croatia following soon after.Negotiations with Albania were formally opened inJanuary 2003. The European Commission is in theprocess of preparing a study on the feasibility of Bosniaand Herzegovina negotiating and concluding an SAA,and the continued progress in Serbia and Montenegroshould allow the Commission to prepare a feasibilitystudy for an SAA in this country.2

The financial instrument introduced by the processis the Community Assistance for Reconstruction,Development and Stabilisation (CARDS) programme.The programme underpins the objectives and mecha-nisms of the SAP. It is foreseen that as each countrymoves deeper into the SAP, assistance will increasinglyfocus on support for the reforms and institution build-ing necessary to implement the obligations of the SAAs.Country strategies and multi-year programmes arebeing drafted accordingly.

According to the European Commission3 the coun-tries of SEE have invested significant effort into the SAP.Stability has essentially been restored, security hasimproved, all of the countries have democratically elect-ed governments, massive reconstruction has taken placeacross the region, a substantial number of refugees andinternally displaced persons have returned home, andreforms in many sectors are currently under way.

According to a European Commission opinion,none of the five SEE countries, not even Croatia — thestrongest economy and most advanced in terms of eco-nomic reforms — can be considered a functioning mar-ket economy. Though, to varying extent, all countries


Chapter 2Background Information

are characterised by the slow pace of large-scale privati-sation, an underdeveloped financial sector and a poorenvironment for domestic and foreign investment.4

Since the mid-1990s, all SEE countries have regis-tered overall growth in real gross domestic product(GDP). Most of them, however, are still far from their

1989 levels of real GDP. Albania is the only exception,though it should be noted that its figures were low tobegin with. Concerning the level of GDP per capita,there is a significant difference between Croatia,where GDP per capita amounted to over EUR 5,000 in2001, and other countries of the region, where GDP

C H A P T E R 2 : B A C K G R O U N D I N F O R M A T I O NP O L I T I C A L A N D E C O N O M I C S I T U A T I O N


BOX 1

Situation in the SEE countries

■ ALBANIAAlbania was spared from the conflict that erupted inthe region in 1991 after the break up of formerYugoslavia. Nevertheless, in the 1990s it experi-enced a period of high economic and political insta-bility. Financial reforms were not followed throughon, and its privatisation programme stagnated. In1997-1998, the collapse of pyramid investmentschemes resulted in severe economic and politicalcrises. These events were followed by the inflow ofmore than 500,000 refugees, who entered Albaniaduring the 1999 conflict in Kosovo. In spring 2002 arelative, though still fragile, political stability andrenewed inter-party dialogue was established.

■ BOSNIA AND HERZEGOVINAIn 1992 after declaring its independence from for-mer Yugoslavia, Bosnia and Herzegovina enteredfour years of war. The armed conflict resulted in thevast destruction of public buildings, private resi-dences and utility infrastructure. It also caused thedisruption of all governmental and economic sys-tems, tragic human loss and the displacement oflarge portions of the population. The signing of theDayton Peace Agreement brought the war to an endand laid the foundation for a new structure forBosnia and Herzegovina, establishing a two-entitystate consisting of the Federation of Bosnia andHerzegovina and Republika Srpska. These entitiesare subdivided into different configurations of localauthorities with varying levels of decision-makingpower. As a result of the divergent governmentalstructures in the two entities, policy differencesbetween the two parts of the country are still amajor issue.

■ CROATIA Elections in 1990 and the proclamation of inde-pendence in 1991 were followed by five years ofarmed conflict for Croatia, which had a profoundimpact on both Croatian society and the country’senvironment. The war caused extensive destructionof property, loss of life and disruption of economicand social activities. The fighting also made a signif-icant impact on the environment. Three nationalparks were damaged and industrial sites — particu-larly the Sisak refinery and the Osijek power plant

— were ruined. Furthermore, the shift of politicaland public attention to the war resulted in a lack ofactivity regarding environmental problems, at a timewhen these problems were increasing exponentiallyin significance. The political situation remains stableand the overall situation remains satisfactory asdemocratic developments are being consolidated.

■ FYR MACEDONIAFYR Macedonia became an independent state in1991 and was largely spared from the violence thaterupted in other former Yugoslav republics in theearly 1990s. It began a period of social and eco-nomic reforms that involved restructuring govern-ment and privatising large-scale public enterprises. Itwas only during the 1999 Kosovo conflict that FYRMacedonia began to experience major effects fromthe war. These effects were primarily associatedwith the inflow and encampment of some 261,000of ethnic Albanian refugees along the border of FYRMacedonia and Kosovo border. Following an unsta-ble period after the 2001 crisis, the political situa-tion has been moving steadily towards normalisa-tion.

■ SERBIA AND MONTENEGROSerbia and Montenegro consists of two republics –the Republic of Serbia and the Republic ofMontenegro. The Republic of Serbia includes theprovinces of Vojvodina and Kosovo. Military con-flicts and operations in the 1990s, as well as eco-nomic and political sanctions, have prevented eco-nomic development or environmental remediationthroughout Serbia and Montenegro in the 1990s. On March, 2002 the two remaining republics(Serbia and Montenegro) of the six former republicsand two autonomous regions that made up ofFederal Republic of Yugoslavia, signed a new StateUnion agreement, which regulated de facto the situ-ation between the two republics.

Focus on KosovoKosovo is governed by the civil authority of theUnited Nations Interim Administration Mission inKosovo (UNMIK) and has effectively been UN protectorate since May 1999.

per capita was below EUR 2,000 (the lowest beingBosnia and Herzegovina).

In 2002, SEE economies grew at a rate close to 4percent, faster than the rate of growth of the worldeconomy of about 2.5 percent. This was partly fuelledby the inflow of foreign grants and loans correspon-ding to roughly 7 percent of the region’s GDP.5 Box 2presents the main macroeconomic indicators in theSEE countries.

General environmental situationIn this section the general environmental situation of

the SEE region is presented based on the most up-to-date documents and reports published.

AirAlbania

In Albania the emissions of air pollutants havedeceased since the beginning of 1990s. This was main-ly due to the difficult economic situation and closure ofmany industrial facilities. On the other hand, pressurefrom the transport sector has increased due to theincreased number of the older cars in use.

Energy production is mainly based on hydro-electricplants, which contribute 90-95 percent of the energysupply. Although there is currently only one thermo-plant in operation, its energy production is severely pol-luting the air. The plant burns oil with sulphur contentof 6-8 percent.6 Oil extraction also creates a problem,

being one of the main sources of industrial air pollution.Coal combustion has decreased due to the closure ofmany coal mines; only six out of 20 are still operating.Albania is currently facing an electricity crisis caused byhigher demand than domestic production.

Cement production and open-air waste burning alsoimpact air quality.

Bosnia and HerzegovinaAir pollution in Bosnia and Herzegovina is mainly

caused by stationary sources, including coal-basedpower plants and industry. Those facilities use domes-tic coal with low caloric values and relatively high sul-phur content. It is estimated that the coal has less thanhalf the heat content of coal from Poland or the UK.7

The industrial capacity (large energy and metallurgyfacilities) was designed according to the needs of themajor part of the former Yugoslavia. Before 1992, themain pressures on the air sector were connected withthe production of coke, iron, steel, aluminium andcement. The factories were often improperly located inthe vicinity of human settlements. The other feature ofindustry is the high level of energy intensity, where BiHin 1992 was consuming almost 2.5 times more energyper unit than Croatia or FYR Macedonia. It was mainlydue to the lack of industrial co-generation facilities.

Due to the current economic recession, many indus-trial facilities are operating at lower capacity or have beenshut down completely. Air emissions have thereforedecreased, but the problems with high sulphur-dioxide(SO2) emissions and low energy efficiency remains.

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BOX 2

Main macroeconomic indicators in SEE countries

Population GDP at Real GDP Estimated GDP per Cumulative net (in millions) market growth % level of capita at FDI inflow

prices real GDP market prices per capita (in EUR in 2001 (in EUR) (in EUR)

billions)*

2001 2001 1996 1999 2001 1989 = 100 1996 2001 1996-2001

Albania 3.4 4.6 9.1 7.3 7.3 110 644 1,369 177

Bosnia and 4.3 5.8 86.0 10.0 5.6 n/a 527 1,196 112Herzegovina

Croatia 4.5 22.7 6.0 -0.4 4.1 84 3,484 5,081 1,179

FYR Macedonia 2.0 3.9 1.2 4.3 -4.6 75 1,753 1,942 447

Serbia and 10.6 11.6 7.8 -15.7 5.5 50 1,077 1,374 119 Montenegro

Source: Transition report update, EBRD, May 2002 * Exchange rate based on OECD MEI database.

At the same time, pressure from the transport sectorhas increased. This is especially true in urban areas,where increased traffic is combined with an increasednumber of older vehicles.

CroatiaThe major air pollution sources in Croatia are com-

bustion and traffic. Over the past decade, emissions ofSO2 from the energy sector have decreased steadily.This trend is partly related to the quality of burnt fuel,where imported coal with low sulphur content is nowused. It is also due to a new facility being equippedwith desulphurisation units.8 Emissions of carbon diox-ide (CO2) from the energy sector are also relatively low,as significant amounts of hydro-power and natural gasare used in power generation and cogeneration.

Emissions from industry sector have decreasedsteadily as a result of overall economic recession, eco-nomic reforms and compliance process. There areabout 24 large sources of industrial pollution that pro-duce the majority of all pollution.9 Those include: sixpower plants, two refineries, four cement plants, fourpetrochemical plants, one gas-extraction facility, andother metallurgical and chemical plants.

Emissions of nitrogen oxides (NOX) have beenincreasing mainly as a consequence of increased traffic.The share of road transport in total emissions was 44percent in 2000, while combustion plants and produc-tion, and energy transformation constitute 14 percent.10

FYR MacedoniaSince the late 1980s, air emissions in FYR Macedonia

have decreased. The main causes are the poor econom-ic situation and reduced industrial production.According to the Agency for Statistics, industrial pro-duction decreased by around 50 percent between 1990and 1995. Combustion and transformation of energyprocesses are the major contributors of SO2 emissions,and production processes are the main sources of dust.Carbon monoxide (CO) is mainly produced by roadtraffic and the main NOX emitters are energy productionand mobile sources.11

The industrial sector is the main contributor to airpollution with sulphur, carbon and nitrogen-oxideemissions. There are many industrial facilities locatednear settlements, and existing facilities are poorlyequipped with de-polluting devices. Metallurgical,metal-processing (i.e. lead and zinc smelters), chemicaland cement facilities are the main industrial sources ofair pollution.

The energy sector also impacts air quality throughthe use of domestic lignite in thermal plants (80 percentof electricity is generated in thermal power plants).Although the lignite itself has relatively low sulphurcontent, the plants lack flue-gas desulphurisationequipment. Some thermal power plants (e.g. in Skopje)

burn fuel with high sulphur content (2-4 percent).Mobile sources reduce air quality in big cities due to

increased traffic and the growing number of older cars. In general air quality problems are limited to urban

areas, such as Skopje, Veles, Bitola and Tetovo, whereapproximately 60 percent of the national populationbreathes air of poor quality.12

Serbia and MontenegroIn Serbia and Montenegro, thermal power plants,

district heating, household combustion, motor vehicles,and industrial facilities are the main polluting sources.

In Serbia the main thermal power plants are locatedin the lignite basins of Kolubara and Kostolac. Theyemit significant amounts of sulphur and nitrogenoxides, and dust into the atmosphere. Refineries,cement factories and the chemical and metallurgicalindustrial facilities use old and energy inefficient tech-nologies, and there is a lack of end-of-pipe treatment, aswell as poor operation and maintenance.13 In the big-ger cities, air pollution is caused by mobile sources,especially from old vehicles using leaded petrol.

In Montenegro combustion processes using low-grade lignite and motor fuels impact air quality most.The single worst source of emissions is a lignite-filledthermal power plant in Pljevlja. Another major sourceof pollution is the aluminium processing plant inPodgorice. Other sources of pollution are characterisedby low energy efficiency and the lack of end-of-pipetreatment. Old cars that use leaded petrol also impactair quality.

Focus on KosovoIn Kosovo (territory under UN interim administra-

tion) thermal power plants are the worst air polluters.The pollution contributes to the greenhouse effect, acidrain and respiratory diseases. Industrial air pollution hasdeclined due to the closure of facilities or the decreasedcapacity of their operations.

WasteAlbania

In Albania industrial waste constitutes a significantpressure on the environment. Although industrial pro-duction has declined over the past decade by 50-70 per-cent — resulting in decreased amounts of waste — thepressure from old contaminated industrial sites and oper-ating facilities is still significant. Industrial production cur-rently consists of mining and the enrichment of copperand chromium ores, coal (lignite) mining, oil explorationand processing, and construction materials. In 2000 thehighest quantities of industrial hazardous waste were gen-erated in the chromium and copper industries.15

According to the United Nations DevelopmentProgramme’s (UNDP) Post-conflict Environmental



Assessment of Albania, industrial sites in Vlore, Durres,Elbasan, Rubik, Patos, Ballsh, Fier and Lac are contami-nated by toxic chemicals. There is also a lack of haz-ardous municipal waste management for materials suchas batteries and used oil, which are abandoned inindustrial sites or stored together with municipal waste.

Migration from rural to urban areas in the pastdecade has resulted in more municipal waste generat-ed. It is estimated that only 50-70 percent of urbanwaste is taken to landfills; the rest is dumped illegally.16

All collected waste is deposited in landfills that are oftenuncontrolled, illegal or improperly located. In addition-al, waste is often burned in open areas. There are nofacilities for sorting, processing or recycling municipalwaste. Hospital waste is often improperly handled,placing additional pressure on the environment. Theonly hospital waste incinerator in Tirana has no smokepurification, and the remaining waste is dumpedtogether with municipal waste.

Bosnia and Herzegovina In Bosnia and Herzegovina waste management is a

serious environmental issue due to inadequate wastemanagement and society’s attitude towards waste.

Hazardous waste is not separated at the source or atlater stages. There are no special facilities for hazardouswaste processing or storage. Some heavy industry facil-ities have their own dumpsites on their premises.17

There are only a few municipalities where the col-lection of municipal waste is organised properly.Waste is not segregated into municipal, hazardous,and inert types. Collected waste is dumped in localdumpsites. The National Environmental ActionProgramme (NEAP) states that most of these areimproperly located and inadequately equipped. Thereis also a common practise of dumping waste on river-banks, and in lakes, abandoned quarries and mines.There are few sanitary landfills. The most successfulform of waste management is the collection of scrapiron, paper and non-ferrous metals, where privatecompanies are involved.18 Hospital waste is not sepa-rated and it is improperly disposed of. Some hospitalwaste is incinerated in ordinary furnaces; the rest isdumped in local municipal dumpsites.

Expired pharmaceutical waste, generated throughdifferent international aid programmes during the war,is also a problem.19

CroatiaIn Croatia, the generation of hazardous waste has

decreased over the past few years. The amount of haz-ardous waste collected and treated has increased, whileexports of such waste have decreased.20 The main cat-egories of hazardous waste include: waste oils, wastefrom crude oil processing, and natural gas purificationand inorganic waste from thermal processes.

Municipal waste generation, however, has increased.In 2000 the amount of municipal waste transported toofficial disposal sites increased by 51 percent comparedto 1995 — a result of improvements in waste transport,disposal and collection system coverage. About 80 per-cent of the population is covered by organised collec-tion and transport of waste to disposal sites.

There are 126 official disposal sites in operation, outof which 40 percent are fenced, and 52 percent are con-trolled, while there are only few disposal sites that com-ply with Croatian legislation.

The system of waste collection includes the separatecollection of waste for paper, glass and other materials.It has resulted in 4.5 percent of all waste being divertedfrom the landfills.21

FYR MacedoniaIn FYR Macedonia almost all hazardous and non-

hazardous waste is dumped in landfills which often lackproper design and management. Municipal and indus-trial waste is stored separately. The majority of industri-al waste is stored on or near the industrial premises itcome from. The main industrial waste comes from themining, metallurgical, fertiliser and chemical industries,along with waste from coal-fired power plants.

There are 32 official landfills operated by municipal-ities, but it is estimated that there are about 1,000 illegaldumpsites.22 Other waste management practices, suchas recovery, re-use and recycling, are rare and havemostly been initiated by industries trying to improve theefficiency of the process.

All hospital waste is currently mixed with municipalwaste and dumped in landfills. A medical centre inSkopje is an exception, where the waste is collectedseparately and burned in an incinerator near the city.The emissions are not monitored.

Serbia and MontenegroIn Serbia hazardous waste is mainly generated by

the mining, chemical, petrochemical, metallurgical,paper, leather and textiles industries. Hazardous wasteis not collected or managed separately. There are nofacilities for hazardous waste treatment and disposal.The result is a high concentration of hazardous waste atindustrial sites. Only a few enterprises have storage sitesequipped to prevent the spread of toxic components ortheir diffusion into soil and groundwater.23

Mining, the chemical and metallurgical industries,and the energy sector are the major generators of indus-trial waste. There are only a few recycling facilities forindustrial waste.

About 70 percent of the area of larger municipalitiesis serviced by waste collection services. There is no sep-aration of waste components for recycling or compost-ing. Additionally, there is no separate collection ofmunicipal hazardous waste from the total municipal



waste stream. Landfilling is the main method of munic-ipal waste management. There are about 150 landfillsites for municipal waste.24 Some recyclable materialsare collected on the dumpsites. The majority of dump-sites have not been properly located and operate with-out construction or operating permits. The sites oftenlack proper equipment like bottom sealing or degasifi-cation systems.

In Montenegro about 42 percent of municipal wasteis collected by public utility companies. Municipalwaste is disposed of on uncontrolled sites without anytreatment or management. There are about 20 regis-tered landfills for municipal waste. They are not prop-erly constructed or operated, and none of them meetsanitary standards.

The main generators of industrial waste are thermalpower plants, wood-processing plants, zinc and leadmines, flotation facilities and aluminium plants.25


tion) about 60-80 percent of all municipal waste is col-lected in urban areas. There are no recycling facilities.Municipal waste is dumped in the individual or regionallandfills. Some municipal landfills have been rehabilitat-ed. The majority of industrial waste is generated frommining activities and the concentration process of non-ferrous metals; super-phosphate production, battery fac-tories and the combustion of lignite for electricity pro-duction. Nothing is being done to rehabilitate or reducethe risk from industrial waste sites. There is a lack ofproper management of hazardous waste, and in manycases it is stored in an inapropriate manner. Incineratorshave recently been installed in the main hospitals ofKosovo to burn hospital waste.

Water Albania

In Albania, the irrigation and mining sectors rely onsurface waters, while households and industry drawwater from aquifers. Industry is supplied with waterfrom the public drinking water networks. The watersupply and treatment infrastructure is underdevelopedand obsolete. There are problems with delivering thewater services in urban areas, where the population hasincreased over the past decade. One problem is con-nected with illegal buildings being constructed andtheir illegal connections to water supply lines andsewage pipes. It is estimated that about 80 percent ofdrinking water is extracted from underground and 20percent from the surface. In urban areas 85 percent ofthe population is supplied through the public system. Ingeneral, water is distributed without preliminary treat-ment, with the exception of three newly renovateddrinking water plants in Tirana and Durres. The quality

of drinking water is unsatisfactory in many cases. The wastewater-collection and treatment infrastruc-

ture has not been maintained well and has not devel-oped in response to growing demand, especially fromthe bigger cities. It is estimated that in urban areas only40 percent of the population has access to sewage con-nections. There are no sewage treatment facilities at themoment in Albania for domestic wastewater.

The following industries activities contribute to thedischarges of untreated wastewater: mining and oreprocessing (copper and chromium ore), the cementindustry and the oil sector.26

Bosnia and HerzegovinaIn Bosnia and Herzegovina drinking water supply

services cover 56 percent of the Federation of Bosniaand Herzegovina and 48 percent of Republika Srpska.Groundwater is the main water supply for almost half ofthe total water supplied, the rest coming from wells,springs and surface sources. Water supply systems areoften unable to meet the needs of consumers, especial-ly during the dry season. The water supplied is oftenonly disinfected. In most cases water supply sources arenot safe from a bacteriological point of view.

About 56 percent of the urban population is cur-rently connected to the sewage systems. The majorityof sewage (almost 90 percent) is discharged directlywithout treatment to the rivers. In many cases thesewage systems have not been completed or weredamaged during the war. Few wastewater treatmentplants were built before the war for cities bigger than5,000 inhabitants. At the moment five of them are inoperation and one has been built since. In the past,there were wastewater treatment plants serving indus-try, but at present none of them are in use. Industrialdischarges have decreased due to the closure of theindustrial facilities, but they are still high, as the dis-charged wastewater is not treated.27

In addition, water is polluted from leakages from theillegal dump sites located around the country.

CroatiaThe quality of surface and spring water is generally

good in Croatia, where 76 percent of the population iscovered by public water-supply systems. This figurecan be broken down into 86 percent in the Adriaticcatchment area and 71 percent in the Black Sea catch-ment area. When compared with the connection rate in1990 (63 percent), there has been a significant increasein the rate of connection. There is a problem with theloss of water from the public water supply system,which is, on average, 46 percent. It should be noted thatin the Adriatic coastal area almost all settlements areconnected to the supply system. However, during thehigh tourist season the increased demand may signifi-cantly reduce the water supply.



Agriculture activities and discharges of untreatedwastewater greatly affect water quality. The major pro-ducers of wastewater are the chemical and petrochemi-cal industries. In the water basin of the Drava andDanube rivers, the foodstuffs industry is the main pol-luter. There has been a decrease in discharges, whencompared with 1997, caused by the drop in the indus-trial production, wider application of water circulationin industrial processes and the construction of industri-al wastewater pre-treatment plants.

About 75 percent of the population living in majortowns is connected to the sewage systems, but the sit-uation is much worse in smaller towns. There are 81municipal wastewater treatment facilities, of which 22have pre-treatment, 26 have first-degree treatment,and 34 have second-degree treatment. Altogether, 12percent of municipal wastewater is treated.Additionally, outfall pipes directed to the sea wereconstructed for the wastewater treatment facilitieslocated along the Adriatic coast.28

FYR MacedoniaIn FYR Macedonia about 70 percent of the popula-

tion of large towns is connected to the water supply sys-tems. According to an analysis from 2000, the sanitaryconditions of water supply systems and the generalquality of supplied water was found satisfactory. Thesituation is worse in relation to rural areas and holidayresorts with their own water supply systems, wherewater is not disinfected. There is a problem with sea-sonal drinking water shortages for many cities and vil-lages throughout the country.

The major pollution of both surface water andgroundwater is discharge of municipal and industrialwastewater. Moreover, significant pressure comes fromthe agricultural sector, which is mainly located in thenortheast of the country.

Wastewater is treated only in a few towns (Ohrid,Struga, Resen and Dojran). In other cities and towns,wastewater is directly discharged into rivers withoutany treatment.

Agriculture is regarded as the main water consumerand also a significant water polluter. For example, largeindustrial cattle breeding and pig farms in the north dis-charge directly into rivers.

Industry is the main polluter responsible for toxicand eutrophicating elements. The main industrialpolluting branches are chemical and leather manu-facturing, food production, metal processing, andlead and zinc smelting. Some of the facilities areequipped with pre-treatment wastewater plants ontheir premises. The majority of them discharge theirwastewater into municipal collectors or directly intosurface waters.29

Serbia and MontenegroIn Serbia about 50 percent of the population is con-

nected to a water supply system. About half of the pop-ulation receives water from the three largest water-sup-ply systems (located in Belgrade, Novi Sad and Nis). Ingeneral, the water supply systems are old and the infra-structure is in poor condition. In 2001, 29 percent ofsamples from piped systems did not meet physical-chemical or bacteriological standards. However, it mustbe noted that there are regional differences. There arealso regional differences in relation to the connectionsto the sewage systems, with 44.9 percent of Vojvodinaconnected and 66.9 percent for central Serbia. It is esti-mated that only 12 percent of municipal wastewater istreated. There are 37 wastewater treatment plants, ofwhich seven have primary treatment and 30 have sec-ondary or biological treatment. Due to the age of theplants, it is estimated that only 13 percent of all plantsare satisfactory. The majority of industrial wastewater isdischarged without any treatment. There are about 20wastewater treatment plants for large industries, how-ever they are not effective. Smaller industries dischargetheir wastewater into municipal systems.

In Montenegro most of drinking water comes fromgroundwater sources. About 90 percent of the popula-tion is connected to a water supply system. The mainwater supply problems include: insufficient water forcoastal cities during the summer due to the increasednumber of tourists; significant water losses (only 48 per-cent of water is delivered); and pollution by municipaland industrial wastewater discharges. In 2000, 25 per-cent of samples for drinking water quality were belowbacteriological standards. There were regional differ-ences, where some cities improved their drinking waterquality (e.g. Podgorica and Kotor), while drinking waterquality in other cities has deteriorated.

About 60 percent of households are connected topublic sewage systems. The majority of wastewaterconnected is discharged untreated. There is a waste-water treatment plant in Podgorice. In smaller towns,sewage systems are non-existent. Industry dischargeswastewater directly into the municipal systems ordirectly into surface waters.30


tion) 44 percent of the population is connected to awater supply system. The main problems of the watersupply systems stem from pipe breaks, interruptedpower supply and limited storage capacity. In general,water supply systems are old and in a poor state.There is no wastewater treatment in Kosovo. It is esti-mated that only 28 percent of homes are connected tosewage systems. Industrial wastewater is not treatedand is discharged directly into surface water.31



Environmental financing in SEERecent reports32 analysing environmental financ-

ing in SEE determined that many SEE countries weredependent almost exclusively on international assis-tance for funding environmental investment projects,while funding from national (domestic) sources wasvery limited. During recent years there were somecourses of actions taken to encourage financing fromdomestic sources. For example, an environmentalfund was set up in FYR Macedonia in the second halfof the 1990s. In Croatia the Fund for EnvironmentalProtection and Energy Efficiency has been estab-lished and it is expected to become operational atthe beginning of 2004. Croatia environmental proj-ects were also financed by the Croatian Bank forReconstruction and Development (IBRD and EBRD).The involvement of the private sector in public infra-structure projects in SEE is limited, and in general themarket for financing environmental investment proj-ects is in the early stages of development.Additionally, the system of collecting expendituredata is underdeveloped and not unified with interna-tional standards,33 which hinders the comparison ofexpenditure data.

The investment needs for complying with the EUheavy investment directives are unknown for any ofthe SEE countries.

As noted before, SEE countries have been depend-ing heavily on international assistance. Over the periodof 1996-2001, the total assistance provided to SEE coun-tries increased, though there were significant fluctua-tions due, for the most part, to the conflict in Kosovo,which resulted in assistance being shifted to the area ofemergency aid. At the same time, the significantincrease in contributions in 2000 was linked to thelaunch of the Regional Environmental ReconstructionProgramme for South Eastern Europe (REReP), whichmobilised donors’ assistance to the region.

Donor countries provided the largest share of envi-ronmental assistance channelled to the region. Theirtotal contribution in this area amounted to over EUR 442million. International financial institutions contributedEUR 334.5 million.34

Assistance from individual donor countriesaccounted for the majority of commitments providedto the region in the area of environment. Analysis ofthe data demonstrates an overall growing trend inassistance provided. However, from the perspective ofindividual countries the contributions fluctuated

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BOX 3

Total environmentally related commitments to SEE, 1996-2001

1996 1997 1998 1999 2001

0

50

100

150

200

250

2000

Grand total Total IFIs (a) Total bilateral donors (b)

EUR

Mill

ion

Source: Fiedler J. and Janiak P. 2003; based on OECD creditor reporting system database, donors and international and financial institution reporting

Notes: (a) Includes data from the European Bank for Reconstruction and Development and the World Bank(b) Excludes the European Commission

markedly, which suggests that the support is focusedon individual projects. The highest environmentalassistance to the region was provided by Germany,which channelled around 34 percent of the total bilat-eral assistance in this field over the period 1996-2001.This support was directed mainly to Albania, FYRMacedonia, and Serbia and Montenegro (includingKosovo). The United States was second, contributingalmost 17 percent of channelled environmental assis-tance. In geographical distribution, support was pro-vided to Bosnia and Herzegovina and to Croatia. In theanalysed period, significant environmental assistancewas also provided by Italy, the Netherlands, Norwayand Switzerland whose contributions ranged from 6.5to more than 10 percent of total assistance. Mostdonors supported projects in the water sector (espe-cially water supply and sanitation) as well as urbanand rural development. Due to the continuing deterio-ration of environmental infrastructure, these areas aregiven the highest priority in all countries of the region,which also explains the high level of internationalassistance provided in recent years. Bilateral donorsalso supported projects in agriculture (includingforestry) in three of the SEE countries (Albania, Bosniaand Herzegovina and FYR Macedonia). Part of theassistance was channelled to the field of environmen-tal policy, which is linked to the recipients’ need tostrengthen the institutional and administrative capaci-ty of national and local governments.35

There was no clear trend regarding the assistanceprovided by international financing institutions. From1996 to 2001, environmental lending to the SEE regionwas provided by two international financial institutions— the European Bank for Reconstruction andDevelopment (EBRD) and the World Bank. The com-mitments were modest and seemed to depend on theindividual projects. This is mainly due to macroeco-nomic vulnerability and the limited ability to repayloans.36 In 1999 the assistance declined due to theKosovo conflict, while in 2001 assistance increased withthe launch of REReP. Within this framework, for exam-ple, the European Bank for Reconstruction andDevelopment contributed funds to the wastewater sec-tor in Croatia and FYR Macedonia. Only in Croatia didtotal environmental borrowing from international finan-cial institutions significantly outpace the level of bilater-al environmental assistance, and international financialinstitutions’ contributions accounted for almost 92.5percent of the total environmental assistance providedto the country.38

According to Phare programme annual reports, theEC’s environmental support to the region in 1996-2000concentrated on assistance to small projects in the areaof water supply and wastewater treatment (especially inAlbania and Bosnia and Herzegovina) as well as oninstitutional strengthening and capacity building ofpublic administration (e.g. FYR Macedonia’s Ministry ofEnvironment). In parallel with the launch of the

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BOX 4

Environmentally related commitments to SEE per capita, 1996-2001 averages

Albania Bosnia andHerzegovina

Croatia FYRMacedonia

Serbia andMontenegro*

0.0

3.0

6.0

9.0

12.0

EUR

8.29

5.30

8.09

11.31

1.88

Source: Fiedler J. and Janiak P. 2003*Data for Serbia and Montenegro includes KosovoData for 2001 is preliminary.

Stabilisation and Association process, the EC began tosupport the approximation of the countries’ legislationto EU standards in such areas as air and water quality,waste management and environmental impact assess-ment (e.g. projects in FYR Macedonia in 1999 and2000). At the end of 2000, the EC offered assistance tothe region in the framework of the CommunityAssistance for Reconstruction and Stabilisation (CARDS)programme. The initiative was designed to supportcountries’ participation in the SAP.39 Concerning theenvironment, the CARDS programme focuses on pro-viding assistance to infrastructure projects (especiallywater supply and sanitation) as well as on strengthen-ing the capacity of public administration to implement,enforce and monitor environmental law effectively. In2001 the EC contributed EUR 20 million to Kosovo toreconstruct the water supply system and improve solidwaste collection, as well as EUR 3.25 million to FYRMacedonia to assist the preparation of the NationalEnvironment Action Plan, solid waste feasibility studiesand air quality monitoring stations.40

As for the beneficiary countries, the highest totalassistance per capita between 1996-2001, was providedto FYR Macedonia and amounted to almost EUR 11.4per capita. Serbia and Montenegro received the leastcommitments over the period from 1996 to 2001, lessthan EUR 2 per capita.

Conclusions• SEE countries have struggled with the legacy of the

break-up of the former Yugoslavia and numerousarmed conflicts. The region is highly fragmentedand characterised by a complex economic andsocial situation.

• The launch of the Stability Pact in 1999 was the firstattempt to introduce a long-term conflict preventionstrategy. The introduction of the Stability Pact pro-vided SEE countries with the prospect of full futureintegration into EU structures. The first step towardsEU integration is the launch of the Stabilisation andAssociation process, within which the countries signStabilisation and Association agreements. Within theprocess, the EU introduced the financial instrumentof CARDS, which supports the countries’ attempts tofulfill the requirements of the agreements.

• From an economic point of view none of the SEEcountries is regarded as a functioning market econ-omy. Since the mid-1990s all countries registeredoverall growth in real GDP.

The situation in the region regarding air qualitypressures can be summarised by the following factors:

• Closure and/or lower-capacity operations at indus-trial facilities in the region caused a decrease in airemissions.

• Operating sources of pollution use low-quality fuel,lack end-of-pipe treatment and are highly energyintensive.

• There is a trend in the region of increased pollutionfrom mobile sources, mainly due to the greater num-ber of older cars.

The situation in the region regarding waste sectorpressures on the environment is characterised by:

• the existence of old contaminated industrial sites;

• the lack of facilities for hazardous waste manage-ment;

• the use of landfilling as a main waste managementpractice;

• the lack of sanitary landfills;

• the large number of illegal dumpsites; and

• the lack of other waste management facilities (recy-cling, composting etc.).

The situation in the region in relation to the pres-sures to the water sector is characterised by:

• underdeveloped water-supply systems and sub-standard water quality;

• underdeveloped sewage systems and sewage that isdischarged directly into surface waters; and

• the lack of wastewater treatment facilities for indus-trial wastewater.

When financing environmental investment projects,most countries were dependent almost exclusively oninternational assistance. In the second half of 1990s theassistance tended to grow and individual donors pro-vided the largest share of environmental assistancechannelled to the region. The highest assistance wasprovided to FYR Macedonia, followed by Albania,Croatia and Bosnia and Herzegovina, with the leastgoing to Serbia and Montenegro.

Endnotes

1 Stability pact 1999.

2 COM (2003)139.

3 Ibid.

4 EC 2002c.

5 COM (2003) 139.

6 UNECE 2002.

7 NEAP, March 2003.

C H A P T E R 2 : B A C K G R O U N D I N F O R M A T I O NC O N C L U S I O N S


8 www.mzopu.hr.

9 UNECE 1999.

10 www.mzopu.hr.

11 UNECE 2002a.

12 UNECE 2002a.

13 UNECE 2002b.

14 Ibid.

15 UNECE 2002.

16 Ibid.

17 NEAP 20003.

18 Ibid.

19 Ibid.

20 www.mzopu.hr 2003.

21 Ibid.

22 UNECE 2002.

23 UNECE 2002b.

24 Ibid.

25 Ibid.

26 UNECE 2002.

27 NEAP 2003.

28 www.mzopu.hr 2003.

29 UNECE 2002a.

30 UNECE 2002b.

31 Ibid.

32 Fiedler J. Janiak P; REC 2003.

33 Countries analysed in this report does not report to EUROSTAT.

34 As noted in Fiedler J. Janiek P 2003. Due to the lack of exact data on EU contrbutions, the magnitude of the total assistance to the region cannot be estimated.

35 Fiedler J. Janieak P; REC 2003.

36 European Investment Bank 200b.

37 These include: Rijeka Seweage Services improvement Programme inCroatia and the Municipal and Environment Action Programme in theFYR Macedonia. Source: EBRD 2001.

38 Fiedler J. Janiak P. 2003.

39 Within its framework EUR 4.65 billion has been allocated for the period of 2000-06.

40 Fiedler J. Janiak P; REC 2003.

C H A P T E R 2 : B A C K G R O U N D I N F O R M A T I O NC O N C L U S I O N S


The two main features of this report — regionalenvironmental priorities and the list of regional priorityinvestment projects — are outcomes of the PriorityEnvironmental Investment Programme development. Inpursuit of these outcomes, a methodology was devel-oped and followed that best suited the existing situationin SEE countries and lent itself to efficient strategicinvestment planning.

To overcome the lack of reliable information andenvironmental data available to the general public, theproject was implemented in close cooperation withfocal points from the ministries of environment of theSEE countries.

As a result, the methodology used to developregional priorities and the list of priority environmentalprojects has been approved by the ministries of envi-ronment. All data, priorities and investment projectspresented in this report have been approved by theministries of environment. A summary of the method-ological approach is presented in Annex 1 in the formof a logical framework, or “logframe.”

As the diagram in Box 5 demonstrates, once theregional priorities were established, they were fac-tored into the prioritisation process to produce thelist of priority projects.

Regional prioritiesAn objective framework was designed to set the

regional environmental priorities. Environmental indi-cators were used to compare the environmental pres-sures of the region, which helped to point to those sec-tors most heavily impacting the environment.

Hot spots were used to pinpoint the geographiclocation of the environmental problems. The hot spotsidentify areas where the natural environment is consid-erably worse than in other areas.

National priorities were used to check the national poli-cy responses, which take into account the current and actu-al political contexts. The national priorities are thenanalysed to see whether they support the regional priorities.

Environmental indicators The environmental indicators used in this analysis

are based on the core set of indicators advocated by theOrganisation for Economic Co-operation andDevelopment (OECD).1 The OECD indicators havebeen used because of their status as an internationalstandard for environmental statistics and performancereviews. The following indicators have therefore beenanalysed:


Chapter 3Methodology

BOX 5

Regional prioritiesProblem analysisData gathering

Prioritasation List ofpriority projects

Environmentalinvestment

project ideas

Interactions between the main outputs of the report

• country emissions of CO2;

• country emissions of SO2;

• country emissions of NOx;

• country municipal solid waste generation;

• country industrial waste generation;

• country hazardous waste generation; and

• country sewage treatment connection rates (percent of population connected to sewage treatment system).

Each country’s economic condition is taken intoaccount, as it is an important factor in the potential suc-cess of sustainable development. Economic situationsalso play a special role in assessing the relative pressureof particular pollutants. Indeed, both the causes forenvironmental concerns and the factors behind eco-nomic growth in SEE countries are closely interrelateddue to the countries’ current patterns of naturalresource use.

Another, no less important denominator is the totalpopulation. It affects the volume of both productionand consumption.

The indicators were therefore analysed in relation totwo denominators: gross domestic product (GDP) andpopulation.

In order to identify the priority environmental sec-tors for the region as a whole, several analyses wereconducted. SEE regional averages were calculated forall indicators. Baseline averages for all indicators werealso calculated. For the purpose of this project, theVisegrad countries (Czech Republic, Hungary, Polandand Slovakia) were chosen as a baseline for the follow-ing reasons:

• They share the legacy of a totalitarian past and thusfollowed a similar pattern regarding the use of nat-ural resources and economic inefficiency as the SEEcountries.

• They will soon be members of the EU and thereforeneed to adopt and implement EU environmentalstandards and regulations leading to better environ-mental performance.

• They are OECD members, and their environmentalstatistics are compatible with OECD.

Regional averages and baseline averages arecompared in the gap analyses to identify the largestdisparities between different indicators and betweenthe SEE region and baseline countries. This compari-son leads to the identification of regional priorityenvironmental sectors.

Considering the specific situation of the SEE region,the main limitations involve the availability of data forall indicators and the availability of data for matchingtime periods. All data to be included in this report was

therefore sent to the SEE ministries of environment forapproval. Due to the variety of sources used to gatherdata, detailed references are not given. It should beinstead understood that all data was approved by therelevant ministries of environment to be presented forthe purpose of this report. Data concerning theVisegrad countries, as well as GDP and per capita val-ues, has been collected from the statistics of OECD2 andthe World Bank.3

Hot spotsThe identification and analyses of hot spots com-

plement the findings of the indicators. The mostpressing regional environmental problems are locat-ed on a map to get a geographic sense of where pres-sures are highest.

The concept of hot spots is taken from theEnvironment for Europe process as it was used in theEnvironmental Action Programme for Central andEastern Europe (adopted at the ministerial conferencein Lucerne in 1993). The concept is based on the simpleidea that real environmental problems (or areas requir-ing special protection) have a specific location that canbe found on a map. This geographic dimension of envi-ronmental policy is key to targeting severe environ-mental problems. For this report, hot spots are consid-ered environmental problems related to the state andpressure on the environment, located on a map andapproved by the relevant ministry of environment to bepresented in this report.

Hot spots can be major sources of air pollution;areas with bad, ambient air pollution; major sources ofwater pollution; parts of rivers or other bodies of waterwith poor water quality; major agglomerations withoutwastewater treatment; large landfills or major industrialfacilities. A hot spot could also be a part of nature or abiodiversity-protected area.

National prioritiesNational priorities are used to analyse national policy

responses to regional priorities. More specifically, it isimportant to analyse how national priorities of SEE coun-tries respond to the regional priorities identified based onthe analysis of environmental indicators and hot spots.

It must be noted that although the PEIP provides theregional framework for investment planning, the particu-lar investments will take place in specific countries. Fromthis perspective, the national priorities outline the nation-al policy opportunities and constraints for the environ-mental investments.

National priorities of the SEE countries have beenpresented as priorities related to the environment pres-sures, the state of the environment and the prioritiesrelated to the policy responses.

C H A P T E R 3 : M E T H O D O L O G YR E G I O N A L P R I O R I T I E S


National priorities have been gathered for the:

• general environment;

• air sector;

• waste sector; and

• water sector.

Compiling the set of regional environmental priorities

The set of regional environmental priorities consists of:

• the set of regional priority environmental sectors,expressed by the OECD indicators. The PEIP priori-ty projects shall aim at them.

• the set of national hot spots of the SEE countries.The PEIP priority projects shall improve/protect theenvironment in the hot spots.

• the set of national environmental priorities of SEEcountries. The PEIP priority projects shall be consis-tent with them.

List of priority projectsThe second outcome of the PEIP is the list of priori-

ty invstment projects. The methodological steps forcompiling the list included:

• collecting investment projects;

• screening project eligibility;

• prioritising the projects; and

• clustering priority projects into programmes.

Collecting investment projects A unified project identification form (see Annex 2)

was drafted to collect information on investment proj-ects from different countries. Separate questionnaireswere designed for air, waste and water investment proj-ects. The forms were divided into three parts:

• Part A requested basic information about thebeneficiary country, the project title and the sec-tor of the environment that would be influencedby the project. Basic information was alsorequested on the foreseen implementing agency,as well as on the strategic context of the project(i.e. the project’s priority from international,national and sectoral perspectives). Lastly, Part Aprovides information on the project rationale andobjectives, size of the population affected and thestatus of the project idea.

• Part B, which is sector specific, concentrates on thespecific technical features of the project. These fea-

tures include a technical description of the project,legal aspects, information on environmental-pres-sure reduction and stakeholders’ opinions.

• Part C presents financial information about the proj-ect, including investment outlays, foreseen financ-ing sources and financing schedule.

An example of the blank project identification formfor the waste sector can be found in Annex 2.

Screening project eligibilityA set of criteria was chosen to determine the eligi-

bility of a project. An eligible project would be an envi-ronmental infrastructure investment project that:

• contributes to the reduction of environmental pres-sures; or

• contributes to solving a nationally recognisedhotspot problem.

Prioritising the projects A set of criteria was established to conduct the pri-

oritisation exercise. All eligible projects were screenedagainst nine different criteria to establish the list of pri-ority projects. Descriptions of these criteria can befound in Box 6.

Each criteria group (e.g. strategic, geographic, etc.)had an assigned value of importance referred to as“weight” (see Box 7). The weights were used to priori-tise between the different sets of criteria. The weightsadd up to one. Moreover, for all indicators of a particu-lar criteria group, a respective value is assigned. Thevalues indicate the fulfilment of a particular criterion ina particular group. If a criterion has not been fulfilled, itis given a score of zero. If criterion is fulfilled the scoreequals the indicated value.

After screening the project against each criteriagroup, the scores were totalled. The process of projectscoring was based on the concept of weighted average.Each sum is weighted by a corresponding weight.Weighted scores are aggregated (added) into one value.The system of weights and scores corresponds to (orwas influenced by) the set of regional environmentalpriorities.

This method of prioritisation is used to make astrategic identification of regional priority investmentprojects.

After all projects have been screened they are divid-ed into three levels of priority:

• high priority project — score of more than 60 percent;

• medium priority project — score of 30-60 percent;

• low priority project — score of less than 30 percent.

C H A P T E R 3 : M E T H O D O L O G YL I S T O F P R I O R I T Y P R O J E C T S


C H A P T E R 3 : M E T H O D O L O G YL I S S T O F P R I O R I T Y P R O J E C T S


BOX 6

Project prioritisation criteria

■ STRATEGICTwo indicators were used as strategic criteria. Thefirst indicator assessed the project’s consistency withnational priorities. Projects that met a national prioritywere preferred. The second indicator involved cross-border cooperation in the SEE region. Projects withthe potential to promote and strengthen cooperationwithin SEE in solving cross-border environmentalproblems were preferred.

■ GEOGRAPHICA project location indicator functioned as the geo-graphic criteria. Several project location values werepossible. The first two — hotspots and downtownsand/or special protected areas — were of greater sig-nificance. Location, expressed through populationdensity, suggests the potential intensity for pollutionabsorption. Projects located in areas of high risk andwith consequences on human health and nature con-servation were preferred. Other densely populatedareas were not given high priority. Lowest prioritywas given to sparsely populated areas.

■ HEALTHThe positive impact on human health was used as acriterion. The indicator focused on the size of thepopulation that could benefit from the reduction ofthe health risk. The project’s effect on mortality rateswould have been used, but data limitations made thistoo difficult.

■ LEGALLegal criteria group took into consideration whetherownership to the land and buildings was clear andsettled. Projects that had a settled situation in thisrespect were preferred.

■ TECHNICALThe technical criteria favoured projects with moderntechnical solutions. Lowest priority was given to proj-ects proposing the use of low-efficiency technology.All solutions were required to meet a threshold oftechnical quality and efficiency.

■ ENVIRONMENTALThe environmental criteria consisted of environmentalpressure reduction and environmental monitoringindicators. The former is expressed by mass/volumeof annual average pressure reduction consistent withthe OECD classification. The projects with higherpressure reduction were given higher priority.Additionally, projects foreseeing the monitoring ofenvironmental pressure were preferred.

■ SOCIALThe social criteria focused on the public’s opinion ofthe project. Projects with strong public support(including NGOs) were preferred. Additionally, localinitiatives driven by active public participation alsoreceived preference.

■ ECONOMIC AND FINANCIALThe prioritisation process evaluated financial andeconomic dimensions of the projects. The cost effec-tiveness of pressure reduction played an importantrole. The unit annualised cost was chosen as a com-mon denominator for the initial assessment. Thus,higher priority was given to projects that would leadto the minimal unit annual average costs of achievingenvironmental benefits.

■ PROJECT PHASEProjects ready for implementation, as well asadvanced from a preparation point of view, wereassigned priority.

C H A P T E R 3 : M E T H O D O L O G YL I S S T O F P R I O R I T Y P R O J E C T S


BOX 7

System of criteria, weights and scores used for project prioritisation

Indicator Criterion Weight Score

1. Strategic criteria 0.15

Project priority from national point of view Yes 100(national priority) No 0

Project strengths, cross-border cooperation Yes 75

No 0

2. Geographic criteria 0.15

Project location impact Hot spot/or 100

specially protected area

Downtown area 75

Other densely populated area 50

Loosely populated area 25

3. Health criteria 0.15

Population directly impacted by reduction > 50,000 100of health risk (size of population) 50,000-25,000 75

< 25,000 50

4. Legal criteria 0.1

Clear and settled ownership to land and objects Yes 100

No 0

5. Technical criteria 0.05

Degree of modern technology Modern 100

Modern, not widely implemented 75

Traditional 50

Old 0

6. Environmental criteria 0.15

Reduction of environmental pressure (positive Project with max. indicator 100environmental impact — mass/volume per year) Project with min. indicator 0

Environmental monitoring Yes 50

No 0

The results of the prioritisation exercise are present-ed separately for each SEE country.

Clustering priority projects into programmes In order to present the list of priority investment

projects, programmes are identified for the main envi-ronmental sectors. The concept of programmes is basedon the expectation of additional benefits obtained thatwould be available for projects developed and man-aged individually.

The identified programmes deal not only with theparticular sector, but also introduce the differences ofthe potential project’s developers by setting the pro-gramme’s components. Within the programme, clus-tered projects have been divided into two groups: highpriority projects and other projects. High priority proj-ects are those which received more than 60 percent ofthe total points available, while other projects are thosewhich received less than 60 percent.

Programmes present the priority projects for eachSEE country.

Process of PEIP developmentIn this section the process of PEIP development is

introduced, including the key stakeholders and theirroles, main steps and activities undertaken.

StakeholdersSeveral stakeholders were involved in developing

the PEIP. The diagram in Box 8 summarises the keystakeholders and their roles.

The project team was the body responsible fordeveloping the PEIP. The team consisted of a core proj-ect team, focal points from ministries of environment,local consultants and representatives from the REC’scountry offices.

C H A P T E R 3 : M E T H O D O L O G YP R O C E S S O F P E I P D E V E L O P M E N T


BOX 7 (continued)

7. Social criteria 0.1

Public participation Yes 50

No 0

Community driven process Yes 50

No 0

8. Economic and financial criteria 0.1

Cost-effectiveness — mass/volume of reduced Project with max. indicator 100pressure per unit annualised cost Project with min. indicator 0

Co-financing (committed) > 50% 100

20-50% 50

< 20% 0

Social investment returns Yes 100

No 0

Financial sustainability Yes 100

No 0

9. Project development and management 0.05

Project phase Identification 50

Formulation 75

Implementation 100

Evaluation 25

Indicator Criterion Weight Score

The core project team (project director, projectmanager, two CEE consultants) was responsible forthe overall management of the project, as well as fordeveloping the methodology and conducting the proj-ect. Focal points from the ministries of environmentwere nominated by environmental ministers. The focalpoints were active members of the team who helpedlocal consultants to access relevant information, andalso provided input on the relevance and applicabilityof the proposed methodology. The focal points thenapproved the project results. Local consultants from allSEE countries were responsible for conducting tasks inrelation to providing country-specific information anddata from the SEE countries. REC country office repre-sentatives were responsible for facilitating communi-cation between the local consultants, focal points anddecision makers, with the core project team members.

Decision makers from the SEE countries were criti-cal to the overall success of the project. They providedfeedback on the methodology, and approved the infor-mation, data and results.

The donor community is interested in a harmonisedand systematic approach towards investment planningin the SEE region. The PEIP was, therefore, largelydeveloped to respond to donors’ preferences and prac-tices, with the donors themselves giving feedback on

the programme — identifying and discussing possiblefuture activities for further implementation.

Public representation was important to the pro-gramme’s development. The results have been present-ed to several NGOs in the region, many of whichresponded with useful feedback.

Several tools were used to improve communica-tions. Team meetings were organised to discussmethodology and to allocate tasks to the local consult-ants. Regional meetings were organised for decisionmakers and the donor community in order to discussand approve the results, as well as to identify futurepossible activities for further implementing the PEIP.The public consultations process was conducted byREC country offices and the project manager withNGOs representatives. Day-to-day correspondence wasmaintained between the key stakeholders and the coreproject team

The development of a Priority EnvironmentalInvestment Programme was a complex process. It wastherefore crucial to clearly define the phases, mile-stones and related activities of the process. This pro-gramme represents the first time that this process wasperformed in the SEE countries on a regional level.These steps are presented in Box 9.



BOX 8

Key stakeholders of the PEIP’s development

The Project TeamDevelopment of the PEIP

Feedback on the PEIP, investment projects

Public representation, NGOs, municipalities, etc.

The PEIP developed with donor funding principles

Donor community, IFIs

Decision makers from the SEE countries

Presentation, Consultations PresentationEndorsement Publicconsultation process

Endnotes

1 For details see <www.oecd.org>.

2 OECD Environmental Indicators.

3 World Bank Development indicators. Current values for 1999.



BOX 9

Process of developing the PEIP

Step Objective Activities

Step I — From the To design the • Presenting the general methodological approach at the project approval to methodology for High Officials Conference in February 2002the first team meeting developing the PEIP • Organising the first team meeting (July 2002, Sofia, Bulgaria)

to present to the team members the general methodological approach and to allocate tasks among the local consultants.

Step II — From the first To receive the • Developing country reports by local consultantsteam meeting to the feedback on relevance • Organising the second team meeting (December 2002) tosecond team meeting and applicability check the availability of data in the countries and how it

of the methodology influences the proposed methodology

Step III — From the To identify the regional • Presenting draft regional priorities and the draft list of second team meeting priorities and collect investment projects to the first regional the investment projects • Discussing the method of prioritising the projectsmeeting • Organising the first regional meeting (March 2003)

Step IV — From the To present the final draft • Conducting the prioritisation exercisefirst regional meeting results and the results of • Discussing the project results with stakeholders in the to the second regional the prioritisation exercise SEE countriesmeeting • Organising the second regional meeting (June 2003) to

receive the approval of the results and to discuss futureoptions for implementing the PEIP with the stakeholders

Step V — Finalisation To prepare the final • Preparing the report on the PEIP’s development with the report on the PEIP results of regional priorities and the list of development investment projects

Environmental indicatorsThis section analyses environmental indicators for

the SEE countries and compares them with averages forthe Visegrad countries. Gap analyses are also conducted,

which lead to the identification of priority environmen-

tal sectors for the SEE region.

Background data used for the analyses can be found

in the Annex 5.


Chapter 4Regional Environmental Priorities

BOX 10

Annual CO2 emissions per USD 1,000 of GDP

0

500

1,000

1,500

2,000

2,500

3,000

3,500


Croatia FYR Macedonia

Montenegro

Serbia

Kosovo

Emission of CO2

(Kto

ns o

f CO

2/U

SD 1

,000

of G

DP)

Serbia and Montenegro

753

3,125

988

3,338

No data

3,247

4,000

10

Visegrad baseline Regional average

19121866

When analysing carbon dioxide (CO2) emissions per USD 1,000 of gross domestic product (GDP), it can be seen thatBosnia and Herzegovina, FYR Macedonia and the Republic of Serbia contribute the most pressure on the environment(more than 3,000 kilotons of CO2 per USD 1,000 of GDP). The regional average is close to the Visegrad baseline,being approximately at the level of 1,900 kt of CO2 per USD 1,000 of GDP.

C H A P T E R 4 : R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E SE N V I R O N M E N T A L I N D I C A T O R S


BOX 11

Annual CO2 emmissions per capita

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000



Montenegro

Serbia

Kosovo

Emission of CO2

(Kto

ns o

f CO

2 pe

r ca

pita

)


830.70

3,125

4,513.41

6,086.59

No data

4,324.25

8,000

10.63


8,221

3,142

9,000

Croatia, FYR Macedonia and the Republic of Serbia emit higher levels of CO2 per capita (3,142 kilograms per capita).Emissions by SEE countries per capita are, on the whole, lower than those of the Visegrad countries.



BOX 12

Annual emissions of SO2 per USD 1,000 of GDP

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00



Montenegro

Emission of SO2

(Kto

ns o

f SO

2/U

SD 1

,000

of G

DP)


57

53

3

28

94

43

80.00


90.00

100.00

Kosovo51

43

8

Serbia

94

Emissions of sulphur dioxide (SO2) per USD 1,000 of GDP reveal that the most intensive regional pressure is demon-strated by the Republic of Montenegro. In the case of Albania and Bosnia and Herzegovina, the indicators are closeto the regional average. Pressure on the SEE region is much higher than the pressure intensity from the Visegradcountries.

Note: Data for Montenegro is calculated based on estimates and is to be used for the purpose of this report only.



BOX 13

Annual SO2 emissions per capita

0

20

40

60

80

100

120

140



Montenegro

Emission of SO2

(Kto

ns S

O2

per

capi

ta)


63 52

13

52 58


Kosovo55

5955

Serbia

118

When analysing per capita SO2 emissions, the most intensive regional pressure is demonstrated again byMontenegro. The regional average is close to that of the Visegrad countries.




BOX 14

Annual NOX emissions per USD 1,000

0

2

4

6

8

10

12

14



Montenegro

Emission of NOx

(Kto

ns o

f NO

X/U

SD 1

,000

of G

DP)


4.33

16.90

3.82

7.73

5.72


Kosovo

10.80

9

6 Serbia

12.17

16

18

Bosnia and Herzegovina has the most intense level of NOx emissions in the region at 17 kg of NOx per USD 1,000 ofGDP. Emissions from Kosovo and Montenegro are also higher than the regional average. Pressures in the SEE regionare higher than in the Visegrad countries.




BOX 15

Annual NOX emissions per capita

0

5

10

15

20

25

30



Montenegro

Emission of NOx

(Kto

ns o

f NO

X p

er c

apit

a)


4.77

16.6517.47

14.09

7.62


Kosovo11.47

12

28

Serbia

15.15

In the case of NOX emissions per capita, it can be seen that Bosnia and Herzegovina, Croatia, FYR Macedonia andSerbia have the highest share of pressures in the SEE region. However, levels in the Visegrad countries (28 kg of NOXper capita) are higher than in the SEE region (12 kg of NOX per capita).




BOX 16

Municipal solid waste generation per USD 1,000 of GDP

0

50

100

150

200

250

300

350



Montenegro

Municipal Waste Generation

(Kto

ns o

f MSW

/USD

1,0

00 o

f GD

P)


126.43

213.63

74.90

128.82

213.24


Kosovo213.75

74.90

Serbia

319.29

206.19

When analysing the municipal solid waste generation, it can be seen that Serbia, Montenegro and Bosnia andHerzegovina contribute most to pressures, exceeding the regional average of 213 kg per USD 1,000 of GDP. It can be also noted that levels in the SEE region are higher than in the Visegrad countries.



BOX 17

Municipal waste generation per capita

0

50

100

150

200

250

300

350



Montenegro

Municipal Waste Generation

(Kto

ns o

f MSW

/per

cap

ita


139.30

210.47

342.06

234.83

283.98


Kosovo

304Serbia

397.42400

450

363

219

The per capita municipal waste generation in Montenegro and Croatia is higher than the regional average of 304 kgper capita. Levels in the Visegrad countries (363 kg per capita) are higher than in the SEE region.



BOX 18

Annual industrial waste generation per USD 1,000 of GDP

0

100

200

300

400

500

600

700



Montenegro

Industrial Waste Generation

(Kto

ns o

f IW

G/U

SD 1

,000

of G

DP)


100.9086.25

136.12

44.82

630.03


KosovoNo data

199

Serbia

No data

328

Serbia has by far the highest level of industrial waste generation at 630 kg per USD 1,000 of GDP, whereas no othercountry reaches the SEE average. The regional average for SEE is lower than in the Visegrad countries.



BOX 19

Annual industrial waste generation per capita

0

200

400

600

800

1,000

1,200

1,400



Montenegro

Industrial Waste Generation

(Kto

ns o

f IW

G p

er c

apit

a)


111.17 84.96

621.66

81.70

839.03


KosovoNo data

348

Serbia

1,600

1,800

1663

No data

Serbia and Croatia generate the most industrial waste in SEE per capita, while the other countries fall below theregional average, which is lower than for the Visegrad countries.



Annual hazardous waste generation per USD 1,000 of GDP

0

10

20

30

40

50

60



Montenegro

Hazardous Waste Generation

Kto

ns o

f HW

G/U

SD 1

,000

of G

DP


0.36

9.73

1.17

12.35

25.20


KosovoNo data

9.76

Serbia

52.15

No data

Serbia and FYR Macedonia generated the highest levels of hazardous waste per GDP. The other countries fell at orbelow the regional average of 9.7 kg, which is lower than in the Visegrad countries.

BOX 20



Annual hazardous waste generation per capita

0

50

100

150

200

250



Montenegro

hazardous Waste Generation

Kto

ns o

f HW

G/p

er c

apit

a


9.58 5.56 22.50 33.56


KosovoNo data

14

Serbia

227

No data

0.40

Serbia and FYR Macedonia generate the most hazardous waste generation per capita, higher than the regional average of 14 kg per capita. The Visegrad countries generate much higher levels.

BOX 21



Sewage treatment connection per USD 1,000 of GDP

0%

2%

4%

6%

8%

10%



Sewage Treatment

Sew

age

trea

tmen

t co

nnec

tion

per

USD

1,0

00 o

f GD

P


1%

7%

3%


Kosovo

4%

Serbia

10%

No data

0%

12%

Montenegro

9% 9%

0%

In the case of sewage treatment connections, there is a significant difference between the connection rates inVisegrad countries (10 percent per USD 1,000 of GDP) and the SEE average (4 percent per USD 1,000 of GDP).Only Montenegro, Serbia and Croatia are closer to the Visegrad countries average. There are no systems in Albaniaor Kosovo and the wastewater is treated on a very low scale in Bosnia and Herzegovina and in FYR Macedonia,respectively 1 and 3 percent per USD 1,000 of GDP.

BOX 22



Percentage of population connected to sewage treatment

0%

5%

10%

15%

20%

25%



Sewage Treatment

Sew

age

trea

tmen

t co

nnec

tion


1%

34%

5%


Kosovo

11%Serbia

45%

No data

0%

30%

Montenegro

11% 11%

0%

35%

40%

45%

50%

All SEE countries fall below the Visegrad average in terms of the percentage of population connected to sewagetreatment. The highest level of sewage treatment connections is in Croatia at 34 percent. The regional average is 11percent — far below the 45 percent connection rate for the Visegrad countries.

BOX 23



-100%

-50%

0%

50%

100%

150%

Gap

(%

)

41%

118%

ST

HWG

200%

-39%

-81%

250%

300%

350%

293%

60%

ST

IWG

MSWGNOxSO2CO2

2%

In many cases there are significant gaps between the pressure values for SEE countries and the Visegrad baseline.These gaps have been identified for both the GDP and per capita denominators. In both cases a positive gap illus-trates that the environmental situation is better in the Visegrad countries, while negative values of the gap suggest abetter environmental situation in SEE.

The greatest performance disparities are for SO2 emissions, municipal waste generation and sewage treatment con-nections when the GDP denominator is applied. The general environmental performance of the SEE region is worsethan the Visegrad countries for all indicators except for industrial and hazardous waste generation.

MSWG — municipal solid waste generationIWG — industrial waste generationHWG — hazardous waste generationST — sewage treatment

BOX 24

Gaps between SEE and Visegrad countries with GDP as a denominator



-80%

-60%

-40%

-20%

0%

20%

Gap

(%

)

-55%

-26%

HWG

40%

-79%

-94%

60%

80%

7%

76%

ST

IWMSWGNOxSO2CO2

62%

-100%

When applying the per capita denominator, the largest gaps appear for sewage treatment connections, SO2 emissionsand municipal solid waste generation. Only sewage treatment connections and SO2 emissions pressures per capitaare higher than for the Visegrad countries. For other indicators the pressures are lower.

A positive gap illustrates that the environmental situation is better in the Visegrad countries, while negative values ofthe gap suggest a better environmental situation in SEE.

MSWG — municipal solid waste generationIWG — industrial waste generationHWG — hazardous waste generationST — sewage treatment

BOX 25

Gaps between SEE and Visegrad countries with per capita as a denominator

Conclusions• Environmental indicators and consequent gap

analyses show that the highest disparities in envi-ronmental performance can be found in the sectorsof SO2 emissions, municipal waste generation andsewage treatment connections.

• According to the adopted methodology, these sec-tors shall be the SEE regional environmental prioritysectors.

• Application of the per capita denominator has cer-tain constraints. One shortcoming is that it does notreflect the fact that better environmental perform-ance results from environmental investments beingcoupled with economic growth (presented as GDPdenominator).

• For some indicators the environmental performanceof the SEE region is better than in the Visegrad coun-tries. If the EU member states average had been cho-sen for the baseline, all of the gaps would have beenhigher (worse) for the SEE region. The baselinechoice does not change the fact that the first threesectors identified are the worst, and therefore shallbe treated as priority sectors.

Hot spots This section analyses the information collected on

hot spots in the SEE countries. Information was collect-ed for the following categories related to the pressureand state of the environment:

• pressure – air pollution sources;

• pressure – agglomerations without wastewater treat-ment;

• pressure – other water pollution sources;

• pressure – landfills;

• pressure – industrial facilities;

• state – bad air quality;

• state – bad water quality;

• state – nature/biodiversity protected areas; and

• state – problems with human health.

A total of 238 problems were identified and locatedon maps. In many cases multiple problems were identi-fied in one location. In all, 143 geographic hot spots wereidentified by the SEE countries. Box 26 illustrates thenumber of hot spots per country. The Table in Box 27shows the number of hot spots by category and country.

C H A P T E R 4 : R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E SH O T S P O T S


BOX 26

Number of hot spots per country


Croatia FYRMacedonia


0

5

10

15

20

25

30

35

Serbia

Montenegro

Kosovo

9

35

24

27

11

29

8



BOX 27

Number of hot spots by category

Category ALB BiH CRO MAC MON SRB KOS SEE

PAI Pressure — Air pollution sources - 7 6 7 3 7 2 32

PAG Pressure — Agglomerations without - 7 14 12 6 3 7 49wastewater treatment

PWA Pressure — Other water pollution sources - 2 - 11 - 3 1 17

PLN Pressure — Landfills 1 1 3 15 4 4 - 27

PIN Pressure — Industrial facilities 8 10 - 12 2 4 2 30

SAI State — Bad air quality - 9 - 4 3 8 - 24

SWA State — Bad water quality - - - 5 5 5 - 15

BIO State — Nature/biodiversity protected areas - 12 5 4 - 5 - 26

HEA State — Problems with human health - - - 1 2 3 3 9

Total geographically located problems identified 9 48 28 71 25 42 15 238

Total geographic hot spots identified 9 35 24 27 11 29 8 143

Distribution of hot spots among the air, waste and water sectors by countries in percentage

0

20

40

60

80

100


Croatia South EasternEurope

FYRMacedonia


Montenegro Serbia Kosovo

100

32

39

19

14

67

18

28

55

18

29

53

42

24

33

17

17

67

24

31

45

air waste water

perc

enta

ge o

f hot

spo

ts b

y se

ctor

29

The full of list of hot spots and their descriptions arepresented in Annex 3.

The hot spots were analysed within the followingcategories:

• air (air pollution sources and poor air quality);

• waste (landfills and industrial facilities); and

• water (agglomerations without wastewater treat-ment plants, other water pollution sources and poorwater quality).

Hot spots in protected areas (nature and biodiver-sity) were analysed separately.

It was not possible to distinguish those hot spotswhich impact human health, as many of the hot spotsmight have health implications, but due to the poor stateof data it could not be justified at this stage. The hotspots with health implications are therefore listed as aseparate category, but they are not analysed separately.

The figure in Box 27 shows that 45 percent of hotspots in SEE relate to the water sector, 31 percent towaste and 24 percent to the air sector. The SEE countriestook different approaches to the task of submitting hotspots. For example, Albania submitted only waste-sectorhot spots. In Bosnia and Herzegovina, there is an equaldistribution for air, waste and water. In Serbia the major-



TABLE 28

Number of air-sector hot spots by category

Geographic distribution of air-sector hot spots

0

2

4

6

8

10

12

14


Croatia FYR Macedonia Serbia and Montenegro

0

9

4

7

14

Kosovo

Serbia

No data

16

Montenegro

3

2


PAI Pressure — Air pollution sources - 7 6 7 3 7 2 32

SAI State — Bad air quality - 9 - 4 3 8 - 24



ity (42 percent) of hot spots are related to the air sec-tor, while for Croatia, FYR Macedonia, Montenegroand Kosovo the majority of hot spots are related tothe water sector.

Air sectorA total of 39 hot spots related to the air sector were

collected. The table in Box 28 gives a geographic break-down of the number of hot spots analysed, while the

graph below it shows the number of air-sector hotspots per country.

Box 29 shows the hot spots related to the air sectorand their location. The numbers correspond to theirdesignations on the maps and information in Annex 3.

There are no explicit hot spots targeting the air sec-tor in Albania, although the oil refinery in Ballash gen-erates several forms of pollution, including air.

In Bosnia and Herzegovina the power plants in



BOX 29

Air-sector hot spots and locations

BOSNIA AND HERCEGOVINANo. Location PAI SAI

10 Mostar

13 Sarajevo

14 Tuzla

15 Banja Luka

25 Zenica

27 Ugljevik

28 Kakanj-Catici

29 Gacko

30 Jajce

CROATIANo. Location PAI SAI

47 Sisak

59 Rijeka

60 Kastel Sucurac near Split

61 Plomin

FYR MACEDONIANo. Location PAI SAI

69 Jegunovce

70 Veles

71 Skopje

72 Bitola

73 Oslomej

74 Kavadarci

81 Tetovo

SERBIA AND MONTENEGROMontenegro

No. Location PAI SAI

96 Pljevlja

97 Podgorica

98 Niksic

Serbia


107 Obrenovac

108 Kolubara-Lazarevac

109 Kostolac

110 Smederevo

111 Beocin near Novi Sad

112 Paracin

113 Subotica

117 Belgrade

119 Nis

121 Bor

122 Sabac

123 Pancevo

124 Kragujevac

125 Uzice

Kosovo (territory under UN interim administration)


136 Obiliq near Pristina

143 Border with Macedonia near Kacanik

PAI Pressure — air pollution sourcesSAI State — bad air quality

Tuzla, Ugjevik, Kakanj-Catici and Gacko were proposedas air-sector hot spots. Problems with ambient air qualityremain in Sarajevo (especially in the winter) and BanjaLuka, mainly due to traffic sources. Industrial facilities inZenica and Jajce were also identified. The aluminiumplant near Mostar may create a problem if a leak occurs.

In Croatia thermal power plants in Sisak, Rijeka andPlomin were submitted as air-sector hot spots togetherwith the oil refineries in Sisak and Rijeka. The cementfactory near Split was also identified.

In FYR Macedonia the air-sector hot spots are main-ly associated with the operation of industrial facilities.Those facilities include a plant in Jegunovice that pro-duces ferroalloys, lead and zinc smelters in Veles,organic chemical plants, an iron plant, a rolling mill anda crude-oil refinery in Skopje. In Oslomej there is pollu-tion from the mining tailings industry, and in Kavadarcithe production of non-ferrous metals represents the air-

sector hot spot. In addition, poor air quality was recog-nised as a problem in Veles, Skopje and Tetovo. Thepower plant in Bitola is a major air-sector hot spot.

In Montenegro the power plant in Pljevlja was identifiedas a hot spot. The aluminium plant in Podgorica was alsoidentified, as it generates significant amounts of pollutants,including toxic substances as fluorides and phenols.

In Serbia the power plants in Obrenovac, Kolubara-Lazarevac and Kostolac were submitted. There is aniron and steal production hot spot in Smederevo. Thereare two cement factories: one in Beocin (near Novi Sad)and one in Paracin. The chemical industry in Suboticawas also identified. Several places have low air-qualitystandards, including Belgrade, Nis, Bor, Sabac,Pancevo, Kragujevac and Uzice.

In Kosovo the power plant in Obiliq was submittedtogether with the cement factory near Kacanik.



BOX 30

Number of waste-sector hot spots by category

0

2

4

6

8

10

12



11

3

8

Kosovo

Serbia

No data

Montenegro

5

2

9

11


PLN Pressure — Landfills 1 1 3 15 4 4 - 27

PIN Pressure — Industrial facilities 8 10 - 12 2 4 2 30





BOX 31

Waste-sector hot spots and locations

ALBANIANo. Location PLN PIN

1 Tirana

2 Duressi

3 Vlore

4 Patos

5 Ballsh

6 Fier

7 Elbasan

8 Rubik

9 Lac

BOSNIA AND HERCEGOVINANo. Location PLN PIN

12 Konjic

14 Tuzla

15 Banja Luka

18 Przici (Vares)

19 Srebrenica

20 Zvornik

21 Bosansko Petrovo Selo

22 Lukavac

23 Maglaj

24 Prijedor

25 Zenica

CROATIANo. Location PLN PIN

59 Rijeka

62 Zagreb

63 Kutina

FYR MACEDONIANo. Location PLN PIN

69 Jegunovce

70 Veles

71 Skopje

72 Bitola

73 Oslomej

74 Kavadarci

75 Probistip

76 Makedonska Kamenica

77 Kriva Palanka

78 Radovis

84 Kumanovo


No. Location PLN PIN

96 Pljevlja

97 Podgorica

98 Niksic

102 Mojkovac

103 Coastal region

Serbia


107 Obrenovac

108 Kolubara - Lazarevac

109 Kostolac

120 Majdampek

121 Bor

122 Sabac

123 Pancevo

124 Kragujevac



138 Kosovska Mitrovica

142 GjilanPAI Pressure — air pollution sourcesSAI State — bad air quality

Waste sector A total of 49 geographic hot spots were collected in

relation to the waste sector. The table in Box 30 theirdistribution by category, while the graph below it givesa geographic breakdown of total waste-sector hot spots.

Box 31 lists the hot spots related to the waste sectorand their locations. The numbers correspond to their des-ignations on the maps and information found in Annex 3.

In Albania the dumpsite near Tirana was identifiedas a waste-sector hot spot. Due to the lack of hazardouswaste management facilities in the country, toxic pollu-tants may be on site. A number of hot spots were iden-tified that relate to closed industrial facilities. The pollu-tion comes from the former chemical plant in PortoRomano-Durres, the former chlorine alkali and PVC fac-tory in Vlore, the former nitrate fertiliser plant in Fier,the former metallurgical complex in Elbasan, the formercopper factory in Rubik and the former phosphate fac-tory in Lac. Oil refineries in operation in Patos andBallsh were also identified.

In Bosnia and Herzegovina, there is pollution fromthe dumpsite in the Municipality of Konjic. Many indus-trial facilities lack proper waste management facilities,including the cellulose and viscose factories in BanjaLuka, Magdaj and Prijedor, the chlorine-alkaline com-plex in Tuzla, lead and zinc production in Przici andSrebrenica, red mud production in the aluminium plantin Zvornik, asbestos production in Bosansko PetrovoSelo, coke chemical production in Lukavac and themining and metallurgic complex in Zenica.

In Croatia disposal of the oil refinery’s waste wasidentified. The other two hot spots named included thedumpsite in Jakusevac near Zagreb unsafe municipaland industrial waste disposal with the potential of haz-ardous waste storage — and waste from the chemicalproduction of fertilisers in Kutina.

In FYR Macedonia, waste-sector hot spots includethe disposal of chromium slag and other materials in aJegunovce factory, an industrial landfill and storage offertiliser factory waste in Veles, chemical and oil refin-ery waste in Skopje, a non-sanitary municipal dump-site in Skopje, waste from the thermal power plant inBitola, waste from mining tailing in Oslomej, produc-tion of non-ferrous metals in Kavadarci, waste fromlead and zinc production in Probistip, flotation slagwaste from the mining sites in Makedonska Kamenicaand Kriva Palanka, waste from copper mine extractionand processing in Radovis, and the dumpsite for flota-tion waste in Kumarovo.

In Montenegro, waste from the thermal power plantin Pijevlja was identified, along with the aluminium pro-cession plant in Podgorica and the municipal landfill forPodgorica, which does not meet sanitary requirements.Unsafe waste disposal in Niskic was identified as a hotspot, as was lead and zinc production in Mojkovac. There

are also unsafe waste disposal sites in coastal areas.In Serbia, waste from thermal power plants in

Obrenovac and Kolubara-Lazarevac, waste from theKostolac thermal power plant and mining waste wereidentified. Several industrial facilities were identified aswaste-sector hot spots, including flotation waste inMajdampek, waste from a metallurgic complex in Bor,waste from a chemical and metallurgic complex inSabac, waste from an industrial complex in Pancevoand asbestos production in Kragujevac.

In Kosovo the waste-sector hot spots are located at theindustrial complex in Kosovska Mitrovica, due to hazardouswaste storage, and in Gjilan, at a closed battery factory.

Water sectorA total of 72 geographic hot spots for water were

identified. The table in Box 32 shows the hot spots bycategory, while the graph below it shows the distribu-tion of water-sector hot spots in the SEE region.

Box 33 lists the hot spots related to the water sectorand their location. The numbers correspond to theirdesignations on the maps and information found inAnnex 3.

No explicit hot spots were identified by Albania forthe water sector.

In Bosnia and Herzegovina, the majority of hot spotsidentified are connected with the lack of sufficientsewage network and, consequently, the lack of waste-water treatment plants in Bileca, Konjic, Sarajevo, Tuzla,Banja Luka, Bijelija and Brcko. Additionally, leakagefrom the closed aluminium factory waste storage inMostar was identified, along with the lack of wastewatertreatment for the carpet factory in Bileca.

In Croatia, all water-sector hot spots are connectedwith the construction or upgrading of the wastewatertreatment plants for major Croatian agglomerations.Those include Koprivnica, Bjelovar, Sisak, Karlovac andDuga Resa, Slavonski Brod, Osijek, Vukovar, Samobor,Zapresic, Velika Gorica, Opatija-Lovran, Pula, Vodnjanand Fazana, Rovinj and Porec.

In FYR Macedonia the lack of industrial and munic-ipal wastewater treatment plants was identified inindustrial plants and agglomerations of Veles, Skopje,Bitola, Oslomej, Kavadarci, Probistip, MakedonskaKamenica, Kriva Palanka, Radovis and Kicevo. Otherlarge agglomerations without municipal wastewatertreatment plants include Prilep, Tetovo, Stip, Strumica,Kumarovo, Kocani and Gostivar. Parts of the Vardar,Pcinja, Bregalnica, Zletovska and Crna rivers were alsoidentified as hot spots of poor water quality.

In Montenegro the lack of industrial and municipalwastewater treatment plants was identified for theindustries and agglomerations of Pljevlja, Podgorica,Niksic, Berane and Bijelo Polje. There is no wastewatertreatment for the coastal agglomerations located along



the Bay of Boka and Budva, Bar and Ulcinj.Additionally, poor water quality was identified for theCehotina and Vezisnica rivers downstream fromPljevlja, the Lim River below Berane and the Bijelo Poljeand Moraca rivers downstream from Podgorica.

In Serbia, the lack of industrial and municipal waste-water treatment plants was identified for the industriesand municipalities of Zrenjanin, Vrbas, Krusevac,Belgrade, Novi Sad and Nis. The bad state of water qual-ity was noted for the Borska River near Bor, the Banatwaterways, the Topciderska River, the Velika MoravaRiver and its tributaries, and the Veliki Timok River.

In Kosovo, the majority of water-sector hot spots arerelated to the major agglomerations without wastewatertreatment plants, which include: Pristina, KosovskaMitrovica, Prizren, Kacanik, Dakovica, Pec and Gjilan.There is a lack of industrial wastewater treatment for thethermal power plants in Obiliq near Prishtina.

Biodiversity and nature protection hot spotsAreas of biodiversity and nature protection consti-

tute an important complementary category of hot spots.Protected areas might have important implications forthe type of environmental infrastructure to be devel-oped. For example, more sophisticated equipment anddifferent types of technology are needed when stricteremissions standards are established for protected areas.Biodiversity and protected areas might also be takeninto account during investment planning, when theinfrastructure to be developed in or near such areasshall have higher priority due to their vulnerability andhigher protection needs.

As seen in Box 34, only Bosnia and Herzegovina,Croatia, FYR Macedonia and Serbia submitted natureand biodiversity protected areas. A total 26 of protect-ed areas were collected.



BOX 32

Number of water-sector hot spots by category

Number of water-sector hot spots per country

0

5

10

15

20

25



8

14

11Kosovo

Serbia

No data

Montenegro

97

0

22


PAG Pressure — Agglomerations without wastewater - 7 14 12 6 3 7 49treatment

PWA Pressure — Other water pollution sources - 2 - 11 - 3 1 17

SWA State — Poor water quality - - - 5 5 5 - 15





BOX 33

Water-sector hot spots and locations

BOSNIA AND HERCEGOVINANo. Location PWA PAG SWA

10 Mostar

11 Bileca

12 Konjic

13 Sarajevo

14 Tuzla

15 Banja Luka

16 Bijeljia

17 Brcko

CROATIANo. Location PWA PAG SWA

45 Koprivnica

46 Bjelovar

47 Sisak

48 Karlovac and Duga Resa

49 Slavonski Brod

50 Osijek

51 Vukovar

52 Samobor

53 Zapresic

54 Velika Gorica

55 Opatija-Lovran

56 Pula, Vodnjan and Fazana

57 Rovinj

58 Porec

FYR MACEDONIANo. Location PWA PAG SWA

70 Veles

71 Skopje

72 Bitola

73 Oslomej

74 Kavadarci

75 Probistip

76 Makedonska Kamenica

77 Kriva Palanka

78 Radovis

79 Kicevo

80 Prilep

81 Tetovo

82 Stip

83 Strumica

84 Kumanovo

85 Gostivar

87 Part of Vardar River

88 Part of Pcinja River

89 Part of Bregalnica River

90 Part of Zletovska River

91 Part of Crna River

95 Kocani


No. Location PWA PAG SWA

96 Pljevlja

97 Podgorica

98 Niksic

99 Berane and Bijelo Polje

100 Bay of Boka

101 Budva, Bar and Ulcinj

104 Cehotina and Vezisnica rivers downstream from Pljevlja

105 Lim River, downstream from Berane and Bijelo Polje

106 Moraca River, downstream from Podgorica

In Bosnia and Herzegovina, national parks wereidentified in Prenj-Cvrsnica-Cabulja, Treskavica-Igman-Bjelasnica, Sutjeska, Kozara, Jahorina, and Vranica;nature parks in the area of the Una River, Hutovo Blato,Blidinje, Bardaca, the Miljacka river canyon andTrebevic. The protected landscape Bijambare andnature monuments Skakavac were also submitted.

In Croatia the biodiversity and nature protection hotspots are connected with the lack of wasterwater treat-ment plants for the national parks settlements andtourist infrastructure. It is true for the Plitvicka JezeraNational Park, the area of Skradin within the KrkaNational Park, the sensitive area of Mali Ston-Hodije-Luka, Mljet National Park, and Brijuni National Park.

In FYR Macedonia, biodiversity and nature protec-tion hot spots include Shara Mountain, Ohrid Lake,Prespa Lake and Dojran Lake.

In Serbia the Djerdap and Kopaonik national parkswere submitted together with the wetlands of ObedskaBara and Carska Bara and the fragile arid ecosystem ofDeliblatska Pescara.

Conclusions• A total of 238 environmental problems have been

collected from the SEE region. Of these, 143 hotspots are located on the maps that have multipleproblems in the same location.

• The highest number of hot spots was collected forBosnia and Herzegovina (39) and the lowest forKosovo (eight) and Albania (nine).

• Forty-five percent of all hot spots are related to thewater sector, 31 percent to the waste sector and 24percent to the air sector.

• Although hot spots with human health implicationswere collected, they were not included in the analy-ses because it is difficult at this stage to verify thetrue health impacts.

• The majority of air sector problems are located inSerbia, Bosnia and Herzegovina and FYR Macedonia.The majority of waste sector problems are located inAlbania, Bosnia and Herzegovina and FYR Macedonia,



BOX 33 (continued)

Water-sector hot spots and locations

BOX 34

Hot spots in biodiversity and nature protected areas


BIO State — Nature/Biodiversity protected areas - 12 5 4 - 5 - 26

Serbia


114 Zrenjanin

115 Vrbas

116 Krusevac

117 Belgrade

118 Novi Sad

119 Nis

126 Borska River, near Bor

127 Banat waterways

128 Topciderska River

129 Velika Morava River and its tributaries

130 Veliki Timok River



136 Obiliq (near Pristina)

137 Pristina

138 Kosovska Mitrovica

139 Kacanik

140 Dakovica

141 Pec

142 Gjilan

PAG Pressure — Agglomerations without wastewater treatment

PWA Pressure — Other water pollution sourcesSWA State — Poor water quality

and the majority of water sector problems are locatedin FYR Macedonia, Croatia and Serbia.

• A total of 26 hot spots related to nature conservationand biodiversity were collected.

National environmental priorities

This section presents the national environmentalpriorities submitted by the SEE countries. A list ofnational environmental priorities was prepared for eachSEE country for four categories:

• national priorities for general environmental policy;

• policy related to air quality;

• policy related to water quality; and

• policy related to waste management.

Within each category, national environmental priori-ties have been organised — in accordance with the OECD

pressure/state/response model — into three areas:

• pressure on the environment;

• state of the environment; and

• society’s response to the poor state of the environ-ment or high pressure on it.

Each priority was listed as a simple narrative state-ment. In ideal cases a quote was taken directly from theofficial information source of the given country. Thefocus was not placed on the complexity of individualstatements but rather on covering a broad range of pri-ority problems, measures and strategies.

Albania In Albania the general environmental policy priori-

ties are focused on strengthening legal and institutionalframeworks. There is a need to increase the capacity foreffective enforcement and for approximating legal actswith the corresponding EU legislation. The development

C H A P T E R 4 : R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E SN A T I O N A L E N V I R O N M E N T A L P R I O R I T I E S


BOX 35

National environmental priorities for Albania

PRIORITY TYPE PRESSURE STATE RESPONSE

General national •Weak legal and •Lack of capacity and •Approximate legal environmental acts environmental Institutional frameworks legal framework with those of the EU priorities •Lack of sectoral enforcement •Integrate environmental

development strategies •Poor use of sustainable considerations into the •Insufficient public development principles preparations of sectoral strategies

awareness and in sectoral development •Prepare a strategy for public participation •Lack of inter-sectoral information and participation,

coordination and a respective action plan•Lack of regular public •Prepare LEAPs

information on environmental issues and consequences

•Lack of public hiring•Strengthen capacity and

enforcement

Air specific •Urban road traffic •Increasing pollution from •Adopt legal acts and standards for airnational priorities vehicle emissions protection from car emissions and

appropriate enforcement

Water specific •Urban wastewater •Rivers and coastal waters •Complete sewerage system and national priorities polluted from urban construct sewage treatment plants,

sewage waters starting with coastal cites and Tirana

Waste specific •Urban solid waste •Poor management of •Implement management plans fornationalpriorities •Hot spots collection and transport urban wastes in the main cites/towns

of urban waste and construct respective sanitary•Dumpsites outside of landfills

environmental control •Implement rehabilitation measures •Past industry causing and monitoring of pollution indicators

environmental and for each hot spothuman health problems



TABLE 36

National environmental priorities for Bosnia and Herzegovina


General national n/a n/a n/aenvironmental priorities

Air specific national n/a n/a n/apriorities

Water specific •Lack of integrated •Inadequate use of water Integrated river basin managementnational priorities water management for population and industry •Collect data and prepare cadastres of

system •Uncontrolled discharge springs, hydrologic data (quantitative-•Lack of integrated of untreated wastewater qualitative characteristics), surface and

water management from industry and underground waters, water consumersstrategy households into the river and polluters, water facilities and plants

•Lack of development •Inadequate number of •Prepare strategy, studies and modelsplans and coordination constructed/operated for water management including on all decision-making wastewater treatment international surroundingslevels plants •Implement the Water Framework

•Non-harmonised •Inadequate water quality Directive guidelineslegislation and quantity monitoring •Prepare and complete river basin

•Insufficient finances •Pollution of surface management plans•Lack of information watercourses, Water supply

system underground sources in •Implement long-term water supply•Non-compliance with karst area with organic projects in the most endangered

existing legislation substances, metals and regions of karst underground•Lack of trained staff, hazardous substances waters for water supply in the

equipment and •Frequent incidental northwest regions of BiH)institutions pollution of water •Identify and minimise (rehabilitate)

•Destroyed or damaged resources water losses in water supply systems,infrastructure (water where the losses are up to 60 percentsupply and sewage) Wastewater treatment and

•Huge losses in water construction of sewage systemssupply system •Prepare and carry out projects for(average 50 percent) construction of new and rehabilitation

•Lack of the wastewater of existing wastewater treatmenttreatment plants systems (Sarajevo, Bihac, Tuzla, Banja(Country sewage Luka, Kljuc, Bosanski Peterovac,treatment connection Trnovo)rate of 1.2 percent) •Rehabilitate existing and construct

•Lack of monitoring new sewage systems in threatenedsystem regions of BiH

•Irrational use on all levels

•Inadequate water pricing and low collection rate,resulting in weak financial foundation of water utilities

•Lack of research and training activities on all levels for water and wastewater

of sectoral strategies with the sustainable developmentprinciple in mind is a general policy priority. The prepa-ration of a strategy for public information and participa-tion and local environmental action programmes areidentified as a national priority as a response to insuffi-cient public awareness and participation.

The national priorities related to the air sector inAlbania identified urban road traffic as the mainpressure as well as the related increasing levels ofpollutants from cars. The adoption of legislation forair protection from car emissions and its enforce-ment is a priority.

Problems with urban wastewater treatment are seenas a priority, where sections of rivers and coastal areasare polluted due to discharges of untreated water. Thecompletion of sewage systems and wastewater treat-ment plants, starting with Tirana and coastal areas, is a

priority. The management and treatment of urban wasteis also a priority, and waste management plans need tobe implement for major cities. The pollution caused byclosed industries is also a priority, and the rehabilitationand monitoring off all industrial hot spots is foreseen.

Bosnia and HerzegovinaNo general environmental priorities or national air-

sector priorities were identified for Bosnia andHerzegovina. National environmental policy focusesinstead on the waste and water sectors.

Water priorities are related to the introduction ofintegrated river-basin management, water supply andwastewater treatment, and sewage-system construction.Integrated river basin management is based on the col-lection of all necessary data, including the preparationof cadastres for springs and hydrologic data, the prepa-



TABLE 36 (continued)

National environmental priorities for Bosnia and Herzegovina


Waste specific •About 6,000 tonnes •Existence of countless •Introduce waste management systemnational priorities of various waste illegal dumpsites •Adopt a waste management strategy

generated daily •Waste disposed of on with an action plan for its •Lack of a river beds and in lakes, implementation

comprehensive abandoned quarries •Adopt basic regulations for wasteinformation system and mines management according to EU

•Lack of an organised •Water polluted by direct regulationswaste collection system disposal of waste in the •Establish databases of wastes

•Insufficient number of rivers and very close to •Prepare a programme for selectivewaste treatment and water courses waste collection, and materialistic anddisposal facilities, •Land contaminated by energy evaluation of wasteespecially those inappropriate •Create network organisations/labs forrequired for treating waste disposal the collection of data on wastehazardous waste •Countless fires caused by •Establish market for waste materials

•Lack of gas collection inappropriate waste •Prepare studies on the use of systems and treatment disposal secondary materialsof leachate •Expired pharmaceutical •Introduce adequate prices for disposal

•Thousands of tonnes of waste located at over 90 of all kinds of wastes in an waste and household locations through BiH environmentally sound mannerrubbish untouched for •Introduce fees for disposal of years, even in some electronic waste, electrical urban areas appliances, old cars, tyres, and liquid

•Thousand of and bulky wastehumanitarian aid in Introduce fees for hazardous pharmaceuticals past waste generators their expiration dates, •Introduce fees for packaging for which there are no and wrapping wasteadequate disposal •Eliminate wild dumpsites andfacilities rehabilitate degraded areas

•Lack of (except in •Identify and conduct Sarajevo Canton) inventarisation of destroyedinventory of land by contamination ofhazardous waste wastes and revitalise such areas

ration of strategies for water management and theimplementation of the Water Framework Directiveguidelines. Water supply priorities focus on implement-ing long-term water supply projects, especially in thenorthwest regions of Bosnia and Herzegovina, as wellas minimising water losses from water supply systems.

The introduction of waste management systems is anational waste-sector priority. It involves adopting awaste management strategy and EU waste managementregulations, preparing a programme for selective wastecollection, establishing a market for waste/recycledmaterials, and introducing various types of fees andcharges for particular waste streams. The identificationand rehabilitation of illegal dumpsites is also a priority.

CroatiaGeneral environmental policy priorities are related

to the establishment of an environmental fund, theintroduction of International Organization forStandardization (ISO) standards, the development of anintegrated environmental information system, draftingof the EU approximation strategy — together with leg-islative harmonisation in accordance with the acquiscommunautaire — and capacity building.

The reduction of particle and NOX emissions is anair-sector priority. Improving liquid-oil quality andapplying measures in the industry and energy sector areseen as priority activities. There is a need to develop anational air quality protection strategy and action plan.

To stop the maritime and water pollution due to dis-charges of untreated wastewater is a water-sector prior-ity. Reducing the environmental risks caused by sunkenships in Croatian areas of the Adriatic Sea is also need-ed, as is the protection of drinking-water quality.Development of a water management plan and con-struction of wastewater treatment plants are the policyresponse priorities.

Developing a national waste management strategyis a policy response priority. It includes the develop-ment of separate waste collection systems, closure andremediation of several hazardous waste dumpsites andconstruction of sanitary landfills.

FYR MacedoniaReducing emissions to all environmental media and

halting the unsustainable use of natural resources arethe general priorities for environmental policy. The pol-icy responses focus on the development of a strategyfor sustainable development, environmental legislationand an institutional framework in accordance with EUregulations. Another response is introducing a permit-ting/licensing system for industry.

In the air sector, the reduction of air pollution fromdifferent sectors, including industry, energy and mobile

sources, is a priority. Priority is placed on developinglegal and institutional frameworks for air quality man-agement, setting new air quality standards and intro-ducing new monitoring systems, and permitting andlicensing systems.

Water sectoral priority is related to the reductionof water pollution from the communal and industrialsector, which will improve water-quality. The policyresponse priorities include the development of legaland institutional frameworks for water quantity man-agement, the development and implementation of anational wastewater and water quality strategy, set-ting new wastewater quality standards, developing amonitoring system and permitting/licensing systems,and introducing watershed management systems.

In the waste sector, priority is given to minimisingthe disposal of all types of waste. Remediating indus-trial waste landfills and reducing the number of illegaldumpsites are seen as priorities. The policy responserelates to the development of the legal and institu-tional framework for waste management, a nationalwaste management strategy, a national hazardouswaste management strategy, and programmes pro-moting the reuse, recycling and incineration of waste,as well as the introduction of a landfill permitting andlicensing system.

Serbia and MontenegroSerbia

The general environmental policy responses outlinetwo priority policy activities: bringing the legislative andregulatory frameworks in line with EU requirements;and developing a national strategy and action plan forenvironmental and natural resource management prior-ities and improvements in the monitoring system.

Implementing the polluter pays principle and intro-ducing environmental friendly technologies has alsobeen identified. In the air sector, priorities are related toimproving the monitoring system and air quality incities and areas of special importance. Improvementsshould also be made to urban and spatial planning inorder to reduce the negative influence of transport andindustry. Reducing emissions from thermal powerplants, transport and major industries is also a priority.

In the water sector, policy response priorities focus onestablishing a water protection strategy, introducing water-pollution emission standards and improving economicinstruments. Construction of and improvements to sewagesystems is a priority for municipalities, along with largeorganic pollution sources (e.g. cattle farms and food indus-try) and improvements to industrial wastewater treatment.Priority is also given to the protection of drinking watersources and surface water protection in protected areas.

In the waste sector, policy response priorities focus



on the development of a waste management strategy,harmonisation and compliance with EU legislation andthe development of economic measures and enforce-ment tools that support the legislation. Waste manage-ment at thermal power plants and municipal landfills isa priority, as well as improvements to the waste trans-port system. Concrete projects need to be identified,together with the establishment of waste recycling sys-tems and separated waste collection.

MontenegroIn Montenegro, general environmental policy prior-

ities relate to building institutional capacity, improvingenforcement, preparing a national environmental action

programme and sectoral strategies, establishing a mech-anism for financing environmental projects and improv-ing the environmental information monitoring systems.Environmental performance improvement and compli-ance with international standards have also been iden-tified, together with the establishment of a frameworkfor nature and biodiversity protection.

In the air sector, priority is given to the improvementof air quality in industrial and urban centres. Targetedpressures come from stationary sources, transport andlow energy efficiency. Improving water quality involvesthe rehabilitation and construction of sewage systemsand wastewater treatment plants. The creation of prop-



TABLE 37

National environmental priorities for Croatia


General national n/a n/a •Establish an environmentalenvironmental fund and an environmental agencypriorities •Introduce ISO standards

•Build an integrated environmental information system

•Draft the EU approximation stratgy•Harmonise legislation with acquis

communautaire•Capacity building

Air specific national •Pollution from particle • Inventory damages to •Develop national air quality priorities and NOx emissions in pedosphere caused protection strategy and action plan

fuel oil fired thermal by war •Apply measures in industry and power plants • Low fuel-oil quality energy sectors

Water specific •Marine and water • Environmental risks caused •Develop water management plannational priorities pollution by sunken ships in Croatian •Build wastewater pre-treatment

•Pollution due to waters of the Adriatic sea plantsuntreated wastewater • Quality of drinking water

at risk

Waste specific •Lack of separate • Sovjak Hazardous waste •Reconstruct the oilednational priorities collection systems landfill, and the mud disposal Botovo

Viskovo municipal waste •Develop a national landfill (Rijeka) waste-management strategy

• Waste disposal of Drnis •Close and remediate the and Knin hazardous waste landfill

• Recycling facility and a Sovjak, and the Viskovodisposal site in Vukovar municipal waste landfillneeded (Rijeka)

• Central composting plant for •Rehabilitate waste northwest Croatia needed disposal of Drnis and Knin

• Unsanitary landfill in Porec •Build a recycling facility and• Low level of controlled a disposal site in Vukovar

waste collection •Construct central compostingplant for northwest Croatia

•Reconstruct the landfill inPorec to improve sanitation

•Raise the share of controlled waste collection

er conditions for waste disposal, waste-stream reduc-tion and recycling are the waste sector priorities, whichare intended to reduce the pollution caused by impro-priate waste management.


In Kosovo general environmental policies focus onthe development of an environmental protection strategyand a biodiversity protection strategy. The lack of capac-ity and polluter responsibility has also been identified.

In the air sector, reducing emissions of major pol-lutants is a priority. The policy response is focusedon introducing advanced technologies for polluters,installing filters on thermal power plants and intro-ducing monitoring systems. The installation of waste-water treatment plants, the protection of riversidesand the introduction of licensing for water users arethe water-sector priorities. In the waste sector, devel-opment of a waste management strategy is a priority,together with capacity building and the introductionof regulatory instruments.



BOX 38

National environmental priorities for FYR Macedonia


General national •Emissions in different •Low quality of •Develop a strategy for sustainable environmental environmental media environmental media developmentpriorities •Unsustainable use of (air, waters, soils) •Develop an environmental, legal and

natural resources •Quality of nature at risk institutional framework (EU legislationapproximation)

•Introduce permitting/licensing systemfor industry

Air specific national •Air emissions in •Poor air quality •Develop a legal and institutionalpriorities different sectors framework for air quality management

(industry, energy (EU legislation approximation)production and •Develop a set of new air quality mobile sources) standards

•Develop a comprehensive air qualitymonitoring system

•Introduce an air permitting/licensingsystem

Water specific •Emissions into water •Poor water quality in •Develop legal and institutionalnational priorities from communal sector groundwater, rivers and framework for water quality

•Emissions in water lakes management (EU legislationfrom the industry approximation)sector •Implement the National Wastewater

and Water Quality Strategy•Set wastewater quality standards, both

for communal and industrial sectors•Develop comprehensive water-quality

monitoring system•Introduce water permitting/licensing

system•Introduce watershed management

system

Waste specific •Improper disposal of •Industrial waste landfills •Develop legal and institutional national priorities all waste types need remediation framework for waste management

•Industrial waste •Large number of illegal (EU legislation approximation)production and waste dumps •Implement the National Solid Wastedisposal Strategy

•Develop programmes for reuse, recycling and incineration of waste

•Develop a national hazardous wastemanagement plan

•Introduce landfill permitting/ licensing system



BOX 39

Environmental priorities for Serbia


General national •Deficient risk •Critical potential/present •Improve legislative and institutionalenvironmental management system hot spots framework towards EU standardspriorities •Lack of environmental •Poor urban environmental •Develop national strategy and action

friendly technologies performance plans for environmental and natural •Insufficient use of •Special natural areas/ resource management priorities

the polluter pays reserves and forests •Improve the environmental principle threatened monitoring system

•Improve urban and spacial plannning(in order to reduce the negativeinfluence of transport and industry)

Air specific national •Air pollutant emissions •Low urban air quality, •Improve air monitoring system andpriorities from thermal power especially in the cities establish environmental information

plants with more than 10 system for air pollution (especially air •Air pollutant emissions percent of days annually pollutant emission inventory)

from transport, exceeding the allowable •Improve economic measuresespecially in larger cities pollutant limit •Identify critical air pollutant loads for

•Industrial air pollutant •Low air quality in areas different ecosystemsemissions (metallurgy, of special importance •Improve air quality in cities and areaschemistry, oil •Negative effects from of special importanceindustry, etc.) transport and industry •Introduce cleaner production systems

Water specific •Settlements without •Drinking water sources •Establish water protection strategynational priorities sewerage systems and wells threatened along with integrated water

•Inadequate sewerage •Small water courses managementsystems for larger threatened (e.g. by •Introduce the water pollution emissionorganic pollutant dispersed pollutants standards according to the capacity of sources (large cities, •Surface water in nature the recipient water bodybig cattle farms, food protected areas •Improve economic instrumentsproduction, etc) threatened

•Inadequate industrial wastewater recycling system

Waste specific •Waste dumps •Reclaim ash and sludge •Establish a waste management strategynational priorities •Lack of waste deposits near the •Harmonise and complete legal

recycling system at thermal power plants regulations in compliance with thethe place of origin Basel Convention and EU provisions

•No segregation of solid •Develop legislative and economicmunicipal waste by measures to support recycling and totype of material diminish the disposal of waste in

•Inadequate municipal waste dumps (credits, financial aid, waste landfills tax relief, penalty policy, higher price

•Inadequate transport of land use for the disposal of waste)and deposition of solid waste

•Waste dumps severely endangering human health and the environment (industrial hazardous waste, non cultivated ash and sludge depots from TPP,and bio-hazardous waste)

•Waste managementincluding chemicalmanagement (number priority in Serbia)

ConclusionsThe SEE countries have adopted a wide range of

approaches to their national priorities for the air, wasteand water sectors. In the case of the air sector, all of thecountries give equal priority to reducing pollution. Thecountries give varying priority to the different sectorscausing the pollution. For example, in Albania urbanroad traffic is seen as a priority sector, while in FYRMacedonia reducing the emissions from industry, energyproduction and transport is a priority. Montenegro listsenergy efficiency and clean technologies as a priority.

In the case of waste-sector priorities, all countriesconsider industrial and municipal waste management ofequal importance. Serbia uses health risk as a criterionfor developing and implementing projects for wastedumps. In Albania hot spots are indicated as a priority,

while Croatia and Serbia indicate hazardous waste aspriority. Bosnia and Herzegovina and Croatia identifythe specific locations as a priority investment project forthe waste sector.

In the water sector priorities, all countries treat allpollutants equally. For all countries, urban waste-water treatment is a priority. Additionally, Bosnia andHerzegovina, Serbia and Kosovo consider water supplyas a priority. Albania and Bosnia and Herzegovina iden-tify special locations for priority investment projects.

Set of regional environmental priorities

Based on the methodology adopted the set of region-al environmental priorities consists of three elements.

C H A P T E R 4 : R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E SS E T O F R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E S


BOX 40

Environmental priorities for Montenegro


General national •Pressures on •Poor state and level of •Build institutional capacityenvironmental biodiversity biodiversity protection •Improve the legal frameworkpriorities (overexploitation, •Improve enforcement

illegal hunting/fishing, •Prepare NEAP and sectoral habitat loss) strategies

•Establish mechanisms for financingenvironmental improvements

•Improve environmental informationand monitoring system

•Improve country’s environmental performance and compliance withinternational standards

•Establish efficient framework to protect nature and biodiversity

Air specific national •Emissions from •Poor air quality, •Introduce measures to reduce priorities stationary sources especially in industrial emissions and encourage cleaner

•Pollution from transport and urban centres technologies•Low energy efficiency •Introduce energy efficiency measures

Water specific •Low rate of connection •Low water quality in •Rehabilitate and construct sewagenational priorities to sewage system bodies of water system

•Insufficient treatment of •Rehabilitate and/or constructcommunal wastewater wastewater treatment plants

•Insufficient treatment ofindustrial wastewater

Waste specific •Inadequate disposal •Pollution (soil, •Create conditions for proper wastenational priorities of municipal waste groundwater, air) from disposal

•Inadequate disposal of inadequate wastes •Create conditions for the reduction of industrial and disposal generated wastehazardous wastes •Stimulate recycling and reuse

A: Regional environmental priority sectors:• SO2 emissions reduction;

• municipal waste generation and treatment; and

• sewage treatment.

B: Set of Hot SpotsThe set of hot spots consists of 144 locations identi-

fied on maps, where there are multiple priority envi-ronmental problems.

C: Set of national environmental prioritiesThe set of national environmental priorities gives an

overview of the SEE countries’ policy responses and therelation to regional environmental priorities (regionalenvironmental priority sectors and the set of hot spots).

C H A P T E R 4 : R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E SS E T O F R E G I O N A L E N V I R O N M E N T A L P R I O R I T I E S


BOX 41

Environmental priorities for Kosovo (territory under UN interim administration)


General national •Pollution •Polluters not held •Endorse the EPL by the Special environmental Management responsible for actions Representative to the Secretary priorities •Environmental Strategy that cause environmental General of UN)

•Loss of biodiversity pollution or strain •Invite donor community to help •Lack of capacities for build capacity

the environmental •Develop an environmental protectiongovernance strategy

•Lack of environmental •Develop a biodiversity protectionprotection strategy strategy

•Lack of proper environmental strategy

•Inappropriate use of natural resources

Air specific national •Emissions of CO, CO2, •Uncontrolled emissions •Reduce emissions through the use of priorities SO2, NOx, •Large amount of dust advanced technologies — applying

dust and fly ash containing heavy metals appropriate filters for Kosovo A and B•Lack of monitoring •Inadequate and thermal plants

unsystematic monitoring •Establish monitoring centres

Water specific •Drinking water •Lack of drinking water •License water usersnational priorities •Floods •Zones threatened by •Protect riversides

•Wastewaters floods •Install wastewater treatment plants •Lack of wastewater

treatment plants

Waste specific •Waste management •Improper management •Develop a strategy for buildingnational priorities •Landfills causes recyclables and capacity

•Consumption hazardous waste to be •Establish regulatory instruments dumped •Raise awareness

•Uncontrolled consumption

This list of priority investment projects is the secondmajor product of the Priority Environmental InvestmentProgramme development.

A pipeline of priority environmental investmentprojects needed to be built that would give a regionalpicture of investment needs. A pipeline of the invest-ment projects enables the prioritisation process. It isbelieved that an investment process that is in harmonywith the priority investment projects is a key precon-dition to attracting external funding and to supportingnational investment planning.

The regional compilation of the national investmentproject ideas was done for the first time ever for theenvironmental sector in SEE countries. Therefore, theprocess of developing the list of priority environmentalinvestment projects was a major learning exercise for

the SEE countries on planning investments, identifyingprojects, gathering relevant data on the projects, devel-oping the criteria for programming and prioritisation.

Although a regional approach has been employed,the principle rule was that the prioritisation was donewithin the countries’ pipelines. In other words projectideas from different countries have not been compared.

It must be noted that the collection of project ideaswas done by local consultants in cooperation with theministries of environment. It was stressed, very often,by the SEE ministries of environment, that due to timeand resource limitations, information on projectsobtained from the project proponents was not checkedor verified by the ministries of environment.

In this chapter the results of the development of thelist of environmental investment projects are presented.


Chapter 5 List of Priority Investment Projects

BOX 42

Projects submitted by the SEE countries

0

5

10

15

20

25

30

35



Montenegro

Serbia

Kosovo

air waste water

Num

ber

of p

roje

cts

subm

itte

d

8


4

6 6

1

2

9

3

15

9

8

3

3

2

6

8

3

4

11

1

The results of the investment projects collection are out-lined first, followed by an analysis of the prioritisationresults. The chapter then outlines the results of the proj-ect clustering in programme sub-components. Finallythe conclusions on the process of the list of environ-mental investment programme are presented.

Collection of national priority investment projects

In this section the results of the investment projectscollection are shown for particular sectors and coun-tries. Information on the projects was collected on theunified project identification form. Original projectidentification forms (full list of all projects submitted)can be found on the REC’s website <www.rec.org>.

Geographic breakdownAlbania

From Albania, six projects were submitted in the airsector, four for the waste sector and eight for the watersector. Eight out of the 18 project ideas target the iden-tified hot spots.

Ideas for the air-sector project are at an early stageof development, with limited information available.Apart from one big project for the thermal power plantin Fier, the rest target small sources of emissions likehospitals and housing estates. The waste project ideasare also at an early stage of development. The majorityof projects propose the construction of new landfills.There are some developments on proposed wastewatertreatment plants, through projects from the GlobalEnvironmental Facility (GEF). The rehabilitation ofwater-supply and sewage networks lacks funding.

Bosnia and HerzegovinaEight projects were submitted from Bosnia and

Herzegovina: one for air, one for waste and six for thewater sector. Six of them target the identified hot spots.The air-sector project idea proposes a national air qual-ity monitoring system. The waste project idea proposesa new landfill for several municipalities near Zvornik.There are four project ideas for new wastewater treat-ment plants in Sarajevo, Mostar, Velagic and Bileca, andtwo projects propose to protect drinking water. All proj-ects are at an early stage of development.

CroatiaThe majority of project ideas for Croatia target envi-

ronmental problems connected with the petroleum,meat processing and fertiliser industries. They proposehazardous and industrial waste solutions, as well as airemission reductions. There is also one project propos-ing an air-monitoring network. Six projects out of 14 tar-get the identified hot spots.

FYR MacedoniaOut of 31 total project ideas, seven target the air sec-

tor, nine the waste sector and 15 the water sector. Allsubmitted projects cover the identified hot spots. Thereare projects for thermal plants in Bitola and Kicevo tar-geting air pollution. Several other projects were submit-ted for the industry in Veles. The majority of waste proj-ects focus on hazardous and industrial waste manage-ment, including industries from Skopje, Bitola andMakedonska Kamenica. There are several municipalwastewater plants proposed in Skopje, Prilep, Bitolaand Veles. Nevertheless, the majority of projects pro-pose solutions for industrial wastewater treatment.

Serbia and MontenegroSerbia

A total of 17 projects were submitted — three in theair sector, seven for waste and seven from water. Tenout of 17 project ideas target the identified hot spots.The air sector project ideas target the thermal powerplant and the copper industry. There are several projectideas proposing the construction of new municipallandfills and industrial waste management. There areproject ideas for both industrial and municipal waste-water treatment plants.

Montenegro All eight projects from Montenegro target the identi-

fied hot spots. There are two projects from the air sec-tor, three projects for waste and three for water. The air-sector projects target the thermal power plant in Plevlja.Waste projects propose the remediation of thePodgorice landfill site and the Borovica landfill. There isalso a project idea for the wastewater treatment plant inPodgorice.

Kosovo (territory under UN interim administration)There are six projects submitted for Kosovo — one

for the air sector, one for waste and four for water. Fourof them target the identified hot spots. Air and wasteprojects target Kosovo’s thermal power plant. There areproject ideas for wastewater treatment plants forPrishtina, Mitrovica and Kacanik.

Air sector analysisA total of 23 projects have been identified for the air

sector. There are six projects submitted from Albania,one from Bosnia and Herzegovina, three from Croatia,seven from FYR Macedonia, two from Montenegro,three from Serbia and one from Kosovo.

The collected projects are related mainly to themodernisation of major heat and electricity generatingplants. The main problems are associated with the lackof air protection equipment, in particular flue-gas,desulphurising and particulate-removing devices. There

C H A P T E R 5 : L I S T O F P R I O R I T Y I N V E S T M E N T P R O J E C T SC O L L E C T I O N O F N A T I O N A L P R I O R I T Y I N V E S T M E N T P R O J E C T S


are also projects related to the automation of power-generation units.

The second group of projects, in terms of scale andinvestment outlays, is related to projects connected withenergy saving, the use of renewable energy sources andmodernisation of decentralised systems of energy gen-eration. The group of five projects has been submittedby Albania only.

There are also projects related to the developmentof the air quality monitoring submitted by Bosnia andHerzegovina, and the National Network for PermanentAir Quality Monitoring project submitted by Croatia.

The analysis of the data gathered indicates that almosthalf of the investment outlays comprise the modernisa-tion of the power plant in Plevlja (Montenegro) for EUR40 million. An assessment of the rationale for the dataprovided points out the low accessibility of reliable datasources. Out of the total number of 23 projects, as manyas 14 have not provided clear rationales for the datagiven. For six projects, only partial data is available. Onlythree projects provided satisfactory sets of data.

Waste sector analysisIn the waste sector, a total of 35 projects have been

identified. Four projects were submitted by Albania, onefrom Bosnia and Herzegovina, nine from Croatia, ninefrom FYR Macedonia, three from Montenegro, eightfrom Serbia and one from Kosovo. In this sector, themajority of projects are related to municipal waste man-agement. There are eight projects that relate to industrialwaste management. The remaining two projects pertainto the remediation of sites where hazardous waste isdumped illegally. As with the air sector projects, there areproblems with reliable data. For 24 projects there are noclear rationales for their investment outlays.

Only five of the projects mentioned above provide asatisfactory level of data and rationale. Those projectideas were prepared under the REReP 5.3 project, whichfocused on project preparation at the local level in Serbiaand Romania.

Water sector analysisIn the water sector analysis, 44 projects have been

identified. There are eight projects from Albania, six



BOX 43

Overview of sectoral breakdown of the number of projects submitted by the countries

0

5

10

15

20

25

30

35

Albania

Bosnia andHerzegovina

Croatia

FYR Macedonia

Serbia

40

45

50

6

3

7

1

4

1

9

9

8

6

2

15

8

4

Montenegro

Kosovo

Air

Num

ber

of p

roje

cts

Waste Water


3

1

8

3

2

3

1

from Bosnia and Herzegovina, two from Croatia, 15from FYR Macedonia, three from Montenegro, six fromSerbia and four from Kosovo.

The majority of projects (26) are related to the con-struction, modernisation and extension of municipalsewage treatment systems. The second group comprisesindustrial systems. A total of 14 projects in industrial plantshave been identified. Four projects were submitted thatrelate to the supply and treatment of drinking water.

The investment figures expressed suggest that themajority of projects have no rationale for their investmentlevels. No data has been provided for three projects. Aproject of EUR 91 million has been identified withoutinformation on the project rationale. Investment outlaysshould therefore be interpreted cautiously.

Lessons learned fromthe collection of projects• The collected list of projects should not be treated as

a final list that covers all environmental projects inthe SEE region, but rather as a first attempt to collectinformation on projects within the scope and time-frame of this exercise. Therefore, the collected proj-ects should be treated as project ideas and as a sub-ject for further work and assistance when preparingproject proposals.

• No projects have been collected for particular sectorsor problems for some countries, although the prob-lems were indicated in the environmental situationanalyses. The lack of a list for those project ideasshould not be taken to mean that they are of lowimportance. Rather they should be treated as areaswhere the SEE countries (project proponents) arehaving difficulties in identification and formulating.

• The lack of available data on the collected projectideas can be easily seen in the completed projectidentification forms. One reason for this may be thelack of monitoring systems. Another problem maybe the low level of awareness of project proponentson requirements concerning the data needed todevelop projects.

• Based on the information provided, it is difficult tojustify the investment outlays indicated by projectproponents, which is especially true for projects ofmore than EUR 10 million. Therefore information ontotal investment outlays should be treated with cau-tion when interpreting or analysing the data.

• It was stressed by the SEE countries (i.e. their min-istries of environment) that due to the lack of timeand resources, information provided by the projectproponents was rarely cross-checked or verified bythe ministries of environment.

Screening and prioritisation exercise Screening the projects for eligibility and prioritising

them is an essential step. It allows those areas to beidentified that are most in need of further assistance tosolve the most difficult regional environmental prob-lems. At the same time it must be noted that this exer-cise is the first attempt to prioritise environmentalinvestment projects on a regional scale for the mainenvironmental sectors.

The collected project ideas made up the basic inputfor the prioritisation process on a country-by-countrybasis. The prioritisation was done according to the cri-teria and system of scores and weights approved by theSEE countries. The system is described in chapter 3 onthe methodology.

The detailed results of the prioritisation exercise arepresented in Annex 4.

First, all collected projects were screened against theeligibility criteria. The screening confirmed that all sub-mitted projects were eligible. All projects thereforeentered the prioritisation exercise phase.

Based on the results of the prioritisation exercise,the priority projects were grouped into three categories.These categories indicate the project’s priority from aregional perspective. The following three categorieswere used:

• high priority — projects which receive more than 60percent of total score available

• medium priority — projects which receive between30-60 percent of total score available

• low priority — projects below 30 percent of totalscore available

The table in Box 44 presents the distribution of theprojects across sectors and priority levels.

The table shows that 17 high priority projects wereidentified in the air sector, 26 high priority projects wereidentified for the waste sector, and 36 high priority proj-ects were identified for the water sector.

The distribution shows that 77 percent of submittedprojects received high priority status. Taking into con-sideration that at this stage of the process the focus wasplaced on strategic issues (strategic, geographical andhealth criteria — 15 percent weight assigned to each),this exercise clearly shows that the countries submittedprojects that target the most demanding environmentalproblems of the region from a strategic point of view.The detailed breakdown of the high priority project listincluding data on country, sector, PIF code and financ-ing gap, are included in Box 45.



Lessons learned from the prioritisation exercise

The system of scoring was set to reflect the region-al environmental priorities and policies of the SEEcountries. It must be noted that the initially designedranking process was strongly affected by the numberof factors that appeared during execution of the pri-oritisation exercise. Whole sets of data were missingfor 55 percent of the projects, and for an additional 23percent data was partially missing. From this perspec-tive it was not possible to make use of all criteria. Adecision was taken to freeze those criteria for whichthe majority of data was missing at this stage of theproject’s development. It is assumed that if the datawill be obtained the prioritisation can be conductedagain with all criteria in use.

The inactive indicators include:

• reduction of environmental pressure;

• economic efficiency criteria; and

• existing data on environmental monitoring (indica-tor belonging to the environmental criteria), whichis included but not added to the calculations, as thewhole set of environmental criteria has been frozen.

In general, the environmental and financial set of cri-teria are frozen at this stage of the project’s development.

Bearing in mind these limitations, the main focuswas put on strategic, geographical and health criteria.

Clustering projects into programmesAccording to the methodology it is foreseen that

programmes will be identified that are in line with theregional environmental priorities and priority projectswill be clustered. The programme is a larger structureaggregating many projects with common objectives, a

set of indicators, criteria and a communication standard.The main benefits associated with the concept of pro-grammes can be summarised to be that the program-ming approach increases the efficiency of developmentand management of the coordinated sets of projects.

The following programmes and its sub-componentshave been identified:

A: Air Pollution Control and Monitoring Programme• component 1: Large scale combustion power plants

and industrial facilities

• component 2: Air Pollution monitoring systems

B: Efficient energy use and conservation• component : Integrated energy planning

C: Integrated Solid waste management• component 1: Municipal solid waste

• component 2: Industrial and Hazardous waste

D: Reconstruction and modernisation of water and wastewater systems• component 1: Public wastewater infrastructure and

modernisation for cities and agglomerations

• component 2: Industrial wastewater infrastructurereconstruction and modernisation

Projects belonging to particular programmes andtheir sub-components are listed in two categories thereare high priority projects and other projects.

Identified programmes and project distribution arepresented in boxes 46-50.

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BOX 44

Categories of priority projects based on prioritisation exercise

ALB BiH CRO MAC MON SRB KOS Total

AIR High 0 1 3 7 2 3 1 17Medium 4 0 0 0 0 0 0 4Low 2 0 0 0 0 0 0 2

WASTE High 1 0 6 9 2 7 1 26Medium 3 1 1 0 1 1 0 7Low 0 0 2 0 0 0 0 2

WATER High 3 4 1 15 3 6 4 36Medium 3 0 1 0 0 0 0 4Low 2 2 0 0 0 0 0 4



BOX 45

High priority projects according to the identification numbers

SECTOR AIR WASTE WATER

Project ID Unsecured Project ID Unsecured Project ID Unsecured funds funds funds

(EUR mil.) (EUR mil.) (EUR mil.)

Albania AL-4 1.00 AL-9 20.000AL-10 2.000

A-6 3.152

Bosnia and Herzegovina BH-1 1.244 BH-8 38.000BH-6 23.750BH-7 2.625BH-2 9.000

Croatia HR-5 1.700 HR-1 8.490 HR-8 0.000HR-9 0.000 HR-6 1.958

HR-14 0.650 HR-7 6.500HR-3 0.000HR-4 0.000

HR-10 0.000

FYR Macedonia MA-10 1.500 MA-4 6.500 MA-30 13.710MA-12 0.200 MA-16 0.200 MA-24 0.500MA-11 0.250 MA-15 0.257 MA-1 53.100MA-21 5.200 MA-5 0.838 MA-7 10.415MA-22 1.000 MA-17 2.000 MA-9 7.322MA-3 2.000 MA-23 20.000 MA-18 1.500

MA-13 9.000 MA-14 0.000 MA-20 81.000MA-6 0.237 MA-2 9.190

MA-25 0.150 MA-19 1.500MA-26 1.840MA-27 7.915MA-31 3.800MA-8 0.150

MA-29 28.000MA-28 0.123

Serbia and MontenegroMontenegro MN-3 40.000 MN-5 23.000 MN-7 19.756

MN-2 0.500 MN-1 0.500 MN-6 3.338MN-8 16.000

Serbia SR-4 0.100 SR-3 6.094 SR-8 3.700SR-6 0.050 SR-16 1.401 SR-1 1.800SR-2 0.250 SR-15 5.337 SR-5 14.500

SR-10 0.025SR-12 1.058 SR-7 3.797SR-17 0.828 SR-11 0.400ST-13 5.244 SR-9 30.000

Kosovo KO-5 0.000 KO-4 0.000 KO-2 15.600KO-1 6.500KO-3 35.000KO-6 8.725

Total 63.644 91.617 477.708

Grand total 632.969



BOX 46

Air Pollution Control and Monitoring ProgrammeComponent: Large-scale combustion power plants and industrial facilities

Description: The programme component promotes various air pollution control techniques, including: a cleaner pro-duction programme focusing on solid-fuel and heavy-oil environmental quality improvements through desulphurisa-tion at the source, conversion from solid fuels and heavy oil to natural gas, significantly decreasing the combustion ofpolluting fuels, and promoting efficient heat and power generation technologies based on combined cycles.

Country/Entity ID Title Location NSF in Euro

HIGH PRIORITY PROJECTS

Croatia HR-9 Acid gas treatment with amine, acid water Sisak N/astripper and sulphur production (Claus)

HR-17 Continuous gas emission monitoring Kutina 650,000

FYR Macedonia MA-10 Sulphur trioxide flue gas conditioning system Bitola 200,000for thermal power plant

MA-12 Stack emission monitoring for thermal power plant

MA-11 Fire protection system for coal bunkers, Bitola 250,000steam turbine lube oil system and narrow bridges at the thermal power plant

MA-21 Decreasing air and soil pollution by heavy metals Veles 5,200,000containing dust — lead and zinc smelter

MA-22 Neutralisation of waste gases from sulphuric Veles 1,000,000acid plant — lead and zinc smelter

MA-3 Air pollution reduction at Silmak ferro-alloy plant Jegunovce 2,000,000

MA-13 Air desulphurisation at thermal power plant, Kicevo 9,000,000 Oslomej/Kicevo

Serbia and MontenegroMontenegro MN-3 Desulphurisation of flue gases at thermal Pljevlja 40,000,000

power plant

MN-2 Reconstruction and increasing of the capacity of Pljevlja 500,000electrostatic precipitators at thermal power plant

Serbia SR-4 Modernisation of copper smelter and sulphuric Bor 100,000acid plants

SR-6 Improvement of regulation system at Kolubara A Lazarevac 50,000 thermal power plant

SR-2 Decreasing air pollution from Zastava Energetika Kragujevac 250,000

Kosovo KO-5 Improvement of air quality, Pristina N/aKosova A thermal power plants

OTHER PROJECTS

Albania Al-13 Introducing desulphurisation of flue gas plant at Fier 5,700,000the heavy fuel-oil fired thermal power plant

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BOX 47

Air Pollution Control and Monitoring ProgrammeComponent: Air pollution monitoring programme

Description: This programme component promotes air pollution monitoring systems and networks.



BiH BH-1 Air quality monitoring Sarajevo 1,174,000

Croatia HR-5 Establishment of the National Network for Zagreb 1,700,000 Permanent Air Quality Monitoring in theRepublic of Croatia

Efficient Energy Use and Conservation ProgrammeComponent: Integrated energy planning

Description: The programme component focuses on minimisation of energy intensity through integrated planning ofenergy demand and supply. A parallel programme promotes the use of renewable sources.


OTHER PROJECTS

Albania Al-14 Reduction of sulphur dioxide and nitrogen oxides Tirana 3,200,000in Mother Teresa Hospital (the main hospital for Albania) by introducing energy efficiency measures and a combined heat and power plant for energy supply

Al-15 Reduction of sulphur dioxide and nitrogen oxides Tirana 3,600,000 in Student City (highest student population in Albania) by introducing energy efficiency measures and a combined heat and power plant for energy supply

Al-17 Reduction of carbon dioxide and nitrogen oxides Saranda (air emission) by introducing demand-side management at two main food factories in Albania 1,500,000

Al-16 Carrying out a feasibility study for reducing sulphur Kavaja dioxide and nitrogen oxides in air emissions by introducing local renewable energy sources in Borshi (Saranda), the most important tourist area of the Albanian Riviera 850,000

Al-18 Carrying out a feasibility study for introducing Tirana 50,000 a solar panel system for supplying hot water to older houses

NSF — Not secured funds



BOX 48

Integrated Solid Waste Management ProgrammeComponent: Municipal solid waste

Description: The programme component focuses on the closure and re-cultivation of illegal dumps and (in-country)regionalisation of solid waste disposal based on the concept of integrated approach to waste minimisation, collection,separation, recycling, incineration and disposal, including the optimal location and size of landfills.



Albania AL-4 Urban solid waste management plan Pogradec 1,000,000

Croatia HR-10 Mariscina waste collection and treatment centre Rijeka n/a

FYR Macedonia MA-17 Modernisation of municipal landfill through Skopje 2,000,000 degasification and utilisation of landfill gas

Serbia and MontenegroMontenegro MN-5 Closure and remediation of the existing waste Podgorica 23,000,000

disposal site and construction of a new Podgorica landfill, along with a recycling centre

Serbia SR-3 Remediation and enlargement of existing waste Vitliste disposal site (Jovanovac) and opening of new waste disposal site (Vitliste) 6,094,000

SR-16 Investment in measures of technical systems Nis 1,401,000 for environmental protection from the existing trash dump

SR-15 Sustainable integrated solid waste management Krusevac 5,337,000

SR-17 Re-cultivation and upgrading of the Badra landfill Svilajnac 828,000

SR-12 Construction of new Vladicin Han and Surdulica Vladicin Han 1,058,000 landfills along with recycling centre and Surdulica

OTHER PROJECTS

Albania AL-2 Management plan and construction of landfill Elbasan 1,531,000 for solid waste

AL-3 Urban waste management and construction Fierof a sanitary landfill 1,600,000

AL-8 Management plan for urban solid waste of ShkoderShkoder and construction of sanitary landfill 1,550,000

BiH BH-5 Construction of new sanitary landfill for Zvornik 1,819,000several municipalities

Croatia HR-12 Waste management, waste collection and Primorje- 7,000,000treatment centre Gorski Kotar

Serbia and MontenegroSerbia SR-14 Rehabilitation and remediation measures for Vranje

inactive waste disposal site near Vranje 160,000

SR-13 Developing a sustainable system for disposing Kragujevacof solid municipal waste 5,244,000

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BOX 49

Integrated Solid Waste Management ProgrammeComponent: Industrial and hazardous waste

Description: The programme component focuses on closure and re-cultivation of industrial and hazardous dumps.



Croatia HR-1 Animal waste management and effluent treatment Sesvetski 8,490,000system in the Agroproteinka rendering plant Kraljevec

HR-6 Pipo biogas plant Cakovec 1,958,000

HR-7 Elimination of asbestos pollution and decontamination of the production area Vranjic 6,500,000

HR-3 Remediation of Botovo and construction Slavonski Brod n/aof wash station in Slavonski Brod

HR-4 Waste disposal by deep well injection n/a

FYR Macedonia MA-4 Treatment of HCH waste from former Lindan Skopje 6,500,000production plant in Adohis

MA-16 Sanitary protective zones and re-cultivation of the Bitola 200,000 final slopes of soil

MA-15 Bio-reclamation revitalisation of hydro-tailings Bucim mine 257,000

MA-5 Procurement of waste recycling equipment for Gostivar 838,000solid waste treatment

MA-23 Slag fuming plant Veles 20,000,000

MA-14 Remediation of illegal hazardous-waste landfill Kumanovo n/a

MA-6 Solvent recuperation from waste in paint Pintija, Lisice 237,000and glue production

MA-25 Reconstruction of the flow round tunnel under the Makedonska 150,0000flotation hydro-tailing disposal of Sasa lead-zink mine Kamenica


Montenegro MN-1 Remediation measures for Mojkovac mining Mojkovac 500,000 waste disposal site

Serbia SR-10 Equipment supply for reconstruction and Kolubura 25,000presentation ash and slag depot

Kosovo KO-4 Rehabilitation of ash dumps in Obiliq Obiliq n/a

OTHER PROJECTS

Croatia HR-2 Incinerator 1,000,000

HR-11 Waste landfill Sarjak 30,000,000


Montenegro MN-4 Rehabilitation and remediation measures for the Borovica, 2,200,000 inactive Borovica coal pit, and for disposal sites Jagnijilo of Jagnijilo and Grevo and Grevo

BOX 50



Reconstruction and Modernisation of Water and Wastewater Systems programmeComponent: Public wastewater infrastructure reconstruction and modernisation for cities and agglomerations

Description: The programme focuses on reconstruction and modernisation of the public water supply and sewage sys-tems based on replacements and extensions of sewerage networks, mechanical-biological wastewater treatment plantand production of a safe and easy to handle sludge.



Albania Al-9 Water supply rehabilitation design for the Vlora 20,000,000Minicipality of Vlora

Al-10 Sewage system for the city of Fier Fier 2,000,000

Al-6 Wastewater treatment plant Durres 3,152,000

BiH BH-8 Construction of the wastewater treatment system Sarajevo 38,000,000

BH-6 Construction of the wastewater treatment system Mostar 23,750,000

BH-7 Construction of the wastewater treatment system Bileca 2,625,000

BH-2 Sewage system (and wastewater treatment plant) Bijeljina 9,000,000

FYR Macedonia MA-30 Wastewater treatment plant Veles 13,710,000

MA-1 Wastewater treatment system Skopje 53,100,000(three wastewater treatment plants)

MA-7 Rehabilitation of the wastewater treatment plant Skopje 10,415,000

MA-2 Wastewater treatment plant Prilep 9,190,000

MA-31 Dam of the Otinja River with associated facilities Stip 3,800,000

MA-29 Construction of hydro-system Orizarska Reka 28,000,000

MA-28 Construction of combined wastewater treatment Stenje 123,000plant in Stenje, Prespa Lake


Montenegro MN-7 Upgrade and extension of existing wastewater Podgorica 19,756,000treatment plant for the period up to 2011 (phase I), and construction of new facilities at a location outside the city area (Phases II and III) for the period 2012-2031

MN-6 Upgrade and extension of wastewater Podgorica 3,338,000treatment plant

MN-8 Construction of sewage system in the town of Kotor 16,000,000Tivat, and expansion and reconstruction of sewage system in the town of Kotor

Serbia SR-11 Construction of sewage system in the town of Vladicin Han 400,000Vladicin Han

SR-9 Upgrade and extension of wastewater treatment plant Subotica 30,000,000

BOX 50 (continued)



Water and Wastewater Systems programme (continued)



Serbia and MontenegroKosovo KO-2 Wastewater treatment plant Mitrovice 15,600,000

KO-1 Wastewater treatment plant Kacanik 6,500,000

KO-3 Wastewater treatment plant Prishtina 35,000,000

KO-6 The “Dragacine” system for water supply, Suhareka 8,725,000irrigation and industry in Suhareka Municipality

OTHER PROJECTS

Albania Al-7 Saranda wastewater plant Saranda n/a

Al-5 Sewage water treatment plant Lezha 318,000

AL-1 Rehabilitation and extension of water supply Durres 6,540,000 and sewerage system

Al-11 Rehabilitation and extension of water supply Lezha 2,165,000 and sewerage system

Al-12 Rehabilitation and extension of water supply and sewerage system Saranda 1,225,000

Bosnia and BH-3 Ecological protection of Modrac accumulation Tuzla 32,600,000Herzegovina as a main resource for water supply for the

population and industry of the Tuzla canton (Dunav river basin)

BH-4 Sewage system and wastewater treatment plant Kljuc 900,000

BOX 51



Reconstruction and Modernisation of Water and Wastewater Systems Programme Component: Industrial wastewater infrastructure

Description: The programme focuses on reconstruction and modernisation of the industrial sewage systems.



Croatia HR-8 Completion of the refinery wastewater Sisak n/atreatment plant

FYR Macedonia MA-24 Recycling the water in a fertiliser factory Veles 500,000

MA-9 Industrial and wastewater treatment station Bitola 7,322,000

MA-18 Leaching and cementation project in copper mine Radovis 1,500,000

MA-20 Konsko hydromelioration system Gevgelija 81,000,000

MA-19 Wastewater recycling project for Kicevo 1,500,000Kicevo/Oslomej

MA-26 Construction of combined wastewater treatment Gradsko 1,840,000plant in the pig farm

MA-27 Construction of combined wastewater treatment Kumanovo 7,915,000 plant in the pig farm

MA-8 Wastewater treatment plant for Fenimak Plant Kavadarci 150,000

Serbia and MontenegroSerbia SR-8 Improving the sewage system of the Novi Sad 3,700,000

Nis oil refinery

SR-1 Upgrade and extension of the Kolubara-Prerada Lazarevac- 1,800,000 wastewater treatment plant Vreoci

SR-5 Construction of new wastewater collector for the Veliki Krivelj 14,500,000Kriveljska River

SR-7 Rejuvenation of Lake Ludas Lake Ludas 3,797,000

OTHER PROJECTS

Croatia HR-13 Wastewater storage at AN/CAN fertiliser production plant Kutina 600,000

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Conclusions• As a result of the project collection process, 18 proj-

ects were submitted from Albania, eight from Bosniaand Herzegovina, 14 from Croatia, 31 from FYRMacedonia, 17 from Serbia, eight from Montenegroand six from Kosovo.

• The majority of projects submitted are in the earlystages of development, and therefore it is moreappropriate to refer to them as project ideas.

• The majority of projects were submitted for thewater sector (44) followed by the waste sector (35)and the air sector (23).

• The collected projects should not be treated as afinal list of projects proposing solutions for all majorenvironmental problems in the SEE region, butrather as a first attempt to collect environmentalinvestment project ideas within the given time andresources.

• There are cases where no projects were submittedfor particular sectors or countries, although theproblems existing there were identified in the set ofregional priorities. It can be concluded that the lackof those project ideas does not indicate the low pri-ority given to those problems, but rather it indicatesproblems with project formulation by potential proj-ect proponents.

• Project identification forms were strongly affectedby the lack of information, by the lack of cross-checking of the data provided and, consequently,by the lack of justification for the indicated invest-ment outlays. Therefore the analyses of projectsshould be treated with caution.

• The project prioritisation process indicated 79 highpriority projects from a regional perspective. Thefinancial gap is EUR 632 million. The projects arelocated in the SEE countries as follows: four projectsin Albania, five in Bosnia and Herzegovina, ten inCroatia, 31 in FYR Macedonia, seven in Montenegro,16 in Serbia and six in Kosovo.

• The high priority projects represent 77 percent of allprojects submitted. According to the criteria applied,the focus of the prioritisation exercise was placedon strategic criteria (strategic, geographical andhealth criteria amounted to 45 percent of the totalweight assigned). It can be therefore concluded thatthe high priority projects submitted target the mostdemanding environmental problems of the regionfrom a strategic point of view.

• From a sectoral perspective, there are 17 high pri-ority projects for the air sector, 26 for waste and 36for water.

• The lack of data has hindered the process of fullyapplying the set of prioritisation criteria. It wastherefore decided to freeze the environmental andfinancial criteria (for which the majority of data wasmissing) at this stage.

• Investment projects were clustered in four majorprogrammes: air pollution control and monitoring;efficient energy use and conservation; integratedsolid waste management; reconstruction and mod-ernisation of water and wastewater systems.

The Priority Environmental Investment Programme(PEIP) is a regional, institution-strengthening andcapacity-building tool that supports national environ-mental investment planning and provides backgroundinformation to the donor community and internationalfinancial institutions (IFIs) outlining a regional perspec-tive of investment planning.

The PEIP is a “living” document based on a long-term process of upgrading and updating the regionalevironmental priorities and investment ideas and devel-oping new outcomes. Its main achievements, (set ofregional environmental priorities and list of priorityinvestment projects) and the way forward for futurePEIP activities are summarised below.

Main achievementsThe set of regional environmental priorities has

been developed for the South Eastern European coun-tries. It consists of:

• regional priority environmental sectors, where envi-ronmental pressures seen from a regional perspec-tive are the most significant. The priority tasks are:the reduction of sulphur-dioxide emissions, munici-pal-waste generation and treatment and sewagetreatment.

• the set of hot spots, which consists of 143 locationsidentified on maps where multiple, priority, envi-ronmental problems exist.

• the set of national environmental priorities, whichgives the overview of SEE countries’ policy respons-es and their relation to the regional environmentalpriority sectors and hot spots.

The list of priority environmental investment proj-ects was compiled for the SEE countries. The projectprioritisation process identified 79 high priority projectsfor which non-secured funds amount to EUR 632 mil-lion. The projects are located in the SEE countries as fol-lows: four projects in Albania, five in Bosnia andHerzegovina, 10 in Croatia, 31 in FYR Macedonia, sevenin Montenegro, 16 in Serbia and six in Kosovo.

It must be noted that the set of regional environ-mental priorities and the list of priority projects havebeen compiled for the first time on a regional level,

based on the unified methodology and with the activeparticipation of stakeholders. This regional approach isespecially important when looking at the contributionsof the SEE region to European environmental pressuresand, more generally, to the pressures on a global scale.

The unified methodology, which was approved bythe SEE countries, introduced a systematic approach toinvestment planning which highlighted the regionalaspect of environmental protection over the politicaland historical divisions. Additionally, this unifiedapproach provided an objective, long-term, strategicdirection to investment planning in the SEE region,which shall complement the national investment plan-ning. The agreed criteria and systems of weights andscores provided an objective and systematic approachtowards priority setting.

The active involvement of the stakeholders (min-istries of environment of the SEE countries, the donorcommunity, IFIs, and NGOs) assisted and enabled thePEIP’s development. This participation is relevant to theexisting situation in the SEE countries and enabled thegathering of the most updated information.

The PEIP’s development helped to build the capaci-ty of the stakeholders, especially the ministries of envi-ronment. Trainings have been provided on project-cycle management, investment planning, priority set-ting, prioritising investment projects and identifyinginvestment programmes. The developmental processhas also played an important role in stimulating infor-mation exchange and cooperation between SEE coun-tries. The regional and, consequently, transboundarycontext of investment projects suggests that this coop-eration should continue.

It is important to note that the results of the PEIP’sdevelopment were linked to the intensive efforts of SEEcountries to achieve practical results. The PEIP canserve as a vehicle? for many potential networking activ-ities aimed at developing effective mechanisms foridentifying and implementing environmental initiatives.

The results of the PEIP development are a goodbasis for long-term investment planning, especially inrelation to the challenges connected to theStabilisation and Association process and implementa-tion of the EU requirements.


Chapter 6Overall Conclusions

Main limitationsWhile developing the sets of regional environmen-

tal priorities and investment projects, the lack of avail-able and reliable data was one of the most significantlimitations. It is partly related to the underdevelopedmonitoring systems in the SEE countries. Therefore, allinformation gathered for the project and presented inthis report was verified and approved by the ministriesof environment, which ensured that the most reliabledata and information were used.

In relation to the investment projects, the lack ofinformation on proposed investment projects could beseen in relation to the majority of submitted projects. Inaddition, it was not possible, due to the limited timeand resources allocated for this project, to verify theinformation provided by the investment-project propo-nents. This limitation influenced heavily the prioritisa-tion exercise, where particular criteria could not beused. It was therefore agreed that the criteria for whichdata is not available would be frozen for the prioritisa-tion exercise. Such was the case for the environmentaland financial criteria. The list of priority environmentalinvestment projects therefore highlights the priorityenvironmental projects from a strategic point of view.

At the same time it should be noted that the resultsof the PEIP’s development, as part of the long-termprocess, should not be treated as final, but rather as asummary of the existing information at this verymoment of the process, and which set the way forwardfor the future activities.

The way forwardAs mentioned previously, the Priority Environmental

Investment Programme is a regional institutional-strengthening and capacity-building tool that supportsnational environmental investment planning and pro-vides background information to the donor communityand IFIs, outlining the regional perspective of investmentplanning. It can be foreseen that together with the sign-ing of Stabilisation and Association agreements, whichbring SEE countries closer to integration into the EUstructures, the SEE countries will be increasingly focusedon the implementation of the EU directives. As proved inthe case of the accession countries, which will join theEU in May 2004, there are several EU directives — keyinvestment-heavy directives — that require major finan-cial resources for implementation. Identifying invest-ment needs in relation to the EU requirements is animportant step in that direction.

From this perspective, future activities related to thePEIP’s implementation should be linked to capacitybuilding and institution strengthening on the imple-mentation of the key investment-heavy EU directives inthe SEE countries.

There are several areas where the abovementionedcapacity building and institution strengthening shouldtake place:

• providing training on investment planning in rela-tion to the key EU heavy-investment directives;

• transferring best practices and lessons learned fromaccession countries on the implementation of thekey EU heavy-investment directives;

• assisting the upgrading of the list of priority invest-ment projects for the SEE countries;

• continuing the work on identifying hot spots andformulating project ideas;

• providing information on available financial assis-tance through development and dissemination ofSEE donor profiles;

• assisting SEE countries’ efforts to exchange informa-tion on best practices for implementing economicinstruments;

• providing assistance on the instructions for launch-ing and implementing the investment programmes;

• facilitating the regional exchange of information oninvestment planning and stimulating transboundaryinvestment activities;

• providing assistance to the project proponents informulating investment project ideas;

• assisting the development of domestic financingmechanisms, which need to be developed by thegovernments in order to support environmentalexpenditures, especially in environmental infra-structure development; and

• building capacity for implementing public-privatepartnerships.

The future activities of the PEIP should also belinked with other processes taking place at the nationallevel, including: developing national environmentalfinancing strategies, creating markets for environmentalservices or identifying project ideas at national andlocal levels. Together with providing the capacity build-ing assistance on a national level, there should be a bot-tom-up approach that enables the participation of thelocal levels of authorities in the overall PEIP process. Itis important to provide training on investment planningto local level administrators, since the majority ofinvestments will be implemented locally.

O V E R A L L C O N C L U S I O N ST H E W A Y F O R W A R D



NARRATIVE SUMMARY OBJECTIVELY SOURCES OF VERIFICATION ASSUMPTIONS AND RISKS VERIFIABLE INDICATORS

Wider Objective

To develop the Priority More effective environmental • Report on the PEIP’s Environmental Investment investment planning in the development Programme for the SEE region • REReP Task Force meetingsSEE countries

Project purpose

To facilitate investment •Set of regional • Final report on the PEIP’s Effective and appropriate planning in the SEE environmental priorities development participation of the project’scountries that more •List of the priority • National reports on focal points from the effectively and efficiently environmental investment participating in REReP environmental ministries addresses the environmental projects activitiesproblems of the SEE region • National documentation

prepared by the ministries of environment

Outputs

1. Set of regional Set of regional • Final report on the PEIP’s • Availability of environmental priorities environmental priorities development environmental data for the developed approved by the SEE • Minutes of the regional SEE countries

countries’ representatives and team meetings •Capacity of the focal pointsto be involved in the project

2. List of the priority List of the priority • Final report on the PEIP’s • Capacity within the environmental investment environmental investment development ministries to identify projects developed projects approved by the • Minutes of the regional projects

SEE countries and team meetings • Capacity of the focal pointsto be involved in the project

Annex 1Logical Framework for the

Methodology of the PEIP Development

A N N E X 1 : L O G I C A L F R A M E W O R K O F T H E M E T H O D O L G Y O F T H E P R I O R I T Y E N V I R O N M E N T A L I N V E S T M E N T


Activities Means

1.1. Develop methodology •Technical assistance Qualified staff exists in for setting regional programme SEE countriesenvironmental priorities •The work of the project

team and stakeholders

1.2. Collect data through county reports

1.3. Collect national hot spots

1.4. Propose regional environmental priorities

1.5. Gain approval for priorities by SEE countries

2.1. Develop the •Technical assistance Qualified staff exists in methodology for programme SEE countriescompiling the list of •The work of the project the priority projects team and stakeholders

2.2. Develop the project identification forms

2.3. Collect information about the national priority projects

2.4. Conduct the prioritisation exercise

2.5. Identify the priority regional programmes

2.6. Compile a list of priority projects for relevant regional programmes

2.7. Gain approval for the list of priority projects by SEE countries

2.8. Prepare the final report

Preconditions

• Full participation of all SEEcountries

• Donor and IFI communityinterest in the PEIP’s development

NARRATIVE SUMMARY OBJECTIVELY SOURCES OF VERIFICATION ASSUMPTIONS AND RISKS VERIFIABLE INDICATORS


Annex 2Project Identification

Form for Waste Sector Projects

PROJECT INFORMATION FORM — WASTE

Part A — General information

Please read the attached guidance before filling in the form

Country

Sector

Project submission Date

Project Code (filled by the REC)

Project title

A-1 Information about foreseen implementing agency

A-1.1 Name

A-1.2 Address

A-1.3 Phones

A-1.4 Faxes

A-1.5 Emails

A-1.6 Person responsible for contacts with the Ministry/Fund

A-1.7 Name and function of person responsible for overall project implementation

A-1.8 Legal status of the implementing agency

A-1.9 Institutions/firms jointly implementing the project (if any)

A-1.10 What is the division of responsibilities (if joint implementation)

A N N E X 2 : P R O J E C T I D E N T I F I C A T I O N F O R M F O R W A S T E S E C T O R P R O J E C T S


A-2 Strategic context

VH- very high; H- high; M- medium; L- low; VL– very low; N- none (mark where appropriate) VH H M L VL N

A2-1 What priority is allocated to the indicated sector on regional level?

A2-2 What priority is allocated to the indicated sector on country level?

A2-3 Does an up-to-date country strategy in this sector exist? Yes No

A2-4 Does an up-to-date country action plan in this sector exist? Yes No

A2-5 What is the project (idea) priority from the regional scale point of view?

A2-6 What priority is allocated to the project (idea) on a country level?

A2-7 What is the project (idea) priority from the cross border cooperation point of view?

A2-8 What is the project (idea) priority from the local point of view?

A2-9 What is the project (idea) priority from the human health protection point of view?

A2-10 What is the project (idea) priority from the country economy point of view?

A2-11 What is the project (idea) priority from the ecosystem point of view?

A-3 Information about the project

A3.1 Short description of the environmental problem

A3.2 Origins and positive environmental impact of the projectA3.2.1 Description of factors that inspired the project (driving forces)

A3.2.2 Project main goal and objectives

A3.2.3 Expected positive environmental effects

A3.2.4 Health impact of the project

A3.2.5 Size of population benefiting from the project implementation

A3.2.6 Scale of impact Regional Country Cross border (County) Local



A3.3 Project status Performance [%] Start [MM/YY] End [MM/YY]

A.3.3.1 Pre-feasibility study

A.3.3.2 Feasibility study

A.3.3.3 Detail engineering designs

A.3.3.4 EIA

A.3.3.5 Permits

A.3.3.6 Financing

A.3.3.7 Procurements

A.3.3.8 Construction

A.3.3.9 Start of operation and training staff

A.3.3.10 Operation

A.3.3.11 Description of critical factorsaffecting project implementation:

PROJECT INFORMATION FORM Part B — Waste managementB Technical and environmental information on project

B-1 Project type

B1.1 Project type

B1.2 Technical description

B1.3 Project location(s) (exact address)

B1.4 Location from the environmental impact point of view (mark where appropriate)

Hot spots

Downtown area and/or specially protected areas

Other densely populated areas

Loosely populated areas

B-2 Status of the ownership title to land and buildings (mark where appropriate)

B2.1 Settled

B2.2 Not settled

B2.3 Under settlement (describe status)



B-3 Category of a technological solution proposed (mark where appropriate)

B3.1 Modern

B3.2 Modern, not widely implemented

B3.3 Traditional

B3.4 Old

B-4 Pressure on environment

Generating intensities Unit Before project After project

B4.1 MSW tons/a

B4.2 Percentage of disposed waste %

B4.3 Industrial waste tons/a

B4.4 Nuclear waste tons/a

B4.5 Hazardous waste tons/a

B4.6 Other tons/a

B4.7 Waste recycling %

B-5 Evidence of the reduction of pressure on environment (mark where appropriate)

B5.1 By direct emission monitoring

B5.2 By technical specification of equipment

B5.3 Other, e.g. input characteristics (give a description)

B5.4 None

B-6 Stakeholders opinion (mark where appropriate)

B6.1 Positive attitude of authorities,local population and NGOs

B6.2 Positive attitude of authorities, public protests

B6.3 Public opinion not informed

B6.4 Project known, attitudes neutral

B6.5 Negative attitude of authorities, local population and NGOs

B6.6 Opinions not known



PROJECT INFORMATION FORM

Part C — Financial information

C Financial information on project

C-1 Investment outlays [thousand EUR]

C-2 Operating costs and revenues due to project implementation [thousand EUR]

Before project After project

Total operating costs

Total operating revenues

C-3 Operating capital [thousand EUR]After project

Demand for working capital

C-4 Financing sources [thousand EUR] Total

Disbursed Committed Planned thousand EUR %

C4.1 Own sources

C4.2 Grants (source: ......................)

C4.3 Soft Loans (source: ......................)

C4.4 Loans with subsidised interest(source: ......................)

C4.5 Private sector(source: ......................)

C4.6 Other (please specify)(source: ......................)

C4.7 Total

C.5 Financing schedule [thousand EUR]

Planned Sources _ Own Other Total Year

Activity C.4.1 C42- C4.6 C4.7 2003 2004 2004 2005 2006 Total

Preparation phase

Construction

Total


Annex 3Full List of Hot Spots

Albania 94

Bosnia and Herzegovina 96

Croatia 100

FYR Macedonia 104

Serbia and MontenegroMontenegro 112Serbia 115Kosovo (territory under UN interim administration) 119

Hot spots No. 33, 35 and 43 have not been identified on the maps provided. They are presented only in tabular form.

The designation of geographical entities in this publication and the presentation of material do not imply expression of any opinion on the

part of the REC concerning the legal status of any country, territory or area, orof their authorities concerning the delimitation of their frontiers or boundaries.

A N N E X 3 : F U L L L I S T O F H O T S P O T SA L B A N I A


Kosovo

likaa

ALBANIA

BULG

F Y R M A C E D O N I A

Montenegro

G R E E C E

S E R B I A A N DM O N T E N E G R O

Corfu

Tirana

Vlora

Shkodra

Lushnje

Durres

Berat

Niköic

Kozani

Florina Edessa

Peshkopi

Kukes

Korce

Gjirokaster

Elbasan

Vidin Calafat

Pernik

Montana

Kyustendil

Vranje

Urosevac

Titov Veles

Tetovo

Strumica

Stip

Prizren

Pristina

Prilep

Pec

Paracin

Ohrid

Novi Pazar

Kumanovo

Kraljevo

Gnjilane

Bitola

LarsiaIoannina

Sarande

Tepelene

Gostivar

Kosovska Mitrovica

Pale

Gorazde

Priboj

BijeloPolje

Bar

Foca

Thessalonik

Katerini

Kastoria

Uzice

Dakovica

Berane

Kotor

Shengjin

Veroia

Podgorica

Skopje

Fier

BALKANMTS.

PI

ND

US

MT

S.

NORTHALBANIAN

ALPS

SA

RP L A

NI N A

Lake

Lake

LakeScutari

Ohrid

Prespa

OtrantoStrait of

Morava

Vardar

Piva

Tara

Vjose

c9

8

2

7

1

64

5

3

Albania1. TiranaSharra waste disposal site

Due to the lack of hazardous wastes facilities in thecountry, Sharra’s waste may be assumed to containtoxic pollutants. Toxic smoke and dust is being emittedfrom the dump’s burning rubbish, exposing inhabitantsin the area to serious health risks. Dumpsite effluentsare probably leaching into the groundwater and con-taminating nearby waters.

2. DurresFormer chemical plant in Porto Romano

Several square kilometres of land are severely con-taminated by hazardous chemicals and residues from aformer chemical plant, a waste dump and an aban-doned chemical storage site. Thousands of people whohave recently arrived from other areas of Albania areliving amid and around the toxic contamination. Graverisks are posed to human health, groundwater, andmarine habitat.

3. VloraFormer chlorine alkali and PVC factory

The site is situated 5 kilometres from the city ofVlora. According to a feasibility study from 1992,approximately 5-6 hectares of former factory groundshave contaminated soil, with mercury to a depth of 1.0-1.5 metres below ground level. Families and domesticanimals are living in extremely hazardous, mercury-contaminated conditions. Steps are not being taken toprevent contamination of the environment by the mer-cury sludge being dumped nearby.

4. PatosMarinza oil field

Groundwater is being severely contaminated by oilfrom wells, pumps, pipelines and pre-treatment facili-ties. Sulphurous gas and hydrocarbon emissions are pol-luting the surrounding atmosphere. Families living in theoil fields are being exposed to serious health risks.

5. BallshOil refinery

Large quantities of the refinery’s oil are emitted intothe surrounding environment (around 20,000 tonnes peryear). Wastewater containing oil impurities is being dis-charged into a channel, contaminating the Gjanica River,and probably affecting the local water supply. The refin-ery emits several toxic air pollutants into the atmosphere.

6. FierFormer nitrate fertiliser plant

A total of 850 cubic metres of arsenate and arsenidesolution require proper disposal. Soil and most likelygroundwater are contaminated with high levels ofarsenic. The groundwater feeds the river that supplieslocal drinking-water wells. Untreated wastewater isbeing discharged into the same river.

7. ElbasanFormer metallurgical complex

Dumped waste containing high concentrations ofheavy metals may be contaminating nearby drinkingwater sources. Untreated wastewater from the plant isbeing discharged into the Shkumbini River. The majorsource of concern in Elbasan is the possible soil andgroundwater contamination being caused by the dis-posal of 1.5-2.0 million tonnes of solid waste. The waste— tailing and dust from coke production — containsheavy metals.

8. RubikFormer copper factory

A stockpile of copper-rich residues may be contam-inating local drinking water supplies and posing a riskto human health.

9. LacFormer phosphate fertiliser factory

A stockpile of residues is probably leaching arsenicand copper into the groundwater and contaminatinglocal drinking water sources. About 30,000 tonnes ofiron-rich residues from the production process remaindeposited on the factory grounds. The dumpsite wasbuilt without previous preparation of the soil, a protec-tive liner underneath, or a drainage system to preventleachage.

A N N E X 3 : F U L L L I S T O F H O T S P O T SA L B A N I A


A N N E X 3 : F U L L L I S T O F H O T S P O T SB O S N I A A N D H E R Z E G O V I N A


Republika Srpska

Vojvodina

Kos

Federation of Bosniaand Herzegovina

Republika Srpska

C R O A T I A

H U N G A R Y

B O S N I AA N D

H E R Z E G O V I N A

M

Serbia

I T A L Y

Montenegro

E N I A

S E R B IM O N T

Tirana

Vukovar

Varazdin

Subotica

Slavonski Brod

Sisak

ovo Mesto

SlunjSenj

Zadar

OsijekKarlovac

Celje

amnik

Bjelovar

Szekszard

Pecs

gy

Kaposvar

T

Zrenjanin

Kikinda

Szeged

Hodmezova

Barletta

Bari

Shkodra

Durres

Zenica

Valjevo

Tuzla

Brcko

Split

Sibenik

Sabac

Panc

RumaPrijedor

Niksic

Mostar

Dubrovnik

Bijeljina

BihacBanja Luka

Peshkopi

Kukes

Elbasan

Smede

Priz

Pec

Novi Pazar

Kragujev

K M

Pale

Gorazde

Priboj

BijeloPolje

Bar

Novi Sad

Udbina

Knin

Ploce

Doboj

Srebrenica

Kljuc

Foca

Uzice

Neum

Dakov

Berane

Kotor

Shengjin

SomborZagreb

ubljana

Belgrade

Sarajevo

Podgorica

DA

LM

AT

I A

NORTHALBANIAN

ALPS

B A N A

SA

RP L A

P AN

NO

NI A N

B A S I N

La

LakeScutari

Oh

Sava

Sava

Drava

Danube

Tisa

Danub

e

Drina

Piva

Tara

Tisza

A d r i a t i c

S e a

4024

15

30

23

2518

2842

37

31

10

12

2632

1344

41

39

36

11

29

19

20

27

16

17

38

34

2122

14

Bosnia and Hercegovina10. Mostar Aluminium factory

The aluminium factory sited near Mostar (126,000inhabitants) does not currently represent a hot spot.However, under unpredictable conditions or unforeseenaccidents, the existence of risk is evident. The outflow ofhighly alkaline red sludge, consisting of red soil andsodium hydroxide, may produce unpredictable damageand destruction to both the surrounding soil and the sur-face-water and groundwater streams. The two potablewater sources that flow into the Neretva River are locat-ed downstream of the disposal sites. These sources sup-ply the cities of Capljina in Bosnia and Herzegovina andMetkovic in Croatia. An environmental impact assess-ment (of the possibility of leakage through an imperme-able asphalt layer and the impact of leakage on springs)would be helpful in preventing accidents and in organ-ising the proper response should an accident occur.

11. Bileca Sewerage system and wastewater treatment plant

The town of Bileca has a poor sewerage systemserving its 15,000 inhabitants. About 50 percent of thepopulation is served by sewerage network, dischargingits wastewater directly into the accumulation. Theremaining population use septic tanks. Since septictanks are not properly constructed, wastewater fromthem drains into the lake, and therefore all wastewateris discharged directly or indirectly into the lake.

Reconstruction of the wastewater treatment plant of a carpet factory

Before the war, the Bilecanka Carpet Factory in Bilecawas one of the biggest wool consumers in formerYugoslavia. About 150,000 tonnes of wool, most of itAustralian, were processed there annually. The factory hadprimary treatment separating lanolin and paints. The plantwas destroyed during the war. At present, the wastewateris directly discharged without any treatment. Although thefactory is working at a reduced capacity at the moment, itis necessary to reconstruct the treatment plant.

12. Konic MunicipalitySewerage system and wastewater treatment plant

The population of more than 20,000 inhabitants, andindustry — mostly metal finishing — with a populationequivalent of more than 25,000, generates heavily con-centrated pollution. As Konjic Municipality is located in

the upper part of the BiH Mediterranean Region, andwastewater is discharged directly into its main river,Neretva, the absence of wastewater treatment in thislocation severely impacts the whole region, includingthe Adriatic Sea, particularly regarding the contamina-tion of downstream, potable water sources.

Constructing a sanitary landfill siteKonjic Municipality does not have adequate sanitary

disposal of municipal or industrial solid waste. Thereare 5,500 apartments in Konjic and its surrounding set-tlements, while two big industrial complexes —mechanical industry (along the Neretva River) andwood industry (along the Tresanica River) — are sitedin the heart of the town. A solution needs to found tothe problem of unsanitary disposal of municipal solidwaste from the city centre and surrounding settlements— Bijela, Glavicina, Gornje polje, Ovcari, Repovica,Pomol, Tuleg, Drecelj and Dolje Selo — into the citylandfill (Repovacki potok).

13. Sarajevo Air ambient quality

Cars and local sources contribute emissions to theair. Ambient air quality in Sarajevo (527,000 inhabitants)is recognised as a hot spot during the winter. Sarajevohas a unique meteorological situation where tempera-ture inversion exacerbates air quality.

Wastewater treatment plant in SarajevoThe reconstruction and revitalisation of a sewage

treatment plant is under way. The size of the plant isdesigned to have — for the first stage — a populationequivalent of 600,000, with an average flow 2.0 cubicmetres per second. It is located in the Bosna river basin.

14. Tuzla Tuzla power plant

High levels of air emissions are present from the fos-sil fuel used at a power plant and other industry in Tuzla(130,000 inhabitants).

Sewerage system and wastewater treatment plant

The Municipality of Tuzla runs a treatment plant andoffers regional sewerage for the cities of Tuzla andLukavac. The capacity of the treatment plant should beabout 850,000 population equivalent (Bosna river basin).

Waste from chlorine-alkaline complex A chlorine-alkaline complex, located near the city of

Tuzla (Bosna river basin), produces non-biodegradablewastewater of high toxicity.



15. Banja LukaSewerage system and wastewater treatment plant

The Municipality of Banja Luka (population200,000) has a wastewater treatment plant and offersregional sewerage to a population equivalent of 2,400.It is located in the Vrbas river basin.

Ambient air qualityCars and local sources release emissions into the air.

Waste from cellulose and viscose factoryA cellulose and viscose factory, located in Banja

Luka, needs reconstruction and its existing facilitiesneed to be extended. It is located in the Vrbas riverbasin.

16. BijeljinaSewerage system and wastewater treatment plant

The Municipality of Bijeljina has a regional seweragesystem and wastewater treatment plant for a populationequivalent of about 160,000 (population of municipali-ty is 50,000). It is located in the Sava river basin.

17. BrckoSewerage system and wastewater treatment plant

The Municipality of Brcko has a regional seweragesystem and wastewater treatment plant of about550,000 PE (population of Brcko municipality is50,000). It is located in the Sava river basin.

18. Przici (Vares)Disposal site of waste from leadand zinc production

The Environmental Protection Assessment Report forIndustrial, Medical and Other Hazardous Wastes inBosnia and Herzegovina concludes that the waste fromlead and zinc production is highly toxic. This waste is cre-ated as a side product in the extraction of these metals inVares. Dry methods of waste disposal are employed.

19. SrebrenicaWaste from lead and zinc production

The Environmental Protection Assessment Reportfor Industrial, Medical and Other Hazardous Wastes inBosnia and Herzegovina concludes that the waste fromlead and zinc production is highly toxic. This waste iscreated as a side product in the extraction of lead andzinc in Srebrenica. Wet disposal is used on the waste.

20. ZvornikDisposal of red mud from the TG Birac

The Environmental Protection Assessment Reportfor Industrial, Medical and Other Hazardous Wastes inBosnia and Herzegovina concludes that red mud fromaluminium production in Zvornik is highly toxic. Wasteis disposed of in a landfill inside the plant.

21. Bosansko Petrovo SeloWaste from asbestos production

The Environmental Protection Assessment Report forIndustrial, Medical and Other Hazardous Wastes inBosnia and Herzegovina concludes that the waste fromasbestos production is highly toxic. Waste is generated inthe asbestos factory in Bosansko Petrovo Selo. Dry dis-posal is used, and the waste is disposed of in the closevicinity of the factory itself. During the war the factorywas devastated, and therefore no production is takingplace. This is an extremely dangerous and hazardous dis-posal site that must be re-cultivated as soon as possible.

22. LukavacWaste from coke-chemical industry

The coke-chemical industry, located in Lukavacnear the city of Tuzla, produces wastewater of high tox-icity, and the wastewater treatment plant is in need ofreconstruction. It is located in the Bosna river basin.

23. MaglajWaste from cellulose and viscose factory

Reconstruction of the existing facilities of a celluloseand paper factory located in Maglaj (population equiv-alent of 400,000) is needed. It is located in the Bosnariver basin.

24. PrijedorWaste from cellulose and viscose factory

A cellulose and paper factory is located in Prijedor(population equivalent of about 1,200,000). It is locatedin the Una-Sana river basin.

25. Zenica Waste from mining-metallurgic plant

Waste from the mining-metallurgic plant in Zenicarequires the reconstruction of the existing wastewatertreatment plant. It is located in the Bosna river basin.

Air Air emissions result from fossil fuel use and metal

production.



26. Boracko LakeInfrastructure facilities

Boracko Lake and its environment represent one ofthe most important natural areas in Bosnia andHerzegovina. In addition to the lake, the canyons of theNeretva and Rakitnica rivers, and the Prenj andBorasnica mountains, represent significant natural val-ues, especially for fishermen. Prenj Mountain attractshikers and hunters, while the Borasnica and Kisermountains are valuable areas for winter sports. Until1992, many picnickers and tourists visited this area dur-ing the summer season. As a result of the war, the struc-tures and infrastructure of Boracko Lake and its sur-roundings were destroyed. In order to exploit the lake,particularly for tourism, it is necessary to construct andreconstruct infrastructure facilities.

27. UgjevikPower plant

Heavy emissions from fossil fuels are released intothe air of Ugjevik (population 25,000*).

28. Kakanj-CaticiPower plant

Heavy air emissions in Kakanj-Catici (population55,000*) result from fossil fuel use from the KA powerplant and the cement industry.

29. GackoPower plant

Heavy air emissions in Gacko (population 11,000*)result from fossil fuel use.

30. JajceFerrou-Silicy factory

Emissions from fossil fuels and metal productionfrom the Ferrou-Silicy factory impact the air of Jajce(population 45,000*).

31. Prenj-Cvrsnica-Cabulja National ParkNatural values

The Prenj-Cvrsnica-Cabulja National Park is a centrefor endemic species of Herzegovina that covers an areaof 9,500 square metres.

32. Treskavica-Igman-Bjelasnica National Park Natural values

The relief-geological, endemic characteristics andbiodiversity of the flora and fauna, represent significantnatural values, along with the different types of climate.

33. Una River National ParkNatural values

The particular value of this area is Strbacki-buk, withits waterfalls and cascades arisen by the effects of bio-logical, chemical and physical factors.

34. Bijambare Protected landscape

The Bijambare landscape covers an area of 3.5square kilometres. The Bijambare cave is of particularvalue in this area.

35. SkakavacNatural values

The nature monuments of Skakavac cover an area of14 square kilometres. The Skakavac waterfall is of par-ticular value in this area.

36. Hutovo Blato Nature ParkNatural values

The Hutovo Blato Nature Bark contains an ornitho-logical reservation over an area of 350 hectares.

37. Blidinje Nature parkNatural values

Endemic species of flora and fauna, Blidinjsko Lake,a forest reservation, and a geomorphologic reservationare the particular values of this area.

38. Bardaca Nature park

The Bardaca Nature Park is a valuable ornithologicalreservation.

39. Sutjeska National ParkNatural values

The virgin forest of Perucica gives special value tothe Sutjeska National Park, covering an area of 17,250hectares.

40. Kozara National ParkNatural values

The Kozara National Park, with distinct hydro-oro-graphic characteristics, and rich flora (specific plantgroups, shrubs and bushes), covers an area of 3,375hectares.



41. Jahorina Nature Park Natural values

Forests values, including a rich biodiversity of floraand fauna, cover 20 square kilometres in the JahorinaNature Park.

42. Vranica Nature ParkNatural values

Numerous endemic species live in the VranicaNational Park. Prokosko Lake is of particular value inthis area

43. Miljacka River Canyon Nature ParkValuable species

Numerous endemic species exist in the nature parkof the Miljacka river canyon.

44. Trebevic Nature ParkNatural values

Forests values cover 1,000 hectares of the TrebevicNature Park.

* Pre-war figure.

Croatia45. KoprivnicaWastewater treatment plant

The town of Koprivnica is located in Bjelovar-Bilogora County in northern Croatia. It has about 24,000inhabitants. The existing wastewater treatment plant,which has primary treatment technology, was built in1989 and upgraded in 1998. The capacity of the existingplant has a population equivalent of 100,000. The exist-ing primary treatment plant needs technical upgrading,which includes the construction of a secondary (biolog-ical) treatment unit and a solution for the sludge dispos-al for the municipal and industrial wastewaters ofKoprivnica. Sanitary and water-quality improvements ofthe Mozdanski Jarak stream in the lower Mura-Dravariver basin are needed. The proposed plant would havea population equivalent of 100,000.

46. BjelovarWastewater treatment plant

The town of Bjelovar is located in Bjelovar-BilogoraCounty in northern Croatia. It has about 32,000 inhabi-tants. The existing wastewater treatment plant was setup in 1984 and upgraded in 2001 with secondary treat-ment technology. The capacity of the existing plant hasa population equivalent 100,000. The existing capacity

of the secondary (biological) treatment unit for themunicipal and industrial wastewaters of the town ofBjelovar needs to be expanded. Improvements areneeded to the sanitation and water quality of theBjelovarska River. The capacity of the proposed plantwould have a population equivalent of 200,000.

47. SisakWastewater treatment

The town of Sisak is located in Sisako-MoslavinaCounty in central Croatia. It has about 45,400 inhabitants.A new wastewater treatment plant (population equiva-lent of 60,000) is needed, with primary and secondary(biological) treatment technology units and solution forthe sludge disposal of the municipal and industrial waste-waters of Sisak. Improvements to sanitation and thewater quality of the Sava River are also needed.

Thermal power plant Placed at the southern end of the industrial zone in

Sisak, this thermal power plant has the largest powerinstalled in Croatia (maximal power installed is 420megawatts). Fuel use includes fuel oil (average annualconsumption of 264,000 tonnes), crude oil and naturalgas (126,000,000 cubic metres).

INA oil refineryINA’s Sisak oil refinery (in the vicinity of the town),

produces various kinds of motor fuels and fluid oils.INA is Croatia's largest company for oil and gas explo-ration and the production, refining, transport and distri-bution of gas and oil products.

48. Karlovac and Duga ResaWastewater treatment plant

The town of Karlovac is located in Karlovac Countyin central Croatia. It has about 60,000 inhabitants. Anew wastewater treatment plant is needed with primaryand secondary (biological) treatment technology unitsand solution for the sludge disposal of the municipaland industrial wastewaters of Karlovac. The plantwould have a population equivalent of 75,000 and pro-vide sanitary and recreational benefits, as well as pro-tection for the water quality of the Kupa River.

49. Slavonski BrodWastewater treatment plant

The town of Slavonski Brod is located in Slavonski-Brod County in eastern Croatia. It has about 60,000inhabitants. A new wastewater treatment plant is need-ed with primary and secondary (biological) treatmenttechnology units and solution for the sludge disposal ofthe municipal and industrial wastewaters of Slavonski

A N N E X 3 : F U L L L I S T O F H O T S P O T SB O S N I A A N D H E R Z E G O V I N A • C R O A T I A


A N N E X 3 : F U L L L I S T O F H O T S P O T SC R O A T I A


Republika Srpska


Republika Srpska

C R O A T I A

H U N G A R Y

B O S N I AA N D

H E R Z E G O V I N A

I T A L Y

Montenegro

SLOVENIA

Vukovar

Varazdin

Slavonski Brod

Sisak

Novo Mesto

Slunj

Pazin

Porec

Pula Senj

Rijeka

Zadar

OsijekKarlovac

Celje

Kamnik

Maribor

KlagenfurtVillach

Udine

Trieste

orzila

Kranj

Bjelovar

Szekszard

Pecs

Nagykanizsa

Kaposvar

Barletta D

Tuzla

Brcko

Split

Sibenik

S

Prijedor

Niksic

Mostar

Dubrovnik

Bijeljina

BihacBanja Luka

Pale

Gorazde

Priboj

BiP

Bar

N

Udbina

Knin

Ploce

Doboj

SrebrenicaGlamoc

Kljuc

Foca

Neum

Kotor

SomborZagreb

Ljubljana

Sarajevo

Podgorica

DA

LM

AT

I A

DI

NA

RI

C

AL

PS

P AN

NO

NI A N

B A S I N

Sava

Drava

Danub

e

D

Piva

Tara

A d r i a t i c

S e a

49

63

46545352

48

64

65

60

6766

5955

61

58

57

68

56

62

47

45

50

51

Brod. The plant would provide recreational benefitsand protect the water quality of the Sava River. Thecapacity of the plant would have a population equiva-lent of 80,000.

50. OsijekWastewater treatment plant

The town of Osijek is located in Osijek-BaranjaCounty in eastern Croatia. It has about 130,000 inhabi-tants. A new wastewater treatment plant is needed withsecondary (biological) treatment technology units andsolution for the sludge disposal of the municipal andindustrial wastewaters of the town Osijek and sur-rounding settlements. The plant would improve sanita-tion and protect biodiversity, while improving the waterquality of the Drava River. The capacity of the plantwould have a population equivalent of 800,000.

51. VukovarWastewater treatment plant

The town of Vukovar is located in Vukovar-SrijemCounty in eastern Croatia. It has about 35,000 inhabi-tants. A new wastewater treatment plant is needed withsecondary (biological) treatment technology units andsolution for the sludge disposal of the municipal andindustrial wastewaters of Vukovar and surrounding set-tlements. The plant would provide sanitary benefits andprotect the water quality of the Danube River. Thecapacity of the proposed plant would have a popula-tion equivalent 85,000.

52. SamoborWastewater treatment plant

The town of Samobor is situated in Zagreb County incentral Croatia. The existing wastewater treatment plantwas set up in 1983 with primary and biological treatmenttechnology. The plant consists of one block, but itsequipment is worn out and in need of repair. The existingwastewater treatment plant should be reconstructed withprimary and secondary (biological) treatment technologyunits. Technical upgrading is also needed by establishingsludge-treatment line units for the municipal and industri-al wastewaters of Samobor and surrounding settlements.The plant (proposed population equivalent of 23,000)would improve sanitation and effluent quality and protectthe waters of the local recipient.

53. ZapresicWastewater treatment plant

The town of Zapresic is situated in Zagreb County incentral Croatia. A wastewater treatment plant is neededwith primary and secondary (biological) treatment tech-

nology units for the municipal and industrial waste-waters of Zapresic and surrounding settlements. Theplant would be built in two stages, with a total capacityof 176,000 population equivalent in the final stage. Theplant would improve sanitation and effluent quality, andprotect the waters of the local recipient.

54. Velika GoricaWastewater treatment plant

The town of Velika Gorica is situated in ZagrebCounty in central Croatia. The existing wastewater treat-ment plant unit was set up in 1973 with primary andbiological treatment technology. The plant consists oftwo blocks, but its equipment is worn out and in needof reconstruction. The reconstruction of Block I is underway with a population equivalent (PE) of 12,000. BlockII (23,000 PE) also requires reconstruction, with primaryand secondary (biological) treatment technology unitsand technical upgrading with sludge treatment lineunits for the municipal and industrial wastewaters ofVelika Gorica and surrounding settlements. The recon-struction would improve sanitation and effluent quality,and protect the waters of the local recipient.

55. Opatija-LovranWastewater treatment plant

The town of Opatija is located near Rijeka, inKvarner Bay, Primorje-Gorski Kotar County. The townand the surrounding settlements of Lovran, MoscenickaDraga and Matulji have about 29,800 inhabitants and17,000 beds of tourist capacity. The sewage of Opatija iscurrently disposed of through a sewerage system andwastewater treatment plant with primary treatmenttechnology. The existing wastewater treatment plantunit was set up in 1989 with primary treatment technol-ogy and partly reconstructed during the 1990s.

The wastewater treatment plant is in need of recon-struction and technical upgrading with new primarytreatment units for the municipal wastewaters ofOpatija. The plant would provide sanitary, recreational,biodiversity and economic benefits. It would also helpto protect the coastal sea. The plant would have a pop-ulation equivalent of 46,000.

56. Northern PulaWastewater treatment plant

The town of Pula and the municipalities Vodnjanand Fazana are located in Istrian County on the Istriapeninsula. Sewage from these municipalities is current-ly disposed of through the Peroj sewerage system and awastewater treatment plant with primary treatmenttechnology with a population equivalent of 13,800. Thewastewater treatment plant requires extension and



technical upgrading, via construction of the secondstage of primary and complete biological and sludgetreatment units for the municipal wastewaters of thesesettlements. The improvements would provide sanitary,recreational, biodiversity and economic benefits. It willalso help protect the coastal sea. The proposed plantwould have a population equivalent of 41,600.

57. RovinjSewerage and wastewater treatment plant

The town of Rovinj is located in Istrian County onthe Istria peninsula. There are about 14,200 inhabitantsand about 45,200 users during the summer. The sewageof this town is currently disposed of through three sew-erage sub-systems. In the northern system, wastewateris disposed of through septic tanks or through directoutlets into the sea. The central and southern seweragesub-systems are connected to a wastewater treatmentplant with primary treatment technology. Extension andtechnical upgrading of the wastewater treatment plantis needed via the construction of the second stage ofprimary and complete biological and sludge treatmentunits for the municipal wastewater of Rovinj. Theimprovements would provide sanitary, recreational,biodiversity and economic benefits, while also helpingto protect the coastal sea. The proposed plant wouldhave a population equivalent of 65,000.

58. Southern PorecSewerage and wastewater treatment plant

The town of Porec is located in Istrian County on theIstria peninsula. There are 6,377 inhabitants and about43,700 users in the summer. The town’s sewage is cur-rently disposed of through a sewerage system connect-ed to a wastewater treatment plant with primary andsecondary treatment technology. The existing waste-water treatment plant in Debeli rt is in good condition.

A new wastewater treatment plant is needed withprimary and secondary treatment technology at thePorec-south location. It is proposed because the exten-sion and technical upgrading of the existing wastewatertreatment plant in Debeli rt is not possible. The plantwould provide sanitary, recreational, biodiversity andeconomic benefits and protect the coastal sea, with apopulation equivalent of 62,000.

59. RijekaThermal power plant

Placed at the coast, 10 kilometres from the centre ofRijeka, TE Rijeka is one of the biggest power generationfacilities in Croatia. Its installed power is 320 megawatts.Its average annual fuel consumption is 160,000 litres offuel oil.

INA oil refineryINA’s Rijeka Oil Refinery, located in the vicinity of

Rijeka, produces various kinds of motor fuels and fluidoils. INA is Croatia's largest company for oil and gasexploration, and the production, refining, transport anddistribution of gas and oil products.

60. Kastel SucuracChemical production

Placed in the vicinity of Kastel Sucurac (near Split),DCRMC Group d.d. (Dalmacijacement) is the biggestcement producer in Croatia — with a capacity of 2 milliontonnes per year — consisting of three production facilities.

61 Plomin Thermal power plant

Placed in the vicinity of the towns of Rabac andLabin (near Rijeka), the Plomin thermal power plantconsists of two blocks (125 and 210 megawatts) con-nected to the same exhaust system. It has an annualconsumption of 700,000-800,000 tonnes of coal.

62. ZagrebJakusevac waste disposal site

Placed in a densely inhabited area of the city ofZagreb, the Jakusevac waste site contains 6 millioncubic metres of disposed municipal waste, as well aspollution by an industrial (potentially hazardous) waste.

63. KutinaPetrokemija and phosphogypsum disposal

Placed in the vicinity of the town of Kutina,Petrokemija is one of the largest chemical companies. Itproduces fertilisers (about 1 million tonnes per year),carbon black and bentonite clay. Fertiliser production isbased on the use of raw phosphates, sulphur and natu-ral gas. The plant also produces ammonia, nitric, sul-phuric and phosphoric acids, urea and nitrogen. Themain environmental problem is the disposal site for thephosphogypsum from phosphoric acid production(about 3.5 million cubic metres).

64. Plitvicka Jezera National ParkSewage treatment

The area of the Plitvicka Jezera National Park islocated in Karlovac County in central Croatia. Theregion includes 18 settlements and hotel complexes.There are about 1,500 inhabitants in the area. The exist-ing sewerage mains need to be reconstructed, and anew wastewater treatment plant should be built withprimary, secondary (biological), nitrogen and phospho-



rus removal treatment technology units and solution forthe sludge disposal for the wastewaters of the area. Theimprovements would provide sanitary, recreational andbiodiversity benefits, and protect the waters within thearea. It would also protect against the karst phenome-non and reduce pollution into the Korana River. Theplant would have a population equivalent of 12,000.

65. SkradinSewerage system and wastewater treatment plant

Skradin is situated in Sibenik-Knin County, in themunicipality of Skradin, along the lower course of theKrka River near Skradinsko Polje. Although Skradin iswithin the area of the Krka National Park, it is not with-in the “basic phenomenon.” Sewage is currently dis-posed of through septic tanks, most of which are leaky,or through direct outlets into the Krka River, which isclassified as “a very sensitive area” by the NationalWater Protection Plan.

Needs for the area include a sewerage system and awastewater treatment plant with third-grade treatmenttechnology for the wastewater of the Skradin settle-ment. Construction of this system would solve the prob-lem of wastewater disposal in Skradin, and provide san-itary, recreational and biodiversity benefits, while pro-tecting the waters of the Krka River. The proposed plantwould have a population equivalent of 4,500.

66. Mali Ston, Peljesac Sewage treatment

The Mali Ston settlement is located in MalostonskiBay, on the island of Peljesac, in Dubrovnik-NeretvaCounty. According to the National Water Protection Plan,Malostonski Bay is classified as “a very sensitive area,”where shells are cultivated. Sewage from the settlementsis currently disposed of through septic tanks or throughdirect outlets into the sea. The construction of three sew-erage sub-systems is needed, which should be connect-ed to the existing regional sewerage system, the Neum-Mljet canal, and, through a mechanical treatment plantand submarine outlet. The construction would providesanitary, economic, recreational and biodiversity bene-fits. It would also protect the waters in the highly sensi-tive area of Malostonski Zaljev Bay.

67. Mljet National ParkSewerage system and wastewater treatment plant

The area of Mljet National Park is located on theisland Mljet, in Dubrovnik-Neretva County. Accordingto the National Water Protection Plan, the Mljet NationalPark is a "very sensitive area." All waters inside the park

belong to category I. In the area of the park, no wastewater disposal sys-

tem has been constructed. All municipal wastewaterflows by infiltration into the soil or is discharged intothe sea.

A sewerage system and a wastewater treatmentplant with primary treatment technology units for thewastewater of the island should be built. Constructionof this system would solve the problem of wastewaterdisposal inside the Mljet National Park, providing sani-tary, recreational and biodiversity benefits, and helpingto protect the waters within the national park’s area.The plant would have a population equivalent of 1,500.

68. Brijuni National ParkSewerage system and wastewater treatment plant

The Brijuni archipelago consists of 14 islands and tworeefs, located northwest of Pula, about 3 kilometres fromIstrian land. Veli Brijun is the biggest and most importantisland, and most monuments and modern buildings aresituated there. Brijuni National Park has a priority rankingas a particularly protected area for the development oftourism in the archipelago, in accordance with Law onTourism. There is no sewage system on Veli Brijun. Non-treated liquid waste is discharged from certain buildingsinto the sea, released into the coastal sea through a shortdischarge-pipeline with no previous treatment.

A sewerage system and a wastewater treatment plantwith third grade treatment technology units for the waste-water of the island should be built, which would providesanitary, recreational and biodiversity benefits and pre-serve the natural environment and building monuments.The plant would have a population equivalent of 2,500.

FYR Macedonia69. JegunovceFerroalloy production

Established in 1952, the HEK Jugochrom plant atJegunovce currently produces over 60,000 tonnes offerroalloys (e.g. ferrochrome and ferrosilicon) per yearusing raw materials such as coal, quartz, ferrous iron,and chromium ore. The company employs some 2,000workers. The facility is a significant air polluter. TheNational Environmental Action Plan reports that, in thevicinity of the HEK Jugochrom plant, standards for totaldust, black smoke and particle-borne chromium havebeen exceeded in recent years. The plant has threelarge electric furnaces and six smaller ones. An air qual-ity monitoring station is situated near the plant. Dustconcentrations in the flue gases were reported to aver-age 3-6 grams per cubic metre. With gas flows averag-

A N N E X 3 : F U L L L I S T O F H O T S P O T SC R O A T I A • F Y R M A C E D O N I A


A N N E X 3 : F U L L L I S T O F H O T S P O T SF Y R M A C E D O N I A


Kosovo

likaa

A L B A N I A

BULG


Serbia

Montenegro

G R E E C E


Corfu

Tirana

Vlora

Shkodra

Lushnje

Durres

Berat

Niköic

Kozani

Florina Edessa

Peshkopi

Kukes

Korce

Gjirokaster

Elbasan

Vidin Calafat

Pernik

Montana

Kyustendil

Vranje

Uroöevac

Titov Veles

Strumica

Stip

Prizren

Priötina

Prilep

Pec

Paracin

Ohrid

Novi Pazar

Kumanovo

Kragujevac

Gnjilane

Bor

Bitola

LarsiaIoannina

Sarande

Tepelene

Gostivar

Kosovska Mitrovica

Pale

Gorazde

Priboj

BijeloPolje

Bar

Foca

Thessalonik

Katerini

Kastoria

Nis

Uzice

Dakovica

Berane

Kotor

Shengjin

Veroia

Podgorica

Skopje

Fier

BALKANMTS.

PI

ND

US

MT

S

NORTHALBANIAN

ALPS

SA

RP L A

NI N A

Lake

Lake

LakeScutari

Ohrid

Prespa

OtrantoStrait of

Morava

Vardar

rina

Piva

Tara

Vjose

71

87 88

7590

77

76

95

89

70

7480

72

91

103

78

93

92

84

85

73

79

86

8169

82

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94

ing 312,000 cubic metres per hour from three of the fourfurnaces, annual dust emissions can be assumed toaverage 9,000 to 17,000 tonnes.

The plant uses an on-site landfill to dispose ofchromium slag and other waste.

The NEAP states that the landfill contains 466,000tonnes of ferrochromium slag and 385,000 tonnes ofchromate sediment (ions of Cr6+). According to studiescarried out with support from the EU’s PhareProgramme, pollution from the landfill is contaminatingthe Vardar River and posing a potential risk to RasceSpring, the main source of water supply for metropoli-tan Skopje.

70. VelesLead and zinc smelter

Established in 1973, MHK Zletovo is a lead and zincsmelter employing 1,100 workers. Each year it uses leadand zinc concentrates to produce 30,000 tonnes of lead,60,000 tonnes of zinc and 250 tonnes of cadmium, aswell as smaller quantities of silver, gold and copperdross, and bismuth alloy. The process produces 100,000tonnes per year of sulphuric acid as a by-product.

The smelter emits large quantities of sulphur dioxideinto the atmosphere, as well as dust bearing lead, zincand cadmium. The air outside the factory smells heavi-ly of sulphur dioxide. In addition, raw materials, includ-ing coke for the smelter’s furnaces, are stored in anopen field. Transportation of these materials and windspread dust around virtually the whole of the plant’s15,000 square metres. According to data provided bynational and local experts, the smelter emitted approxi-mately 11,000 tonnes of sulphur dioxide (SO2), 2,000tonnes of lead and 50 tonnes of cadmium in 1995. A1999 study by the Veles Institute for Health Protection,however, found that total emissions were far larger thanthose originally estimated for 1995.

MHK Zletovo and the Republic HydrometeorologicalInstitute monitor air quality in the city of Veles. The fac-tory is situated in a valley close to residential areas of thecity, and wind directions tend to carry factory emissionstoward Veles. The two existing monitoring stations,however, are poorly positioned and do not providetimely data that could be used to manage episodic risksto public health. With inadequate data, appropriateenforcement actions and public health protection meas-ures are most often not available to local authorities.According to recent studies, emissions are having a sig-nificant impact on the health of the population.

Wastewater containing sulphuric acid and otherpollutants is a source of serious concern. MHK has atreatment plant that was designed to treat 135 m3 ofeffluent per hour. The plant, however, generates 1,500m3/hour of wastewater. Analytical data from regularly

monitored streams indicate that the effluent consistent-ly exceeds maximum concentration levels for lead, zincand cadmium.

The wastewater is discharged into the Vardar River.

Fertiliser factory, MHK Zletovo landfillA fertiliser plant uses the sulphuric acid from the

MHK Zletovo smelter and phosphate to produce phos-phoric acid and, in turn, mono-ammonium phosphateand nitrogen-potassium-phosphorus fertiliser. For eachtonne of phosphate produced, 5.5 tonnes of gypsumwaste is generated. A mixture of 20 percent gypsum and80 percent acidic process water (pH 2 – 3) is pumped toa special landfill that currently holds 5 million tonnes ofgypsum waste. This waste was formerly deposited inthe bottom of the valley, and sludge used to float direct-ly into the Vardar River. It is now being deposited in theupper part of the valley, thereby reducing the direct riskto the Vardar. However, wastewater from the sludgedewatering process continues to drain into the river,and sludge can still be flushed into the river in floodconditions. According to the NEAP the quantity of thewaste is 3,700,000 tonnes.

Municipal wastewaterIn Veles (population of 46,798) 89 percent of the

population is connected to the sewer system.

Air ambient quality in VelesBetween 1990 and 1993, the observed levels of SO2

exceeded the maximum allowable concentrationbetween 32 and 39 times per year, depending on thelocation of the measurement site. More recent data indi-cates that the maximum allowable concentration forSO2 was exceeded on 60 days in 2000, 43 days in 2001and nine days for the month of January alone in 2002.

71. Skopje Chemical industry

The Organic Chemical Industry of Skopje (OHISA.D.) was founded in 1964. It manufactures a variety ofchemical products, including plastics, detergents, poly-acrylic fibres, plant protection agents, cosmetics, basicchemicals (e.g., chlorine, hydrochloric acid), pharma-ceuticals, and process equipment.

The OHIS A.D. complex also generates air pollution,principally from an oil-fuelled power plant. Data sup-plied by management suggests that the plant emitsapproximately 2,240 tonnes of sulphur dioxide (SO2),315 tonnes of nitrogen oxides and 15 tonnes of dust peryear. The SO2 concentration in the flue gas, at 2,220 mil-ligrams per cubic metre, exceeds the applicable 1,700mg/m3 emission standard. An acrylic fibre plant withinthe complex is an additional source of concern regard-ing emissions.



Wastewater flows partly through closed concretecanals, but these are cracked and leaking waste to thesoil and groundwater. The newest part of the plant isconnected to a wastewater facility for treatment prior todischarge into the Vardar River. The treatment plant,however, is not functioning at present. Other parts ofthe plant, such as the now-closed chlorine-alkali-elec-trolysis process, have never been connected to thetreatment plant. This factory reportedly used 2 tonnes ofmercury per year, causing mercury-laden wastewater todrain into the Vardar River.

Management stated that 8 tonnes of mercuryremains stored at the plant. Mercury was analysed inone water sample, giving a concentration of about 65mg/l, some 10 times over the limit value for drinkingwater but below limit values for natural waters. Thelead concentration (500 mg/kg) in one soil sample wasabove the threshold value for normal soil in many coun-tries but not over the threshold values generally appliedfor soil at industrial sites.

The absence of a proper industrial and hazardouswaste treatment facility in FYR Macedonia has led OHISA.D. to store its waste on site. The stores are old and inbad condition, due mainly to poor construction andinadequate maintenance. Management was unable tospecify the types and quantities of these wastes, but theoverall volume is reported to be in excess of 160,000 m3

per year. The lack of proper collection, treatment andsafe disposal of these wastes is undoubtedly causingsignificant pollution of the environment.

Makstil SkopjeMakstil Skopje is private company that operates an

iron plant and a rolling mill. The iron plant generateswaste gases, including SO2, carbon monoxide, carbondioxide, nitrogen oxides, and dust. It operated a dustclean-up system until 1990. The rolling mill generates200,000 cubic meters per hour of SO2 (0.036 percent), aswell as CO2, with no dust clean-up system. According tothe National Environmental Action Plan (NEAP), thequantity of iron slag from electric furnaces is 2,000,000tonnes, and the quantity of the silica and manganeseslag from converters is 74,000 tonnes (including ions ofmanganese).

Oil refineryThe Okta crude oil refinery in Skopje was established

in 1982. Designed as a hydro-skimming refinery for refin-ing crude oil, oil derivatives, and the transport of crudeoil and oil derives, its annual crude oil capacity is 2.5 mil-lion tonnes. The Okta refinery has the only processingcapacity of crude oil and is the only producer of oil deriv-atives in FYR Macedonia. The capacity was designed sothat it could also serve export markets. The crude oil issupplied via the seaport terminal in Thessalonica by rail-road tankers. The finished products are transported by

vehicles. In 1994 the business activity was expanded withwholesale and retail trade, the opening of its own storesand petrol stations, and other activities.

According to the NEAP, the quantity of the waste-water is 1,000,000 m3 including oily substances, sus-pended mineral salts, and other materials. According tothe NEAP, the quantity of the hydrocarbon waste is10,000 tonnes.

Drisla communal landfillThe Drisla landfill was established in the mid-1990s

for the disposal of municipal waste from Skopje.Located in a depression created by gravel extraction,the facility covers approximately 75 hectares. Itsplanned capacity is approximately 26 million cubicmetres, only 4 percent of which has been used so far.The landfill area consists of permeable sand and graveldeposits. No special construction measures, however,were taken to prevent possible percolation of leachateinto the upper and lower aquifers. The upper aquiferdrains to the river system and, downstream of the land-fill, supplies water for drinking and irrigation.

Urban wastewaterIn Skopje (population of 431,150) 56 percent of the


Air qualityThe problem with air quality in Skopje is due to both

mobile and stationary pollution sources (central heatingpower plants, cement factories, chemical complexesand refineries). The topography plays an important rolein pollution levels as the city is surrounded by hills andhas favourable conditions for temperature inversions,particularly during the winter.

The fuel burned in various emission source facilities inSkopje is mostly heavy oil, which contains about 2 percentsulphur. For individual household heating, firewood andelectric heaters are mainly used. Coal is used for less than10 percent of these purposes, and natural gas is not used.

The operating ratio of emission source facilities inthe plants is lower than 40 percent. These facilities are amajor source of air pollution. Levels are reported to behigh at least for SO2 and black smoke, which frequent-ly exceed the maximum daily concentration. From 1991to 1994, the SO2 maximum daily concentration of 150micrograms per cubic metre was exceeded up to 35times a year, while for black smoke, concentrationsabove 50 µg/m3 were recorded up to 123 times a year.

72. BitolaThermal power plant and mine

REK Bitola operates a 25-year-old thermal powerplant and an adjacent lignite mine. The power plantgenerates 75 percent of FYR Macedonia’s annual elec-



tricity requirements and employs approximately 700workers. The mine employs 1,400 workers and suppliesthe power plant with 6.5 million tonnes of fuel per year.The lignite is relatively low in sulphur (approximately0.5 percent) and produces 13-17 percent ash.

The power plant’s electrical precipitators (or dust fil-ters) are old and do not work well. Similarly, its emis-sion monitoring system only functions properly abouthalf of the time. According to management, however,the plant’s three units emitted 46,000 tonnes of sulphurdioxide (SO2) and 2,400 tonnes of fly ash to the atmos-phere in 1999. Average SO2 emissions of 1,600-2,000milligrams per cubic metre are four to five times greaterthan the permissible limit of 400 mg/m3. The average“best case” dust emissions of 100 mg/m3 are double thepermissible limit. The plant’s smokestacks are 256metres high, which should limit the plant’s contributionto air pollution in its immediate vicinity.

The power plant produces 150 tonnes of fly ashdaily. The fly ash contains silicate and heavy metals,including uranium compounds. The ash and slag travelsby conveyor belt to a large dump (97,630 m2, receiving1.5 million tonnes of waste per year) close to the plant.Estimates of fugitive dust emissions from the dump andthe mine are unavailable.

According to NEAP, the quantity of the mining tail-ings is 265,000,000 m3 and the quantity of ash and slagis 11,000,000 tonnes, including ions of heavy metals.

Heavy metals, including uranium compounds, fromthe fly ash dumpsite are probably contaminating soiland groundwater downstream of the dumpsite. Theupper aquifer is believed to drain to a nearby river.Private wells along the river downstream of the plantprovide local inhabitants with water for drinking andirrigation. The plant does not have a wastewater treat-ment plant. Water required for industrial use is takenfrom an artificial lake and, after use, is passed throughan oil separator and two neutralisation basins.However, due to the oil separator’s limited capacity,free phase oil is discharged to the neutralisation basinsand then into the river via an open canal. The dischargeof untreated wastewater containing oil compounds andheavy metals poses a risk of soil, groundwater anddrinking water contamination in the vicinity. This issueis not currently being investigated or monitored.

Urban wastewaterOf the population of 77,462 about 90 percent are

connected to the sewer system.

Air qualityAir quality in Bitola is mainly affected by emissions

from the REK Bitola power plant and the nearby mine. Insummer, since almost all electric power is supplied byhydropower generation, this plant has a minimal load. Atpresent, desulphurisation and denitration facilities are

not installed in the plant As a result, these emissions fromthe plant affect a wide area. While SO2 is mostly withinacceptable limits, black smoke regularly breached themaximum allowable concentration between 1990 and1994 (between 10 and 25 times per year).

73. OslomejMining tailings

The mining tailings from the Oslomej REK facilitypresent a risk. The quantity of waste includes 40 millioncubic metres of mining tailings and 2,000,000 tonnes ofash and slag. Sulphur dioxide and nitrogen oxide emis-sion exceed the state’s standards.

74. KavadarciFenimak activities

Fenimak operates a drying facility, an electric heat-ing system, a rotation furnace and a boiler room. Itsprincipal activity is the production of non-ferrous met-als (nickel), ferroalloys (ferronickel), ore, coarse non-ferrous metals (nickel ores and concentrates), and othernon-ferrous metals.

Emissions from the drying facility include 82-5,000cubic metres of nitrogen per hour with SO2 (3-10 mil-ligrams/m3), CO (40-200 g/m3), NOx (0-20 mg/m3), anddust per 50-350 mg/m3). No data exists for waste gasesquantity emissions from electric heating. Emissionsfrom the rotation furnace include 350-500,000 m3/h withSO2 (50-500 mg/m3), CO (10-50 mg/m3), NOx (20-150mg/m3), and dust (30-1,000 mg/m3). Emissions from theboiler room include 1-8,000 nitrogen m3/h with SO2

(2,000-2,900 mg/m3) CO (10-120 mg/m3), NOx (600-1,000 mg/m3).

The projected production capacity of these two fur-naces is 2 x 6,000 tonnes of ferronickel annually. Theinstalled production capacity is 2 x 84 = 168 MVA (i.e.the working capacity of 2 x 55 = 110 megawatts). Theother operation units are projected to follow the pro-duction of these furnaces.

Fenimak operates with reserves of nickel oredeposits in the Rzanovo mine, which are mainly exca-vated through surface mining. Ore used for productioncomes from the mine and is transported by a conveyorbelt system 36-km long. The mine was opened in 1981and it has a capacity of approximately 2,000,000 tonnesper year. From 1984 to 1991 the mine was closedbecause of the suspended production of nickel in thesmelter. Operations resumed in the second half of 1991.Operating at below maximum capacity, 514,752-620,000 tonnes of ore have been produced. The pre-vailing part of the installed equipment is produced byreputable world producers (e.g. Demag, Krupp andothers). Facilities and equipment are in good condition.



Urban Waste WatersOf the population of 32,000 about 95 percent of the

population is connected to sewer system.

75. ProbistipZletovo mine

The Zletovo mine in Probistip predates World War II.Its 1,500 workers currently produce about 1,000 tonnes ofzinc concentrate and 800 tonnes of lead concentrate perday, about half of the mine’s 1987 production levels. Themetals are extracted from mines 2.5 kilometres north ofthe company’s concentration plant. According to man-agement, 30 litres per minute of acidic water used to set-tle dust in the mine flows directly into a small nearby river,along which private drinking wells are located. Thewastewater contains cadmium and other pollutants.There is no wastewater treatment at the plant.Approximately 1 million cubic meters per year of waste-water contaminated with heavy metals and cyanide ispumped from the concentration plant into the Koritnicaand Kiselica rivers without cleaning or neutralisation.According to the company’s observations and analyses,there is little life in the rivers and high levels of heavy met-als have been found in fish and other biological samples.

76. Makedonska KamenicaSasa mine

The initial mining and geological surveys of theOsogovo's ore-bearing massif and the Sasa locality datefrom 1954. The period between 1954 and 1960 was a peri-od of intensive research that produced a positive balanceof ore deposits. The intensive construction of processing,mining, construction premises and all other accompany-ing facilities with large infrastructure took place between1960 and 1965, and in November 1965 the mines wereopened for trial processing with projected capacities of300,000 tonnes of annual production of lead-zinc ore.

The flotation slag presents the risk of contaminatingsoil and groundwater, with ions of lead, cadmium, cop-per, zinc, and organic substances from flotation reagents.It produces 10,500,000 tonnes of flotation slag waste.

The mine’s principal activity is the production ofores and concentrates of lead and zinc in Mine Sasa,processing of zinc in Sasa zinc plant , production ofconstruction and mining machines and instruments inthe Sasa mechanical industry.

77. Kriva PalankaToranica mine

There is a risk of the flotation slag from the Toranicomine contaminating soil and groundwater with ions oflead, cadmium, copper, zinc and organic substancesfrom flotation reagents. Also, 1,500,000 tonnes of flota-tion slag waste are produced.

78. Radovis Bucim mine

Buchim S.C. — Radovis, the only copper mine inFYR Macedonia, has been operating since 1979. In1999, it was 82 percent government-owned and hadapproximately 800 employees. The mine producesabout 4 million tonnes of ore per year and a similarquantity of tailings.

There are two sources of contaminated water dis-charges into the environment: the flotation plant andthe sedimentation lake. Wastewater from the flotationplant, containing large amounts of copper, is releasedinto a stream from which cattle drink. The dischargeoccurs at the rate of 10 litres per second. The bottom ofthe stream is covered with a bluish layer resemblingmalachite copperhydroxycarbonate. There is no waste-water treatment facility at the plant, although there areplans to construct one when resources permit. Wells inthe valley downstream of the tailings dam are regularlymonitored. The copper content of the wastewater isalso regularly monitored. According to the mine man-agement, the concentration of copper in the water isincreasing. Surface water and sediment samples takenclearly document environmental contamination withheavy metals. Analyses showed values for copper con-centrations in the range 50-200 milligrams per litre, asmuch as 50,000 times higher than the surface waterquality standard in Germany. The Dutch target andintervention values for copper in groundwater are 0.015mg/l and 0.075 mg/l, respectively. The samples alsoshowed contamination with organic components in therange 0.5-10 mg/l.

Bucim mine landfill Each year, the mine pumps more than 70,000 tonnes

of solid waste containing heavy metals from the flota-tion process near a large dam in a nearby valley. Dustfrom the 30-hectare hydro-tailings dam blows towardthe nearby village of Polnica. Because many of themineworkers have joint ailments and silicosis due todust inhalation, adverse health effects can also beexpected among local citizens. In efforts to abate thedust, trees have been planted and a polymer has beenapplied to a 4-hectare area.

According to the National Environmental ActionPlan, the quantity of the mining tailings is 80 milliontonnes, including copper ions, and the quantity of thefloatation slag is 52 million tonnes including organicsubstances from flotation reagents.

As for heavy metals, analyses show values for cop-per concentrations in the range 50-200 mg/l, as muchas 50,000 times higher than the surface water qualitystandard.



79. KicevoMetal resurfacing factory

Tane Caleski, a screw, wire and metal resurfacingfactory, was established in 1967. Its capacity is morethan three times greater than its present annual produc-tion level of 1,500 tonnes. The plant currently employsabout 350 workers.

Several hazardous chemicals (mineral acids,cyanides, cutting emulsions, and salts of chromium andzinc) are used for surface treatment. The plant’s waste-water contains sulphuric acid, hydrochloric acid, nitro-gen hydroxide, detergents, chromium III, zinc, andother heavy metals. In addition, an estimated 25 percentof the 4.5 tonnes of oil components used monthly inproduction are lost to the environment, probablyincluding groundwater.

Construction of a wastewater treatment plant beganin the 1980s, but was never completed. Wastewater istheoretically pre-treated in a sedimentation and pH-neu-tralisation basin. The sedimentation basin, however, hasnever been emptied and is now completely full.Consequently, all wastewater, which is likely to be con-taminated with heavy metals, especially zinc, is dis-charged into the canal without any pre-treatment or sed-imentation. The canal water drains to the Treska Riverand probably into the upper groundwater aquifer. Theplant has not monitored or investigated the potentialcontamination of soil and groundwater in the vicinity.

Urban wastewatersOf the population of 25,129 about 80 percent of the


80. PrilepSewage connections

Of the population of 68,148 about 75 percent of thepopulation is connected to the sewer system.

81. TetovoSewage connections and pollution

Of the population of 50,344 about 60 percent areconnected to the sewer system. Air pollution in Tetovois related to the HEK Jugohrom metallurgical facilitiesand also to heating with high-sulphur fuel during win-ter. Tetovo also had an excess of black smoke duringthe 1990-1994 period (16 to 78 times per year).

82. StipSewage connections


83. StrumicaSewage connections


84. KumanovoUrban wastewater


Lojane landfillThe Lojane mine, north of Kumanovo, was open

almost continuously between 1923 and 1979. During themine’s first 30 years, chromium was extracted. In 1954, themine began to extract antimony, and in 1965 an antimonysmelter began operation at the site. According to theMEPP, an open dumpsite for flotation waste created by themine holds over 1 million tonnes of tailings containingarsenic, antimony, and other hazardous substances.

85. GostivarSewage connections


86. Shar MountainMassif values

The high mountain massif of Shar Mountain, cover-ing an area of 1,607 square kilometres, is situated innorthwest FYR Macedonia along the border of Serbiaand Montenegro. The mountain lies between two lowpositioned valleys — Polog and Prizren-Metohija. Thereis a high, deviated crest of Shar Mountain, which repre-sents an old, wide erosive area with a height rangingbetween 2,000 to 2,200 meters, out of which multiplepeaks emerge.

Due to the unique heritage and diversity of flora andfauna species, Shar Mountain can be placed among theEuropean centres of ecological and biological diversity.It is assumed that the entire flora of the massif, begin-ning with the warm gorges and thermophile forests inthe foothill, through mountain regions to the highestalpine sections, counts over 1,500 species. One shouldespecially point out the unique relic and endemicspecies of FYR Macedonian and Balkan flora. Themountain and its natural resources were severely affect-ed during the war in FYR Macedonia in 2001.

87. Vardar RiverWastewater

The section of the Vardar River between Skopje andNegotino is categorised as class III and IV according tonational standards. It suffers significant pollution from



wastewater (265,557 cubic metres per day) dischargedinto the river, which contains suspended materials(193,974 kilograms per day), biological oxygen demandfor 5 days (BOD5) of 55,130 kg/day, nitrogen (13.06kg/day), and phosphorus (42,347 kg/day).

According to the Physical Plan of Republic ofMacedonia, water-protection projects are needed torecultivate several landfills (Banjica, Vardariste,Jugohrom, MHK Zletovo, the OHIS industrial landfill,and the Okta refinery landfill), and to build a waste-water treatment plant for all major cities downstream ofthe Vardar River.

88. Pcinja RiverWater quality

The section of the Pcinja River from Kumanovo tothe Vardar River is categorised as class III and IVaccording to national standards.

According to the Physical Plan of Republic ofMacedonia, projects are needed to recultivate the lagoonsof the Kumanovo pig farm and the communal landfill ofKumanovo, to establish protected areas for geothermalunderground water near Kumanovo, and to build a waste-water treatment plant for wastewater from Kumanovo.

89. Bregalnica RiverWater quality

The section of the Bregalnica River from Stip to theVardar River is categorised as class III and IV accordingto national standards. According to the Physical Plan ofRepublic of Macedonia, water-protection projects areneeded to recultivate the landfill in Stip and the landfillin Kocani, as well as the lagoons of the paper factory inKocani; to monitor heavy metals in the ground aroundSveti Nikole, Orizari and Stip; and to establish protect-ed areas for geothermal zones in Kezovica, Dobrevo,and Istibanja.

90. Zletovska RiverWater quality

The section of the Zletovska River from Probistip tothe Bregalnica River is categorised as class III and IVaccording to national standards. The Kiselicka Riverneeds to be protected from the slag landfill of theZletovo mine.

91. Crna RiverWater quality

Part of the Crna River is categorised as class III accord-ing to national standards. According to the Phisical Plan ofthe Republic of Macedonia, water-protection projects areneeded to recultivate the landfill at REK Bitola and the

communal landfills in Bitola, Prilep and Kavadarci. Awastewater treatment plant is needed for wastewater inPrilep and industrial wastewater from Fenimak.

92. Ohrid LakeWater quality

Ohrid Lake is a transboundary lake in southwestFYR Macedonia, with Albania on its western bank. Itcovers 349 square kilometres, of which 230 km2 (66 per-cent) belongs to FYR Macedonia. UNESCO classified itas a world natural heritage site in 1979. It is a natural,cultural and historical monument and the cradle ofancient civilisations. Because of its oligotrophic state, itis one of the largest biological reserves in Europe, shel-tering unique flora and fauna that are extinct elsewhere.Due to its age, many of Lake Ohrid’s aquatic species areendemic, including 10 of its 17 fish species. The qualityand hydrological conditions of Lake Ohrid are tied tothose of Lake Prespa, as half of Lake Ohrid’s watercomes from Lake Prespa through an undergroundaquifer and natural siphoning mechanism.

Lake Ohrid is an important cultural and tourist assetfor FYR Macedonia, as the country has no maritimeaccess. For some time, the development of human set-tlements and tourist infrastructures has been placing astrain on the lake. At present, more than 100,000 peoplelive and work along its banks and exert environmentalpressure (domestic activities; tourism; textile, metal,electrical industries; agriculture; and fishing). A sewagecollection ring has been built to collect discharge fromElsani to Struga (one-third of the lake shore) and bringthe wastewater to treatment plants in Ohrid and Struga.However, a few villages and industrial facilities havenot been connected to it yet and pollution from agricul-ture is still uncontrolled. An additional pollution surplusis generated by tourism during the high season.Different pieces of legislation specific to the lake aim tocontrol the human activities that could endanger it, suchas fishing, the use of phosphate-containing detergent,and the introduction of exotic fish species. However,there is no harmonisation in the objectives and legisla-tion regarding the lake or its management between thetwo border countries, which seriously impairs its sus-tainable management.

93. Prespa LakeWater quality

Prespa Lake has a total volume of 4.78 billion cubicmetres, with a water surface of 328 square kilometres, atotal length of 43.3 km, a width of 16.4 km, and a maxi-mum depth of 55.55 metres. FYR Macedonia shares thelake with Albania and Greece, so that 197 km2 of its watersurface belongs to FYR Macedonia, 48.4 km2 to Albaniaand 82.3 km2 to Greece. Its catchment area is 1,046.25



km2, of which 571 km2 belong to FYR Macedonia. LakePrespa is on the international list of protected natural her-itage as a Ramsar site. During the past 15 years the lake’swater level has declined significantly.

94. Dojran LakeWater quality

Located in the southeast of the country, Lake Dojranis the third most important but the smallest natural lakein Macedonia. It is shared with Greece. Its total watersurface is 43 square kilometres, of which 25.62 km2

belong to Macedonia and 17.07 km2 to Greece. Duringthe past 15 years its water table has fallen because ofnatural hydrologic phenomena, dry climate cycles andhuman use. Lake Dojran is an isolated ecosystem withunique flora and fauna that are threatened. The lake hasbeen severely affected by the diversion of waters andexcessive abstractions. It has lost about 5 million cubicmetres of water since 1978, and many of its plantspecies are dying out. Urgent action is needed to buildan additional water supply system to preserve the lakewith additional water from the Konska River.

95. KocaniSewage connections

Of the population of 26,364 about 70 percent is con-nected to the sewer system.

Serbia and MontenegroMontenegro

96. PljevljaPollution

The main pressures on Pljevlja come from a lignite-fuelled thermal power plant, a small boiler plant, acoalmine, a cement factory (not in operation) and trans-port. Pollution prevention/control measures are almostnon-existent. There is no treatment of communal waste-water, and almost no treatment of industrial waste-water. The main industries include mining, energy gen-eration, and wood processing. The town of Pljevlja hasclose to 22,000 inhabitants, of which 85 percent is con-nected to the sewage system.

The thermal power plant is the principal source ofindustrial pollution. Its effects, coupled with pollutionfrom other industrial facilities (such as those mentionedabove) pose multiple environmental threats to thePljevlja region.

The mean annual values for sulphur dioxide exceedprescribed standards. Increased concentrations of par-ticulate matter, fluorides and hydrocarbon matter havealso been recorded during recent years. Pljevlja

Municipality has close to 40,000 inhabitants. Due toarea configuration (the town is located in a valley) andlocal air movements, air pollution problems are exacer-bated during the winter season. Even though there is noconclusive data on the link between health and envi-ronmental problems, a higher incidence of some healthproblems in the areas (typically referred to as “pollutionblack spots”) is observed. The frequency of respiratorydiseases in Pljevlja Municipality, for example, is said tobe markedly above the republic average.

97. PodgoricaPollution

The main pressures on the city of Podgorica(134,000 inhabitants, sewage connection rate 92 per-cent) come from an aluminium plant (KAP) and trans-port. It operates without any pollution abatement meas-ures. Podorica is the only urban centre in Montenegrowith a wastewater treatment plant (mechanical treat-ment). The plant has an installed capacity of 55,000population equivalent (PE), but is operated at about75,000 PE, which reduces treatment efficiency. The vol-ume of treated wastewater corresponds to less than halfof what is presently being generated by the city (about11 million cubic metres per year).

The Podgorica landfill (municipal waste) is locatedsome 8 kilometres from the town, and 25,000 peoplelive in its vicinity. Due to improper waste treatment(burning and covering with a layer of soil) and pooroperation, the landfill poses significant threats to air,soil, groundwater and human health.

The aluminium plant is estimated to be generating350,000 to 420,000 tonnes of red mud (residue from cath-ode production) per year. The plant has two basins forthe disposal of red mud, neither of which has properinsulation layers. A key industrial polluter is KAP (alu-minium plant), with impacts on air, soil and groundwater(also posing a threat to the biodiversity of Lake Shkoder).Besides common pollutants (such as carbon and sulphurdioxide), KAP also emits toxic substances such as fluo-rides, fluorocarbons, phenols, polycyclic aromatic hydro-carbons (PAHs) and polychlorinated biphenyls (PCBs).

Fluorides and hydrocarbons are the two pollutantswhose concentrations have been exceeding maximumallowed concentrations during the past few years.Fluorides exceed the standards by a factor of 1.2-1.5.The population of Podgorica Municipality is 166,000(around 135,000 live in the city itself).

An area where health problems can arguably belinked to groundwater and air pollution is Zeta Plain inPodgorica Municipality, due to the operation of an alu-minium plant. Zeta Plain is a significant agriculturalarea; vegetables and other agricultural produce fromthis area are consumed throughout Montenegro.

A N N E X 3 : F U L L L I S T O F H O T S P O T SF Y R M A C E D O N I A • S E R B I A A N D M O N T E N E G R O M O N T E N E G R O


A N N E X 3 : F U L L L I S T O F H O T S P O T SM O N T E N E G R O


epublika Srpska

Kosovo


Republika Srpska

A L B A N I A

B O S N I AA N D

E R Z E G O V I N A

F Y R M A C

Serbia

Montenegro


Tirana

Brindisi

Shkodra

Lushnje

Durres

Berat

Zenica

Valjevo

Tuzla

Brcko

Sabac

Pancevo

Niksic

Mostar

BijeljinaBanja Luka

Florina

Peshkopi

Kukes

Korce

Elbasan

Urosevac

Titov Veles

Tetovo

Smederevo

Prizren

Pristina

Prile

Pec

Paracin

Ohrid

Novi Pazar

Kragujevac

Gnjilane

Bitola

Gostivar

Kosovska Mitrovica

Pale

Gorazde

Priboj

BijeloPolje

Bar

Ploce

Doboj

Srebrenica

Foca

Kastoria

Uzice

Neum

Dakovica

Kotor

Shengjin

Belgrade

Sarajevo

Podgorica

Skopj

TI A

C

AL

PS

NORTHALBANIAN

ALPS

SA

RP L A

NI N A

Lake

Lake

LakeScutari

Ohrid

Prespa

Sava

Drina

Piva

Tara

A d r i a t i c

S e a

Danube

103

103103

103

103103100

98

102

105

96104

99

99

101

101

101

106

97

Dubrovnik

Fier

98. NiksicIronworks

Transport and the Boris Kidric ironworks are themain sources of air pollution. Besides the typical pollu-tants released from the burning of fossil fuels, BorisKidric also releases heavy metals, polycyclic aromatichydrocarbons and toxic particulate matter.

There is no wastewater treatment for the town of60,000 inhabitants, of which 54 percent are connectedto the sewage system. The main industries include iron-working and brewing. The waste disposal site (for bothmunicipal and industrial wastes) does not meet sanitaryrequirements, and the risks from inadequate waste dis-posal are growing.

Concentrations of fluorides and hydrocarbons oftenexceed the maximum allowed concentrations. The totalnumber of people living in Niksic Municipality is closeto 78,000 (of which 59,000 live in the town itself).

99. Berane and Bijelo PoljeWastewater

Berane and Bijelo Polje are situated on the banks ofthe Lim River. Berane has a population of approximate-ly 14,000 and 42 percent of the population is connectedto the sewage system. Industry includes paper and cel-lulose manufacturing (factory not in operation) andmetal processing. The population of Bijelo Poljeexceeds 20,000 of which 48 percent are connected tothe sewage system. The main industry is textile work-ing. There is no treatment of wastewater in either town.

100. Kotor, Tivat and Herceg Novi – Bay of Boka Wastewater

There is no wastewater treatment in the agglomera-tions situated around the Bay of Boka. The permanentpopulation of the three towns is around 52,000, whilethe population increases two to three times during thetourist season. Connection to the sewage system is 50percent in Kotor and 92 percent in Herceg Novi, butTivat has no sewage system at all. Industrial capacitiesinclude the chemical industry, shipyards and others. Ingeneral, the quality of seawater does not meet the bac-teriological requirements for the prescribed class ofbathing water. Due to its shape and a low rate of waterexchange with the open sea, the Bay of Boka is partic-ularly susceptible to water pollution.

101. Budva, Bar and Ulcinj – southern coastWastewater

There is no wastewater treatment in the towns ofBudva, Bar and Ulcinj. The total permanent population is44,000 and sewage connection rates range from 48 percent

(Ulcinj) to 93 percent (Budva). Tourism, the Port of Barand the food processing industry contribute to water treat-ment problems. In general, the quality of seawater in thevicinity of tourist centres does not meet the bacteriologicalrequirements for the prescribed class of bathing water.

102. MojkovacWaste disposal

The Mojkovac disposal site contains mining tailingsand industrial waste from lead and zinc production, andit occupies and area of 20 hectares. The site is locatedon the bank of Tara River — part of Durmitor NationalPark, and the river is protected by an earth and graveldamn, reinforced by concrete. This site poses a seriousthreat to the population and the environment, especial-ly in the case of an accident or of heavy rainfall.

103. Coastal regionWaste disposal

There are several waste disposal sites in the narrowcoastal area. None of these meet sanitary requirements.Waste dumps are often burned, and in some cases,wastes are even dumped into the sea. The coastal areais the most densely populated region in Montenegro,and waste generation increases significantly during thetourist season.

104. Cehotina and Vezisnica rivers Water quality

Increased concentrations of nitrogen, phosphorous,phenols and mineral oils threaten the Cehotina andVezisnica rivers, downstream from Pljevlja. The situa-tion is particularly alarming with the Vezisnica River.

105. Lim RiverWater quality

Increased concentrations of nitrogen, phosphorous,phenols and mineral oils threaten the Lim River down-stream from Berane and Bijelo Polje.

106. Moraca RiverPollution

Increased concentrations of nitrogen, phosphorous,phenols and mineral oils have been recorded in theMoraca River area downstream from Podorica.Biological oxygen demand (BOD5) at the outlet ofwastewater treatment plant is in the range of 8-40 mil-ligrams per litre. Groundwater pollution is recorded inthe area south of the Podgorica aluminium plant, whereconcentrations of polychlorinated biphenyls, polycyclicaromatic hydrocarbons, phenols, and fluoride exceed-ed the prescribed standards.

A N N E X 3 : F U L L L I S T O F H O T S P O T SM O N T E N E G R O


Serbia

107. ObrenovacAir pollution

The main air pollution sources in Obrenovac arelignite-fuelled thermal power plants Nikola Tesla Aand B, with lignite supplied from Kolubara basin. TheKolubara-Obrenovac corridor consists of lignite-firedpower plants, related ash pits, and lignite mines.Pollution in the 40-kilometre corridor has a majorimpact on air quality and results in a high level of res-piratory problems in the region. Ash and slag deposi-tion, from Thermal Power plant Nikola Tesla A and BObrenovac, cover a 980-hectare area and requireurgent reclamation.

108. LazarevacThermal power plant

The main environmental pressures in Lazarevac (55kilometres south of Belgrade) come from the Kolubarathermal power plant, as well as from open coal pit andnon-cultivated ash deposits. Lignite production wasabout 26 million tonnes during the 1990s. The districtsof Kostolac and Kolubara are the most problematic. Themain pollutants are sulphur dioxide, nitrogen oxides,dust, carbon monoxide, from the thermal power plant;and flying ash, sulphur dioxide, cobalt, nickel, arsenic,cadmium, lead, copper and zinc from the process ofcoal exploitation.

In the Kolubara basin, four coal mines producewaste that occupies an area of 5,783 hectares, fromwhich only 36 percent of the land was re-cultivated.

109. KostolacThermal power plants

The main air pollution sources for Kostolac are thelignite-fuelled Drmno and Kostolac thermal powerplants, as well as an open coal pit and non-cultivatedash depot. The installation capacity of the two thermalpower plants is about 900 megawatts, with about 20million kilowatt-hours per day. According to measure-ments performed by Electric Power of Serbia (EPS), itsfour thermal power plants generated about 287,000tonnes of sulphur dioxide and 55,380 tonnes of nitro-gen dioxide in 2001. The main land pressures are fromwastes from three mines, which are deposited over atotal surface of 1,719 hectares, from which 34 percent ofthe land was rehabilitated, and 166 hectares of ash andslag deposited from the Kostolac thermal power plant.

110. SmederevoAir pollution

Sartid’s iron and steel production is the main sourcesof air pollution in Smederevo, which has 62,700 inhab-itants. The mean values of maximum allowed concen-trations (MAC) for soot were exceeded. The MAC forsoot was exceeded on 10-50 percent of all days. Thetotal number of people living in Smederevo is 110,000.The number of people whose health is endangered islarger, because a number of people living in neigh-bouring settlements work in Smederevo.

111. BeocinAir pollution

The Beocinska Fabrika Cementa cement factory isthe main source of sulphur-dioxide and nitrogen-oxideemissions. About 16,000 inhabitants live in Beocin,which is near Novi Sad.

112. ParacinAir pollution

The major source of air pollution is the NoviPopovac cement factory near Paracin.

113. SuboticaAir pollution

The Zorka and Azotara chemical factories producenitrogenous compounds and fertilisers, which are themain sources of air pollution in Subotica. About 107,000inhabitants live in Subotica.

114. ZrenjaninWater pollution

There are numerous sources of water pollution inZrenjanin resulting from commercial activities. Termikaproduces thermo-isolating materials, Izolir producesplastic panes and other products, Luxol and Delta Inproduce soaps and detergents, Delhem produces chem-icals and agricultural products, and Jugoremedija pro-duces pharmaceutics. Zrenjanin has 79,500 inhabitants.

115. VrbasWater pollution

Industry impacts the environment in Vrbas. Carnexproduces and processes meat, Vital produces vegetableoil and fats, and Sava Kovacevic produces silk fibresand textiles. These are the main polluters of theDanube-Tisa-Danube channel. The channel’s water istherefore of sub-standard quality. About 26,000 inhabi-tants live in Subotica.

A N N E X 3 : F U L L L I S T O F H O T S P O T SS E R B I A




ika Srpska

Vojvodina

Kosovo

ation of BosniaHerzegovina

Republika Srpska

A T I A

H U N G A R Y

B O S N I AA N D

R Z E G O V I N A

BULG.


Serbia

Montenegro

R O M A N I A


Tirana

Vukovar

Subotica

Slavonski Brod

Osijek

Szekszard

Pecs

kanizsa

Kaposvar

Timisoara

Resita

Petroseni

HunedoaraDeva

Arad

Zrenjanin

Kikinda

Szeged

Hodmezovasarhely

Shkodra

Durres

Valjevo

Brcko

Sabac

Pancevo

Ruma

Niksic

Mostar

Dubrovnik

Bijeljinanja Luka

Peshkopi

Kukes

Elbasan

Vidin Calafat

Pernik

Montana

Kyustendil

SeverinDrobeta-Turnu

Vranje

Urosevac

Titov Veles

Tetovo

Strumica

Stip

Smederevo

Prizren

Pristina

Prilep

Pec

Paracin

Ohrid

Novi Pazar

Kumanovo

Kraljevo

Gnjilane

Bor

Bitola

Gostivar

Kosovska Mitrovica

Pale

Gorazde

Priboj

BijeloPolje

Bar

Novi Sad

loce

Doboj

Srebrenica

Foca

Vrsac

Nis

Uzice

Tirgu-Jiu

Neum

Dakovica

Berane

Kotor

Shengjin

Sombor

Belgrade

Sarajevo

Podgorica

Skopje

AL

PS

TRAN

SYLV

ANIAN ALPS

BALKANMTS.

NORTHALBANIAN

ALPS

B A N A T

SA

RP L A

NI N A

NO

NI A N

B A S I N

Lake

Lake

LakeScutari

Ohrid

Sava

DanubeTisa

Danub

e

Danube

Morava

Vardar

Drina

Piva

Tara

Mures

Tisza

A d r i a t i c

S e a

Danube

113

115 127

127

114

118

112

127

122133

108

117123

135

128111108

134

109

129124

132

132

116

119

121126

130

120

131

125

110107

116. KrusevacIndustrial pollution

Production and processing are the main sources ofpollution in Krusevac (population 57,400). Ciglana pro-duces roofing tiles and bricks, Trayal korporacija pro-duces vehicle tyres, Merima produces soaps and deter-gents, and Zupa produces inorganic chemicals.

117. BelgradePollution

Belgrade is the largest town in Serbia with 1,576,000inhabitants. It also has complex and numerous environ-mental pressures. There are many potential industrialaccidents in or near the town. Other pressures come fromthe high number of heating objects, as well as largeindustrial complex in Belgrade (Prva iskra Baric, TPPObrenovac,). The maximum allowable concentration(MAC) for soot is exceeded at single measuring points on141 days per year in Belgrade, and transport is the mainsource of poor air quality. In the past decade numerousillegal settlements have sprouted up that lack basic livingconditions. For example, 19,000 Roma live in 64 “unhy-gienic” (meaning no piped water in the house or yard)settlements, usually in shacks, in Belgrade. Water supplycoverage in Belgrade is 80 percent, and sewerage cover-age about 65 percent. The mean annual values for sootand particulate matter exceeded the MAC. The number ofdays that soot exceeded the MAC for was 15-40 percent.The air pollution indices for basic pollutants place airquality in the fourth category.

Results of the Specific Pollutants Analysis indicatedthat the MAC was exceeded for ammonia andhydrochloric acid (about 25 percent of total measure-ments), and for carbon monoxide, nitrogen oxides, andlead (the mean annual value twice exceeded the MAC).

118. Novi SadOil refineries

The main environmental pressures on Novi Sadcome from the production of crude oil in two refineriesof NIS Novi Sad with a capacity of 1 million tonnes andproduction of 6,500,000 tonnes per year. The main partof the refinery’s production is performed in industrialzones near residential areas. Novi Sad is a town of about234,000 inhabitants.

119. NisPollution and water

Nis is the third largest city in Central Serbia with173,400 inhabitants. It is a highly industrialised townwith, for example, production of metal constructionmaterials, machines for metal processing, and other

metal production and processing, an electronic industry,and production of roofing tiles and bricks. Water supplycoverage is 90 percent, and sewerage coverage is 70 per-cent. The mean annual values for particulate matterexceeded the maximum allowable concentration (MAC).The value of high concentration of soot has beenexceeded in past years (in 2000, C98 was 179 µg/m3). Theair pollution indices for basic pollutants indicate the sec-ond and fourth categories of air quality. The analyses ofspecific pollutants showed that cadmium levels consider-ably exceeded the MAC (50 percent of samples), whilehydrogen sulphide and ammonium were slightly over.

120. Majdampek Mining

Degraded land of about 12,060 hectares is a result ofmining activities in the Majdampek mine basin, includ-ing the disposal of flotation waste.

121. BorAir pollution

The mean value for sulphur dioxide exceeded themaximum allowable concentration (MAC). The numberof days that sulphur dioxide exceeded the MAC wasbetween 20-50 percent. The air pollution indices of thebasic pollutants indicate fifth-degree air quality. Arsenicand cadmium in the soot most frequently exceeded theallowed values. The lead and cadmium in the sedimentmaterial occasional exceeded the allowed limits. Thetotal number of people living in town is 56,000. Thenumber of people whose health is endangered is larger,due to the number of people living in neighbouring set-tlements who work at RTB Bor.

Exposure to the negative effects of the year-long activ-ities of the mining and metallurgic complex of RTB Borpresents a high level of health risk for residents of thetown (about 56,000). The number of people whose healthis at risk is larger, however, due to the number of peopleliving in neighbouring settlements who work in RTB.

HealthBad air quality (especially sulphur dioxide, arsenic

and cadmium in soot, as well as lead and cadmium in sed-iment material) causes health problems such as increasedbronchial and laryngeal diseases. Diseases of the diges-tive system and infectious and parasitic diseases, aredirect results of poor-quality drinking water.

122. SabacIndustrial pollution

Sabac is a town of about 63,000 inhabitants. Themain negative effects to the area come from the chem-ical and metallurgy factory of Zorka Sabac.



Zorka/Ferrous-metals produces metal sulphates,Zorka/Poliplast produces primary plastic materials andZorka/Fertiliser produces fertilisers and chemicals foragriculture. The percentage of wastewater treatment isvery low. Toxic pollution has been recorded in sedi-ments downstream from Sabac. The mean annual val-ues for soot and particulate matter exceeded the max-imum allowable concentration. The number of daysthe maximum allowable concentration was exceededfor soot was about 30 percent. The value of the highconcentration of soot was exceeded in past years (in2000 C98 was 334 µg/m3). The air pollution indices ofthe basic pollutants indicate that air quality is in thefourth category.

HealthMany diseases have been recorded that are direct

and indirect consequences of environmental pollutionin Sabac. The increase of respiratory diseases can becaused by the high level of air pollution (soot, particularmatter, sulphur dioxide, nitrogen oxides, etc.). Diseasesof the digestive system are a direct result of poor-qualitydrinking water, as are infectious and parasitic diseases.

123. PancevoIndustrial pollution

Pancevo, a town of about 91,000 inhabitants, has amajor industrial complex, including an oil refinery of 3.5-megatonne capacity. HIP Petrohemija produces primaryplastic materials, and HIP Azotara produces nitric acid,sulpho-nitric acids and ammonia in aqueous solution. Italso manufactures pesticides and other agro-chemicalproducts. The industrial complex lies on the southern edgeof town. An artificial canal carries storm water and waste-water runoff from the complex directly into the Danube.

The mean annual values for the particulate matterexceeded the maximum allowable concentration(MAC). The number of days exceeding the MAC for sootwas about 10 percent. The analyses of specific pollu-tants showed that levels of ammonium considerablyexceeded the MAC.

HealthBad air quality causes health problems, such as

increased bronchial and laryngeal diseases, especially inthe industrial region of Pancevo. Some recent epidemio-logical studies have found that poor living conditionsand drinking water quality are negatively affectinghealth. Samples of subterranean water, both from shal-low and deep groundwater, point to extreme values ofchlorinated hydrocarbons. These waters are used forsupplying water to inhabitants and for irrigating agricul-tural areas. The NATO bombing of 1999 resulted in pol-lution to the ambient environment in the area, includingseveral toxic substances such as dichlorethane, mercury

and other heavy metals, PCB oils and petroleum productwastes, and phenols. Levels of these pollutants are fre-quently found to exceed national and EU standards.

124. KragujevacIndustrial pollution

The town of Kragujevac has 146,000 inhabitants andsuffers from pollution from various forms of industry.Zastava runs a car factory, Azma produces asbestos andasbestos-based products, and Filip Kljajic runs a metalprocessing factory. Due to expansion of the settlement,the main factories are within the township. The meanannual values for sulphur dioxide and particulate mat-ter exceeded the MAC. The air pollution indices of basicpollutants indicate air quality of the fifth category.

125. UziceAir pollution

About 83,000 inhabitants live in Uzice. The meanannual values for soot there exceeded the maximumallowable concentration (MAC). The number of daysthat soot levels exceeded the MAC was between 30-60percent. The air pollution indices of basic pollutantsindicated 5th category air quality.

126. The Borska River, near BorWater quality

The Borska River represents an open collector of theindustrial wastewater from the town of Bor, as well asRTB Bor, and therefore it is completely degraded to theout-of-class condition.

127. Banat waterways Water quality

The Banat waterways include the Sari Begej, PlovniBegej, Zlatica, Krivaja, Keres, Bosut, and Studva rivers,as well as the Danube-Tisa-Danube channel network.The quality of these waters at the bordering profile fromRomania, according to many parameters, correspondsmainly to the fouth class, according to the disturbedoxygen, available nutrients, high concentration oforganic and suspended material, ammonium andnitrates, anaerobic changes, sporadic phenol, as well asmicrobiological pollution of these surface waters (faecalpollution, potential presence of pathogen bacteria, pro-tozoa, viruses, and intestinal parasites). The dischargedmicrobiological pollution well surpasses the self-purifi-cation capacity of the recipients (small rivers or chan-nels). The overall water quality of those waterways cor-respond to the fourth class, or are out-of-class.



128. Topciderska River, in BelgradeWater quality

During 2000, as in previous years, the river’s waterwas highly polluted by organic and industrial waste.High concentrations of iron and manganese werefound, and, in some samples, of mineral oil. The waterof the Topciderska River falls in the fourth category.

129. Velika Morava River and its tributariesWater quality

According to research findings, the waters of theVelika Morava River and its tributaries — the Crnica,Lugomir, Belica, Lepenica and Veliki Lug rivers — arepolluted with organic material, particularly during thesummer months, causing its degradation to the fourthclass during periods of extremely low waters. Otherparameters were mostly corresponding to class 2. Due tothe levels of disturbed oxygen, available nutrients, con-tent of organic and suspended material, as well as ammo-nium, nitrates occurrence, anaerobic changes, sporadicphenol, as well as microbiological pollution, these sur-face waters — the waters of the tributaries to VelikaMorava — were most often in the out-of-class category.

130. Veliki Timok RiverWater quality

The waters of the Veliki Timok were analysed inBrusnik. Some improvements were detected in compar-ison to the previous period, but the waters of this rivercorrespond to the 4th class, or are out-of-class condi-tion, due to the presence of metals and suspensions.

131. Djerdap National ParkPollution

The Djerdap National Park represents the greatestnatural and archaeological museum in Europe.Transboundary and local pollution is the strongestthreat to the freshwater ecosystem, and biodiversitychanges due to the various levels of influence by sapro-bic processes and eutrophication. The construction ofhydroelectric plants in Djerdap killed off economicallyimportant anadromous species upstream of the dam.

132. Kopaonik National ParkNatural values

The Kopaonik National Park spreads over the high-est parts of Mt. Kopaonik, the biggest mountain inSerbia. A vast, mountainous and relatively flat region atan altitude of about 1,700 meters forms the basis of thisnational park. Kopaonik is characterised by a largenumber of autochthonous species of flora and fauna.High pressures from tourist and telecommunication

demands present one of the biggest threats to naturalfeatures of this valuable natural area.

133. Obedska Bara wetland Development pressures

Obedska Bara is one of the best known Europeanwetlands. The reduction of the flood zone, the devasta-tion of natural forest and its replacement by poplarplantations exert additional influence on the loss ofimportant wetlands functions.

134. Carska bara-Stari Begej wetland Eutrophication

Intensive eutrophication caused by nutrients from thesurrounding agricultural areas and settlements has speed-ed up the process of natural overgrowth of the wetland.

135. Deliblatska pescara Threatened ecosystem

Deliblatska pescara is the biggest and most impor-tant centre of steppe or Pontic flora and fauna biodiver-sity in this part of Europe. The autochthonous sandy,steppe and forest ecosystems are interchanging in thisinteresting area.


136. ObilicThermal power plants

Two power plants in Obiliq (located in the region ofPristina) use lignite in the production of electricalpower. Problems with filtering exist, and one of thethermal plant does not use filters at all. The area affect-ed is the most densely populated in Kosovo (approxi-mately 800,000).

Treatment for industrial water Industrial wastewater and phenol waters from KEK

Obiliq are discharged into the Sitnica River. This iscross-boundary pollution. The last incident was inFebruary 2003.

Flying ashThere is a total of 49,278,822 tonnes of ash stored

openly in Obiliq near the Kosovo A and B thermal powerplants. The ash occupies a total area of 165 hectares. Itcontains heavy metals, and since it is in the open the winddisperses the ash broadly. The most effected area is theregion of Pristina.

A N N E X 3 : F U L L L I S T O F H O T S P O T SS E R B I A • K O S O V O


A N N E X 3 : F U L L L I S T O F H O T S P O T SK O S O V O


Kosovo

blikaka

A L B A N I A

A

I N A

BULG


Serbia

Montenegro


Tirana

Shkodra

Lushnje

Durres

Berat

Valjevo

Tuzla

Brcko

Sabac

Pancevo

Ruma

Niksic

Bijeljina

Florina Edessa

Peshkopi

Kukes

Korce

Elbasan

Vidin Calafa

Pernik

Montan

Kyustend

SeverinDrobeta-Turnu

Vranje

Urosevac

Titov Veles

Tetovo

Strumica

Stip

Smederevo

Prizren

Pristina

Prilep

Pec

Paracin

Ohrid

Novi Pazar

Kumanovo

Kragujevac

Gnjilane

Bor

Bitola

Gostivar

Mitrovica

Pale

Gorazde

Priboj

BijeloPolje

Bar

Srebrenica

Foca

Thessalon

Nis

Uzice

g

Dakovica

Berane

Kotor

Shengjin

Belgrade

Podgorica

Skopje

Fier

TRAN

SYLV

A

BALKANMTS

NORTHALBANIAN

ALPS

SA

RP L A

NI N A

Lake

Lake

LakeScutari

Ohrid

Prespa

Sava

Danube

Morava

Vardar

Drina

Piva

Tara

c

Danube

136

141

140

137

142

139

143

138

137. PristinaWaste water treatment

Pristina is the capital of Kosovo and has the highestpopulation in Kosovo around 545,477. The problem isthat all the untreated waste waters are reaching theSitnica Rver, which streams into the Iber River, and theneventually into the Danube.

138. MitrovicaWastewater treatment

Wastewater from Mitrovica is discharged into theIber River, which then flows into the Danube.According to monitoring, the Iber has level III pollutedwater.

Trepca industrial complexThe industrial complex of Trepca is currently inac-

tive. However, there is historical industrial waste thatshould be treated.

Mitrovica Industrial Park One year ago, 21 rusty drums of dimethyl hydrazine

in Mitrovica Industrial Park were safely transferred into79 new 30-litre metal drums. The new drums are storedin a locked, fire-safe indoor storage facility withinMitrovica Industrial Park

Some radioactive sources are found in the same room,at Prvi Tunel, which are placed in concrete lined barrels.

Seven thousand tonnes of concentrated sulphuricacid remain in storage tanks at Mitrovica. One thousandtonnes have already been shipped out to Serbia by car,and the rest will be shipped out as soon as a replace-ment pump has been installed.

PCBs/PCTsThere are 3,000 litres of transformer oil in Mitrovica.

Leposavic concentrator/region of MitrovicaAbout 20 barrels of sodium cyanide are stored on

location. Even though it is not an immediate concern,the safety (relating to getting access) of the storageroom may be questionable.

Tuneli i Pare Concentrator in MitrovicaThe floatation plant stores 7-12 tonnes of sodium

cyanide. This cyanide was repacked into reliable drumsby the French KFOR troops during a cleanup operationin May. The drums are now in safe storage at the site.

Kisnica Concentrator, Region of Mitrovica There are 560 kilograms of sodium cyanide in safe

storage at the Kisnica Concentrator. The site also holds4 tonnes of sodium hydroxide, and the laboratory holds18,250 kg of non-utilised mercury. Mercury was earlierused at the laboratory for potentiometer titration.

Zvecan region of MitrovicaIn September 2002, approximately 1.5 tonnes of

arsenic trioxide was placed in new barrels by theFrench KFOR. They are now in safe storage on site.

139. KacanikWastewater treatment

The wastewater of Kacanik is discharged into theLepenc River, which then flows into the Vardar River inFYR Macedonia and then into the Aegean Sea.

140. DakovicaWastewater treatment

The agglomeration is without wastewater treatment(no further data provided).

141. PecWastewater treatment


142. GjilanWastewater treatment


BatteryA battery factory is not operational. The following

hazardous waste is stored there:

• hard rubber — 50 cubic metres;

• sludge from drainage ditch — 200 m3;

• porcelain isolators — 4 m3;

• paste waste from the lead recycling — 10 tonnes;and

• slab waste (battery waste) — 30 tonnes.

143. FYR Macedonia-Kosovo borderCement factory

The factory is privatised, and the owners are foreigninternationals. The cement factory is at the borderbetween FYR Macedonia and Kosovo, making the pol-lution a trans-boundary problem.

A N N E X 3 : F U L L L I S T O F H O T S P O T SK O S O V O



Annex 4Results of the

Prioritisation Exercise

Albania 124-125

Bosnia and Herzegovina 126-127

Croatia 126-127

FYR Macedonia 128-129

Serbia and MontenegroMontenegro 130-131Serbia 130-133Kosovo 132-133(territory under UN interim administration)

Albania Project Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

Al-13 Air Introducing desulphurisation of flue gas plant at theheavy fuel-oil fired thermal power plant 100 0 100

Al-14 Air Reduction of sulphur dioxide and nitrogen oxides in Mother Teresa Hospital (the main hospital for Albania) by introducing energy efficiency measures and a combined heat and power plant for energy supply 100 0 100

Al-15 Air Reduction of SO2 and NOx in Student City by introducing energy efficiency measures and CHP plant for energy supply 100 0 100

Al-17 Air Reduction of carbon dioxide and nitrogen oxides (air emission)by introducing demand-side management at two main food factories in Albania 100 0 100

Al-16 Air Carrying out a feasibility study for reducing sulphur dioxide and nitrogen oxides in air emissions by introducing local renewableenergy sources in Borshi (Saranda), the most important tourist area of the Albanian Riviera 100 0 50

Al-18 Air Carry out a feasibility study for introducing solar panel system for supplying hot water to older houses in Tirana 100 0 50

Al-4 WS Urban Solid Waste Management Plan for Pogradec 175 25 75

AL-2 WS Management plan and construction of landfill for solid waste in Elbasan 100 25 100

AL-3 WS Urban waste management and construction of sanitary landfill in Fier City 100 25 100

Al-8 WS Management plan for urban solid waste of Shkoder and construction of sanitary landfill 100 25 100

Al-9 WT Water supply rehabilitation design in the Minicipality of Vlora 100 50 100

Al-10 WT Sewage system for Fier 100 50 100

Al-6 WT Wastewater treatment plant for Durres City 100 25 100

Al-7 WT Saranda wastewater plant 100 25 75

Al-5 WT Sewage water treatment plant for Lezha 100 25 50

AL-1 WT Rehabilitation and extension of water suply and sewerage systemfor Durres 100 50 50

Al-11 WT Rehabilitation and extension of water suply and sewerage system for Lezha 100 50 0

Al-12 WT Rehabilitation and extension of water suply and sewerage systemin Saranda 175 0 0

A N N E X 4 : C R I T E R I A G R O U P SA L B A N I A


Outlays in Own Not Total Legal Technical Environment Social Financial Project mln Euro resources secured score

development10%* 5%* 15%* 10%* 10%* 5%*

0 0 0 0 0 50 5.700 0.000 5.700 38%

0 0 0 0 0 50 3.200 0.000 3.200 38%

0 0 0 0 0 50 3.600 0.000 3.600 38%

0 0 0 0 0 50 1.000 0.000 1.000 38%

0 0 0 0 0 50 2.000 0.000 2.000 29%

0 0 0 0 0 50 0.050 0.000 0.050 29%

100 50 100 50 0 50 1.000 71%

0 50 100 50 0 50 1.531 51%

0 50 100 50 0 50 1.600 51%

0 50 100 50 0 50 1.550 0.000 1.550 51%

100 50 100 100 0 50 20.000 0.000 20.000 72%

100 50 100 50 0 50 2.000 0.000 2.000 67%

100 50 100 50 0 50 3.152 3.152 62%

100 50 100 50 0 50 0.690 58%

100 50 100 50 0 50 0.593 0.318 54%

0 100 0 0 0 50 6.540 0.000 6.540 43%

0 100 0 0 0 50 2.165 0.000 2.165 35%

0 0 0 0 0 50 1.225 0.000 1.225 33%

A N N E X 4 : C R I T E R I A G R O U P SA L B A N I A


* shows weight of criteriaHigh priority projects are marked in bold

A N N E X 4 : C R I T E R I A G R O U P SB O S N I A A N D H E R Z E G O V I N A • C R O A T I A


Bosnia and HerzegovinaProject Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

BH-1 Air Air quality monitoring 175 100 100

BH-8 WT Construction of the wastewater treatment system for the city of Sarajevo 175 100 100

BH-6 WT Construction of the wastewater treatment system for the city of Mostar 175 75 100

BH-7 WT Construction of the wastewater treatment system for the city of Bileca 175 75 50

BH-2 WT Sewage system of Bijeljina and wastewater treatment plant 100 75 100

BH-3 WT Ecological protection of Modrac accumulation as a main resourcefor water supply for the population and industry of the Tuzla canton (Dunav river basin) 75 50 100

BH-4 WT Sewage system and wastewater treatment plant 75 75 50

BH-5 WS Construction of new sanitary landfill (Crni Vrh – sjever) for several municipalities (Zvornik, Kalesija, Sapna, Osmaci) in the vicinity of Zvornik, Bosnia and Herzegovina 175 25 0

CroatiaProject Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

HR-5 Air Establishment of the National Network for Permanent Air Quality Monitoring in the Republic of Croatia 100 100 100

HR-14 Air Continuos gas emission monitoring 100 100 0

HR-9 Air Acid gas treatment with amine, acid water stripper and sulphur production (Claus) 100 100 100

HR-1 Multi/ Animal waste management and effluent treatment system WS in the Agroproteinka rendering plant 175 100 100

HR-6 WS Pipo biogas plant 175 100 100

HR-7 WS Elimination of asbestos pollution and decontamination of the production area 100 75 100

HR-3 WS Remediation of botovo and construction of wash station in Slavonski Brod 0 100 100

HR-4 WS Waste disposal by deep well injection 100 25 100

HR-10 WS Waste collection and treatment centre 100 25 100

HR-2 WS Incinerator 100 0 0

HR-11 WS Waste landfill Sovjak Croatia 100 0 0

HR-12 WS Waste management primorsko goranska county Croatia 100 0 0

HR-8 WT Completion of the refinery wastewater treatment plant 175 75 50

HR-13 WT Wastewater storage at AN/CAN fertiliser production plant 100 0 100

A N N E X 4 : C R I T E R I A G R O U P SB O S N I A A N D H E R Z E G O V I N A • C R O A T I A



development10%* 5%* 15%* 10%* 10%* 5%*

100 100 50 100 0 50 1.244 0.070 1.174 97%

100 100 0 100 0 50 38.000 0.000 38.000 97%

100 0 0 100 0 50 25.000 1.250 23.750 87%

100 0 0 100 0 50 3.500 0.875 2.625 78%

100 25 0 0 0 50 10.195 1.195 9.000 64%

0 25 0 0 0 50 43.100 10.500 32.600 43%

0 0 0 0 0 0 1.000 0.100 0.900 35%

0 0 0 0 0 50 2.130 0.315 1.819


development10%* 5%* 15%* 10%* 10%* 5%*

100 100 100 100 0 25 5.130 3.430 1.700 83%

100 50 0 100 0 100 0.650 0.000 0.650 67%

0 100 100 0 0 100 0.000 0.000 0.000 64%

100 100 100 50 0 50 9.610 1.120 8.490 91%

100 100 100 100 0 50 2.731 0.773 1.958 97%

100 100 100 100 0 50 6.500 0.000 6.500 80%

100 100 50 100 0 50 0.000 67%

100 75 100 50 0 100 2.215 2.215 0.000 67%

0 100 50 100 0 100 0.000 0.000 0.000 62%

100 100 50 50 0 50 2.000 1.000 1.000 43%

0 0 0 0 0 50 30.000 0.000 30.000 20%

0 0 0 0 0 50 7.000 0.000 7.000 20%

100 100 100 100 0 100 0.000 0.000 0.000 87%

0 0 0 0 0 50 0.600 0.000 0.600 38%

FYR MacedoniaProject Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

MA-10 Air Sulphur trioxide flue gas conditioning system 175 100 100

MA-12 Air Stack emission monitoring for thermal power plant 175 100 100

MA-11 Air Fire protection system for coal bunkers, steam turbine lube oil system and narrow bridges at the thermal power plant 100 100 100

MA-21 Air Decreasing air and soil pollution by heavy metals containing dust — lead and zinc smelter 100 100 75

MA-22 Air Neutralisation of waste gases from sulphuric acid plant 100 100 75

MA-3 Air Air pollution reduction at Silmak ferro-alloy plant 100 100 50

MA-13 Air Air desulphurisation 100 75 100

MA-4 WS Treatment of HCH waste from former lindan production plant in Adohis 175 100 100

MA-16 WS Sanitary protective zones and recultivation of the final slopes of soil 175 100 100

MA-15 WS Bio-reclamation revitalisation of hydro-tailings 175 100 50

MA-5 WS Solid waste treatment by procurement of waste recycling equipment 175 50 100

MA-17 WS Modernisation of municipal landfill through degasification and utilisation of landfill gas 100 100 100

MA-23 WS Slag fuming plant 100 100 75

MA-14 WS Remediation of illigal hazardous waste landfill 175 100 100

MA-6 WS Solvent recuperation from waste in paint and glue production 175 50 25

MA-25 WS Reconstruction of the flow round tunnel under the flotation hydro — teiling disposal of lead-zink mine “Sasa”, Makedonska Kamenica 175 100 0

MA-30 WT Wastewater treatment plant for the city of Veles 175 100 100

MA-24 WT Recycling of the water in fertiliser factory 175 100 100

MA-1 WT Wastewater treatment system for the city of Skopje 175 100 100

MA-7 WT Rehabilitation of the wastewater treatment plant in Skopje 175 100 100

MA-9 WT Industrial and wastewater treatment station for the city of Bitola 175 100 100

MA-18 WT Leaching and cementation project in Copper mine — Radovis 175 100 100

MA-20 WT “Konsko” hydromelioration system — Gevgelija 175 100 75

MA-2 WT Wastewater treatment plant — Prilep 175 75 100

MA-19 WT Wastewater recycling project in Kicevo/Oslomej thermal power plant 100 100 100

MA-26 WT Construction of combined wastewater treatment plant for pig farm— Gradsko 100 100 100

MA-27 WT Construction of combined wastewater treatment plant for pig farm— Kumanovo 100 100 100

MA-31 WT Dam of the River Otinja with associated facilities, city of Stip 100 75 100

MA-8 WT Wastewater treatment plant for Fenimak plant 175 50 50

MA-29 WT Construction of Orizarska Reka hydro-system 100 50 100

MA-28 WT Construction of combined waste water treatment plant in Stenje, Prespa Lake 100 75 25

A N N E X 4 : C R I T E R I A G R O U P SF Y R M A C E D O N I A


A N N E X 4 : C R I T E R I A G R O U P SF Y R M A C E D O N I A



development10%* 5%* 15%* 10%* 10%* 5%*

100 100 50 100 0 50 1.600 0.100 1.500 97%

100 100 50 100 0 50 0.250 0.050 0.200 97%

100 50 50 100 0 50 0.300 0.050 0.250 81%

100 100 50 100 0 50 5.200 0.000 5.200 80%

100 75 50 100 0 50 1.000 0.000 1.000 78%

100 50 50 100 0 100 3.200 1.200 2.000 75%

100 50 50 100 0 0 9.000 0.000 9.000 74%

100 50 50 100 0 50 6.500 0.000 6.500 94%

100 50 50 100 0 50 0.250 0.050 0.200 94%

100 100 50 100 0 50 0.257 0.000 0.257 88%

100 50 50 100 0 50 0.838 0.000 0.838 86%

100 100 50 100 0 50 2.500 0.500 2.000 84%

100 100 50 100 0 50 20.000 0.000 20.000 80%

0 0 0 100 0 0 0.000 0.000 0.000 77%

100 50 50 0 0 50 0.237 0.000 0.237 61%

0 50 0 100 0 50 0.150 0.000 0.150 65%

100 100 50 100 0 50 13.760 0.050 13.710 97%

100 75 50 100 0 50 0.500 0.000 0.500 96%

100 50 50 100 0 50 57.100 4.000 53.100 94%

100 50 50 100 0 50 11.415 1.000 10.415 94%

100 50 50 100 0 50 7.322 0.000 7.322 94%

100 100 50 100 0 0 1.500 0.000 1.500 94%

100 100 50 100 0 50 91.000 10.000 81.000 93%

100 50 50 100 0 50 9.190 0.000 9.190 90%

100 100 50 100 0 0 1.500 0.000 1.500 81%

100 50 50 100 0 50 1.890 0.050 1.840 81%

100 50 50 100 0 50 7.965 0.050 7.915 81%

100 75 0 100 0 50 3.800 0.000 3.800 78%

100 50 50 100 0 50 0.150 0.000 0.150 77%

100 75 0 100 0 50 36.000 8.000 28.000 74%

100 100 50 100 0 50 0.173 0.050 0.123 67%


A N N E X 4 : C R I T E R I A G R O U P SS E R B I A A N D M O N T E N E G R O M O N T E N E G R O • S E R B I A


Serbia and MontenegroMontenegroProject Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

MN-3 Air Desulphurisation of flue gases in Pljevlja thermal power plant 175 100 75

MN-2 Air Reconstruction and increase of the capacity of electrostatic precipitators in Pljevlja thermal power plant 0 100 75

MN-5 WS Closure and remediaition of the existing waste disposal site and construction of new Podgorica landfill along with recycling centre 100 100 100

MN-1 WS Remediation measures for Mojkovac mining waste disposal site 100 100 50

MN-4 WS Rehabilitation and remediation measures for inactive Borovica coal pit, and for Jagnijilo and Grevo disposal sites 0 100 75

MN-7 WT Upgrade and extension of existing Podgorica WWTP for the period up to 2011 (phase I), and construction of new facilities at location outside the city area (Phases II and III) for the period 2012-2031 100 100 100

MN-6 WT Upgrade and extension of Podgorica wastewater treatment plant 100 100 100

MN-8 WT Construction of sewage system in the town of Tivat, and expansion and reconstruction of sewage system in the town of Kotor 100 100 100

SerbiaProject Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

SR-4 Air Modernisation of copper smelter and sulphuric acid plants 100 100 100

SR-6 Air Improvement of regulation system at Kolubara A thermal power plant 100 100 100

SR-2 Air Decreasing of air pollution from Zastava Energetika 100 100 75

SR-3 WS Remediation and enlargement of existing waste disposal site (Jovanovac) and beginning of new waste disposal site (Vitliste) 100 100 100

SR-16 WS Investment into measures of technical systems for environmental protection from the existing trash dump in Nis 100 100 100

SR-15 WS Sustainable integrated solid waste managament in Krusevac 100 75 100

SR-17 WS Re-cultivation and upgrading of the existing Badra landfill in Svilajnac 100 75 75

SR-12 WS Construction of new Vladic in Han and Surdulica landfills along with recycling centre 175 75 50

SR-14 WS Rehabilitation and remediation measures for inactive waste disposal site near Vranje 0 50 100

SR-13 WS Developing sustainable system for disposing of solid municipal waste of Kragujevac 100 100 100

SR-10 WS Equipment supply for re-cultivation and preservation of ashand slag depot 100 100 100

A N N E X 4 : C R I T E R I A G R O U P SS E R B I A A N D M O N T E N E G R O M O N T E N E G R O • S E R B I A



development10%* 5%* 15%* 10%* 10%* 5%*

100 0 0 100 0 50 40.000 0.000 40.000 87%

100 75 0 100 0 50 0.500 0.000 0.500 61%

100 100 50 100 0 50 23.000 0.000 23.000 84%

100 50 0 100 0 50 0.500 0.000 0.500 72%

100 50 0 100 0 50 2.200 0.000 2.200 59%

100 100 50 100 0 50 19.756 0.000 19.756 84%

100 50 50 100 0 50 3.338 0.000 3.338 81%

0 50 0 100 0 0 16.000 0.000 16.000 67%


development10%* 5%* 15%* 10%* 10%* 5%*

100 100 50 100 0 50 0.100 0.000 0.100 84%

100 100 50 100 0 50 0.050 0.000 0.050 84%

100 50 50 100 0 0 0.250 0.000 0.250 74%

100 100 50 100 0 50 6.094 0.000 6.094 84%

100 100 0 100 0 50 1.401 0 1.401 84%

100 100 0 100 0 50 5.337 0 5.337 80%

100 100 0 100 0 50 0.828 0 0.828 75%

0 50 50 100 0 50 1.058 0.000 1.058 70%

100 100 50 100 0 50 0.160 0.000 0.160 58%

100 100 0 100 0 75 6.094 0.850 5.244 74%

100 50 50 100 0 50 0.025 0.000 0.025 81%


A N N E X 4 : C R I T E R I A G R O U P SS E R B I A • K O S O V O


Serbia (continued)Project Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

SR-8 WT Improving the sewage system of NIS Oil Refinery, Novi Sad 175 100 100

SR-1 WT Upgrade and extension of the Kolubara-Prerada wastewater treatment plant 175 100 100

SR-5 WT Construction of new wastewater collector for Kriveljska River 175 100 100

SR-7 WT Rejuvenation of Lake Ludas 175 75 100

SR-11 WT Construction of sewage system in the town of Vladicin Han 175 75 50

SR-9 WT Upgrade and extension of wastewater treatment plant of Subotica 100 25 100


Project Sector Project title Criteria group — weights and scoresnumber Strategic Geographic Health

15%* 15%* 15%*

KO-5 Air Improvement of air quality — thermal plants 175 100 100

KO-4 WS Rehabilitation of ash dumps in Obiliq 175 100 100

KO-2 WT Wastewater treatment plant in Mitrovice 175 100 100

KO-1 WT Wastewater treatment plant in Kacanik 175 50 100

KO-3 WT Wastewater treatment plant in Pristina 175 50 100

KO-6 WT The “Dragacine” system for water supply, irrigation and industry in Suhareka Municipality 175 25 100

A N N E X 4 : C R I T E R I A G R O U P SS E R B I A • K O S O V O



development10%* 5%* 15%* 10%* 10%* 5%*

100 50 50 100 0 50 3.700 0.000 3.700 94%

100 75 50 100 0 0 1.800 0.000 1.800 93%

0 50 50 100 0 50 14.500 0.000 14.500 83%

0 75 50 100 0 50 3.797 0.000 3.797 80%

0 50 50 100 0 50 0.400 0.000 0.400 70%

100 50 50 100 0 50 30.000 0.000 30.000 68%


development10%* 5%* 15%* 10%* 10%* 5%*

100 100 0 100 0 0 0.000 0.000 0.000 94%

100 100 0 0 0 0 0.000 0.000 0.000 83%

100 100 0 100 0 0 15.600 0.000 15.600 94%

100 100 0 100 0 0 6.500 0.000 6.500 86%

100 100 0 100 0 0 35.000 0.000 35.000 86%

100 100 0 100 0 50 8.725 0.000 8.725 84%



Annex 5Environmental Indicators

Used in Chapter 4

A N N E X 5 : E N V I R O N M E N T A L I N D I C A T O R S U S E D I N C H A P T E R 4


Environmental Indicators Used in Chapter 4

SEE — RAW DATA (1999)

Type of indicator Unit Albania Bosnia and CroatiaHerzegovina

Country Emission of CO2 Kt/a 3,101.00 1,2540.30 20,026.00

Country Emission of SO2 Kt/a 237.00 212.50 58.80

Country Emission of NOx kt/a 17.80 67.60 77.50

Country Municipal Solid Waste Generation kt/a 520.00 854.50 1,517.70

Country Industrial Waste Generation kt/a 415.00 345.00 2,758.30

Country Hazardous Waste Generation kt/a 1.50 38.90 23.80

Country Sewage Treatment Connection Rates (percentage of population connected to sewage system) % 0% 1% 34%

GDP (current) USD million 4,113 4,000 20,263

Population thousand 3,733 4,060 4,437

Note 1: SEE countries data were approved by the ministries of environment of SEE countries to be used in this report.Note 2: Data for Visegrad countries were obtained from the OECD and the World Bank statistics and refers to 1999.

A N N E X 5 : E N V I R O N M E N T A L I N D I C A T O R S U S E D I N C H A P T E R 4


VISEGRAD — RAW DATA

FYR Serbia and Montenegro Hungary Czech Poland SlovakiaMacedonia Montenegro Serbia Kosovo Republic

12,441.00 n/a 33,500.00 20.20 57,000 108,854 314,390 45,875

105.50 78.00 452.00 104.00 657 701 2,368 134

28.80 10.00 59.00 21.80 197 423 1,154 114

480.00 262.30 2,200.00 416.10 4,933 3,188 12,371 1,800

167.00 n/a 6,500.00 n/a 6,690 38,570 22,200 n/a

46.00 n/a 260.00 n/a 3,873 1,265 4,000 1,600

5% 11% 12% 0% 22% 59% 47% 54%

3,726 822 10,317 2,018 48,044 55,029 15,5038 20,204

2,044 660 7,747 1,900 10,068 10,283 38,658 5,395


Croatian Ministry of Environmental Protection and Physical Planning. Stateof Environment of the Republic of Croatia 2003. Available at:<www.mzopu.hr>.

European Commission. The Stabilisation and Association Process for SouthEast Europe: Second Annual Report. COM(2003)139.

European Investment Bank. Basic Infrastructure Investment in South-Eastern Europe, Regional Project Review. 2000.

European Bank for Reconstruction and Development. Water Strategy:Regional Approach for South Eastern Europe. 2001.

European Commission. Project Cycle Management Training CoursesHandbook. 2001.

Fiedler, J. and Janiak, P. Environmental Financing in CEE 1996-2001. REC 2003

National Environmental Action Plan for Bosnia and Herzegovina. March2003.

Regional Environmental Center for Central and Eastern Europe. TheRegional Environmental Reconstruction Programme for South EasternEurope; Building a Better Environment for the Future. 2001.

United Nations Economic Commission for Europe (UNECE).Environmental Performance Review of Croatia, 1999.

UNECE. Environmental Performance Review of Albania, 2002.

UNECE. Environmental Performance Review of FYR Macedonia, 2002a.

UNECE. Environmental Performance Review of Serbia and Montenegro,2002b.

References


Chapter 1: IntroductionThis assessment

This assessment has been prepared by COWI HungaryConsulting Ltd. and edited by the Regional EnvironmentalCentre for Central and Eastern Europe (REC).

The assessment is the main written output of theRegional Environmental Reconstruction Programme forSouth Eastern Europe (REReP) 1.5.1 project, theNetwork of Environmental and Financial Specialists inSouth Eastern Europe (SEE), which has been imple-mented under the REReP. The overall objective ofREReP 1.5.1 is to assist the beneficiary countries instrengthening their capacity for environmental invest-ment planning by using regional and cross-borderexchange of expertise (networking).

The main objectives of the report are to:

• assess the current state of the institutional and poli-cy developments in SEE with respect to the coun-tries' ability to effectively implement environmentalinvestment projects; and

• identify possible future policy and institutionalmeasures to be taken by the SEE countries in orderto strengthen their capacity for implementation ofenvironmental investment projects.

In general the assessment should assist environmen-tal policy makers in SEE to improve the institutional andpolicy set-up for enhancing the effectiveness of theirenvironmental investments.

It must be noted that the assessment is linked to theprocess of development of the Priority EnvironmentalInvestment Programme (REReP 1.2). The assessment is thefirst and a complementary step towards the implementa-tion of the Priority Environment Investment Programme. Itpresents the general regional picture in relation to the insti-tutional and policy frameworks for implementation ofenvironmental investments in the region.

This assessment should be followed by detailedstudies of the institutional framework of particularcountries and their roles and responsibilities for imple-menting environmental investment projects.

Scope of the documentThe assessment covers Albania, Bosnia and

Herzegovina, Bulgaria, Croatia, FYR Macedonia,Romania, Serbia and Montenegro, and Kosovo (territo-ry under interim UN administration).

The assessment for Albania, Bosnia andHerzegovina, Croatia, FYR Macedonia, Serbia andMontenegro and Kosovo (territory under interim UNadministration) was financed by the EuropeanCommission (EC).

The assessment for Bulgaria and Romania wasfinanced by the German State Aid Agency (GTZ).

The report covers assessments of the institutionaland policy frameworks for particular countries and out-lines regional recommendations.

For the assessment, information was gathered fromthe following sources:

• documents available in national languages providedby local consultants;

• interviews with donors and policy-makers in therespective countries; and

• reviews of available documentation and reports.

This report presents the results of the assessment.Therefore information presented is often not referenced.

The results of the report were presented to the min-istries of environment of the respective countries, whichreviewed the results, provided adjustments and madefinal approval at the regional meeting held in June 2003in Ohrid, FYR Macedonia.

Assessment of Institutional and PolicyFramework for Priority Environmental

Investments in South Eastern Europe

August 2003

Prepared by COWI Hungary Consulting Ltd.

Edited by the Regional Environmental Center for Central and Eastern Europe


Structure of the documentThe structure of the report is as follows:

• Chapter One presents the aims of the report, itsscope and structure.

• Chapter Two presents the methodology used for theassessment.

• Chapter Three presents the regional overview of thenational assessments for each country.

• Chapter Four presents the regional recommendations.

Chapter 2: MethodologyThe results of the assessment were compiled

through the following steps:

• national data collection on the relevant institutional,environmental, economic and financial issues;

• assessment of the institutional and policy develop-ment in each country, predicting future trends;

• deduction of lessons learned for the regionaloverview with respect to the viability and effective-ness of different financing mechanisms;

• regional overview of the national assessments foridentifying typical development patterns; and

• drafting recommendations that would improve theeffectiveness of implementing priority environmen-tal investment programmes or institutionalimprovement for each typical development patternin the region.

National data collection was arranged through theREC country offices. The methodology for data collec-tion was developed and discussed with the localexperts during an internal workshop. On that basis, adetailed template was elaborated and then used fordata collection. The results of the data collection arecompiled in an internal working note for each country.

This report presents a regional overview of thenational assessments and, on that basis, draws regionalrecommendations.

In the regional overview of the national assess-ments, the two following points are addressed:

• analysis of the institutional and policy set-up inorder to identify major driving forces for imple-menting environmental investment projects; and

• identification of lessons learned in each countrywith respect to the viability and effectiveness of dif-ferent financing mechanisms.

The regional recommendations are drafted for eachtype of environmental investment project which arepresent in a group of countries in the region.

In order to conduct the assessment, several defini-tions had to be established. The definitions and theirdescriptions are presented below.

Classification of environmental investment projects

There are different types of environmental invest-ment projects. Projects can differ due to differences inthe environmental problems they intend to address.These differences, in turn, often appear in the typicalsize of the project or in the ownership of the project.

For our purposes we define the following categoriesof environmental investment projects:

• Environmental infrastructure development projects;

- water distribution and wastewater collection andtreatment systems;

- solid waste management facilities, and

- hazardous waste management facilities;

• Pollution abatement projects in production process-es and provision of services

- end-of-pipe abatement; and

- Cleaner technologies;

• Nature conservation projects

- clean-up of contaminated sites; and

- Environmental monitoring projects.

The magnitude and structure of the environmentalinvestment expenditure is the indicator for the imple-mentation of environmental investment projects (EIPs).Environmental investment expenditure figures are col-lected in many countries. Through the analysis ofchanges in environmental investment expenditure wecan assess developments in the implementation of pri-ority environmental investment projects.

Demand for and supply of environmental investment financing

The analytical framework borrows definitions fromthe terminology of economic theory. Accordingly, theinteraction of demand for and supply of environmentalinvestment resources determines the size and structureof the implementation of EIPs. Driving forces determin-ing the demand and available financing mechanismsframe the implementation of priority EIPs.

Drivers of demand for financing EIPsDemand for environmental investment resources

represents the intention to implement environmentalinvestment projects. The formulation of environmentalinvestment projects can be driven by environmental

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policy objectives, instruments and legislation which isintroduced either:

• in line with economic development and public pres-sure for environmental quality; or

• in response to the need for harmonisation withinternational legislation.

At present, the most comprehensive need related tothe second point above is created by European Union(EU) requirements.

In both cases the strength of generating sustaineddemand for environmental investment criticallydepends on the effectiveness of enforcement mecha-nisms and tools. In the case of internally evolving legis-lation, it is more likely that credible enforcement devel-ops parallel to new legislation, while in the case ofinternationally induced policy development, enforce-ment often lags behind new legislation and policies.

International induced policy development includes:

• incentives from the donor community, which oftencome in the form of country assistance programmes;and

• domestic and export market pressure on the indus-try and service sector, which encourages lowerresource use in order to reduce production costs, orimplementation of environmental measures beyondlegal requirements to increase sales among environ-mentally conscious consumers.

Supply of financingThe pace of economic development of a country

ultimately determines the availability of financingsources for environmental investments. We can call thisthe financing “envelope” for EIP implementation, whichmeans a financing constraint that cannot be overcomeby a creative institutional or policy design. The lack ofpolitical will and the existence of policy failures limitenvironmental investment spending well below thisfinancing limit. We need to analyse those institutionalfactors that keep the supply of finance for EIPs belowthe financing limit.

Financing mechanisms that can be applied to envi-ronmental investment projects are the following:

• commercial loans;

• equity investments, concessions;

• international financial institution (IFI) loans;

• international subsidies, such as soft loans and grants;

• direct government budgetary financing;

• government budgetary subsidies; and

• extra-budgetary fund subsidies, such as soft loans,grants and loan guarantees.

Phases in the implementation of EIPThere are several slightly different definitions of a

project cycle applicable to EIPs. They are usuallydefined from the perspective of a particular financingorganisation. We seek a definition of a project cyclewhich is general enough to cover the perspectives ofthe project proponents and various financing sources atthe same time. We define the following phases of aproject cycle as:

• project design, including technical features andpackaging of possible financing resources;

• securing the necessary financial resources;

• implementing the project, including implementationmonitoring;

• financial administration; and

• a post-project evaluation of the project's impact.

Project identification Generally, both project proponents and financing

organisations are searching for good projects.Environmental projects have the special feature thatfinancing often includes some form of public budgetsubsidy or financial instrument. This is due to the factthat the investment is related to public tasks, such asmonitoring; and that the financial rate of return on thoseprojects is below the normal capital market rate ofreturn, but their economic rate of return, which includessocial benefits, is high.

Since there are several subsidy mechanisms forfinancing EIPs, there always seem to be too many proj-ect proposals compared to available subsidies. Projectproponents are usually more active than the organisa-tions offering subsidies. This, however, does not meanthat there are always too many good project proposalsthat fit into the objective of the subsidy scheme.Encouraging development of new project ideas or solic-iting the proper project proposals should be perceivedas permanent environmental policy tasks. For example,if a list of priority EIPs is attached to a national environ-mental action plan (NEAP), it should not be perceivedas a completed project identification task.

On the finance supply side, commercial banks usu-ally search for investment projects with at least averagefinancial rate of return. These are not always easy tofind; therefore commercial banks can lose interest infinancing environmental projects.

Project designThis phase includes matching the technical content

of the project design with environmental and/or legalrequirements and also with requirements of different

A S S E S S M E N T O F I N S T I T U T I O N A L A N D P O L I C Y F R A M E W O R K C H A P T E R 2 : M E T H O D O L O G Y


potential financing sources. Developing packages ofdifferent financial sources can be particularly importantfor larger projects.

This phase involves proponents giving the financingorganisations a clear and proper formulation of theirrequirements, usually in the form of an application.Project proponents, however, must acquire the skills ofunderstanding and fulfilling the requirements.

Securing required financingThe key in this phase is to attract the targeted

finances through successful applications from the proj-ect proponents, and for the financiers to select the bestprojects.

Implementing the project Project implementation in an average investment

project should be carried out in accordance with theinterest of the project owner. For example, if a factory isconstructed, the factory owners organise implementa-tion according to their interests. This is, however alargely simplified picture. Even in the case of construct-ing a factory with the involvement of bank loan financ-ing, the bank can impose certain rules on implementa-tion. Implementation rules can become more compli-cated for EIPs, where the financing package mightinvolve different types of subsidies. The larger the EIP,the more likely it is that the implementation rules aregoing to be complicated.

Financial administrationFinancial administration is determined by the rules

of the organisations participating in the financing.

Post-project evaluationA post-project evaluation is done by the project

owners from their own perspectives. In the case of pub-lic subsidies, the evaluation should be done in order toassess whether the stated objectives have beenachieved.

Chapter 3: Regional overview of national assessments

The aim of this chapter is to form the basis for theregional recommendations. The purpose is to classifyfuture EIPs with respect to the type of the investmentand financing mechanisms in each country. Therefore,the intention is not to provide a detailed description ofthe environmental problems, institutions or futuretrends in each of the individual countries but to high-light major features in each country.

The overview consists of a section on each countryand a conclusion. Each country section has the follow-ing structure:

• Developments in policy and the institutional setting;

• Environmental financing mechanisms and institu-tions;

• Driving forces and types of EIPs implemented; and

• Lessons learned.

The concluding section identifies three typical pat-terns for implementing EIPs.

AlbaniaDuring recent years Albania has achieved macro-

economic stability and high economic growth, albeitfrom a low base. Yet Albania remains one of the poor-est countries in Europe. Based on the most recent data,about one out of three Albanians is poor, and evenmore lack access to basic services.

Developments in policy and institutional setting

The basic institutions and legal framework for envi-ronmental protection were not created until the recentpast.

The Committee of Environmental Preservation andProtection (CEPP) was established in 1991 and was thefirst central body for environmental protection. In 1992 itwas incorporated into the Ministry of Health andEnvironment as the Committee of EnvironmentalProtection. In 1998 the National Environmental Agencywas established under the Council of Ministers, and inSeptember 2001 the Ministry of Environment was created.

The first law on environmental protection wasadopted by parliament in 1993. It was amended in 1998,and a new law was adopted in 2002. Other law and gov-ernmental decrees related to environmental manage-ment have been adopted during the last ten years.Recently, parliament adopted laws on air protection,protected areas, sea and coastal protection and issued agovernmental decree on environmental monitoring. Apackage of environmental laws was passed by theParliament covering water and soil protection, environ-mental impact assessment and public access to environ-mental information. Most of the laws that have eitherbeen adopted or drafted are based on the EU directives.

Enforcement of environmental laws is weak inAlbania. The practical mechanisms for enforcement areincomplete and inadequate. Fines are rarely paidbecause collection procedures, confiscation and closure(as a consequence of non-payment) are slow and com-plicated. Another complicating factor is the fact that thegranting of permits and their enforcement are theresponsibility of the same institution — the Ministry of

A S S E S S M E N T O F I N S T I T U T I O N A L A N D P O L I C Y F R A M E W O R K C H A P T E R 3 : R E G I O N A L O V E R V I E W O F N A T I O N A L A S S E S S M E N T S


Environment and the regional environmental agencies(REAs) at the regional level.

The situation is exacerbated by the inspectorates’lack of basic resources (such as cars to travel withintheir prefectures, computers and telephones) and tech-nical capacity. The inspectors do not have access to reli-able, up-to-date environmental information and thismakes enforcement difficult. A related problem is thelow status of the environmental inspectorate amonglocal authorities and other institutions.

More than 80 environmental NGOs are registered inthe country and approximately 25 percent are active inpublic information, awareness and participation, envi-ronmental studies and the preparation of environmen-tal legal acts. Most of the first environmental NGOswere established in the early 1990s in Tirana. After afew years, their branches were set up in other towns inthe country and new environmental organisations werecreated.

Although NEAP 2002 recognises the Albanian gov-ernment's increased interest in and commitment toenvironmental issues, it underscores the government'songoing low financial capacity to support the imple-mentation of necessary measures.

The NEAP calls for integrated and sustainable strate-gies of other sectors, legislation approximation, etc.One of the important measures foreseen in the NEAP isthe physical intervention for environmental rehabilita-tion and clean-up for the elimination of historical indus-trial pollution and related environmental hot spots.

Environmental financing mechanisms and institutions

Financing mechanisms have been mostly bilateral andmultilateral grants as well as limited soft loans from IFIs.Small-scale budgetary finance has also been applied.

The following are the organisations which havealready assisted and are expected in the future to sup-port environmental protection in Albania:

• European Union, within the framework of Phare;LIFE (the Financial Instrument for the Environment)-Third Countries; and the Community Assistance forReconstruction, Development and Stabilisation(CARDS);

• United States Agency for International Development(USAID);

• UK Department for International Development(DFID);

• Swedish Agency for International Development(SIDA);

• Canadian International Development Agency(CIDA);

• Mediterranean Environmental Technical AssistanceProgramme (METAP);

• World Bank;

• United Nations Development Programme (UNDP);

• UNEP Barcelona Convention/Mediterranean ActionPlan (MAP); and

• Global Environment Facility (GEF).

The EU is providing considerable resources throughthe CARDS programme, and bilateral assistance fromthe governments of Italy, Sweden, United Kingdom andthe Netherlands will significantly improve investmentfunding for environmental management and protection.

So far, the state budget has been unable to supportenvironmental investments in Albania. The situationmay change and the budget may have an increasingrole in environmental financing following the approvaland implementation (in the beginning of 2003) of twoeco-taxes: a carbon tax and a packaging tax. If enforcedproperly, these new taxes are expected to bring a budg-etary income of about ALL 860 million. The funds willbe an earmarked part of the state budget and will beadministered by Ministry of Finance itself. The fundswill be used for environmental investment, rehabilita-tion, feasibility studies, awareness raising, training, etc.The Ministry of Environment will have to apply eachyear for environmental projects.

User charges for wastewater services have beenintroduced and the revenue is a special earmarked fundwithin each municipality.

Driving forces and types of EIPs implemented

The driving forces for the initiation and implemen-tation of EIPs have been incentives from the donorcommunity.

Donor-funded projects are nature conservationprojects; smaller infrastructure development projects,such as sewage network rehabilitation; and monitor-ing projects.

Environmental issues are also addressed in othertypes of donor/IFI funded projects, especially in urbaninfrastructure and poverty alleviation projects.

The government budget has financed some mon-itoring investments. Monitoring expenditure in 2001was USD 0.1 million. The expenditure includes mon-itoring of flora on the coast and in lagoons as well asbiodiversity in the forest ecosystems damaged by fireand deforestation.

Environmental infrastructure development projectsare covered under the public works sector. The expen-diture strategy for public works comprises investmentsto improve water supplies and sewerage networks andto upgrade municipal waste collection, disposal andtreatment. No actual expenditure figures are availablefor these environment-related investments.



Lessons learnedThe key problems related to environmental financ-

ing are:

• a lack of a strategic approach;

• a lack of appropriate and efficient legal and institu-tional structures;

• insufficient institutional capacity; and

• related insufficient capacities for project implemen-tation.

The Ministry of Environment is still understaffed,and a good part of the staff still lacks any environmen-tal education, while the directory dealing with projectpreparation, fund raising, negotiation, monitoring, etc.has a limited staff of only three people.

On-going projects are run by external, separate proj-ect units. The implementation of some of the projectshave been delayed and/or hampered by:

• insufficient knowledge of the donors’ procedures;

• a lack of communication skills;

• local bureaucracy; and

• the poor performance of domestic companiesinvolved in international investment projects, com-bined with unjustified delays on the side of thedonors, etc.

Since there is no strategy for NGOs to raise publicawareness and participation in environmental protec-tion, it is not possible to achieve coordination and effec-tive results from the activities of NGOs to encouragepublic participation in decision-making processes.

Increased activity in the clean-up of contaminatedsites might be a new development. A financing packagefor cleaning up contaminated sites could be developedif the proceeds from future utilisation of the cleanedland can be used for financing.

In summary we can conclude that the EIPs inAlbania have been driven by foreign donor incentivesin the area of nature conservation and smaller infra-structure development projects. There has been littleattention paid to environmental issues internally.

Bosnia and HerzegovinaAccording to the Dayton Peace Accord, Bosnia and

Herzegovina is an administratively decentralised stateorganised into two administrative units (entities): theFederation of Bosnia and Herzegovina and RepublikaSrpska, both of which have a high degree of autonomy.

The war had devastated the economy of Bosnia andHerzegovina, resulting in a low level of per capitaincome. Annual gross domestic product (GDP) wasUSD 1,000 per capita in 2001.


Regarding environmental protection, each entitycreates and implements its own policy exclusively. Inline with tradition, a department for environment wasestablished in the ministries related to spatial planning.

The two entities adopted basic regulations only inlate summer 2002. Development of proper enforcementmechanisms has hardly started.

The National Environmental Action Plan, which isanother important instrument for implementing envi-ronmental policy, was developed within a project sup-ported by the World Bank in 2003.

NGO participation is promoted and financed byinternational funding sources and not by existing pub-lic awareness of environmental issues. For example, thenew act on water contains no provisions on the partici-pation of stakeholders and non-governmental organisa-tions (NGOs) in planning and licensing procedures. Infact, public discussion on drafts for long and medium-term plans is limited to the official level (the federation,the cantons, and the federation ministries).


General government budget financing is the onlydomestic financing mechanism. No special environ-mental financing mechanism from government fundinghas been developed. Other sources, which includebusiness or private initiatives, are not developed, andparticipation of those sources is limited.

Bosnia and Herzegovina has implemented a fewrather big environmental projects in the last few years,mostly financed by various international organisations.These projects were mostly in the form of technicalassistance (such as policy analyses and feasibility stud-ies) but not investment projects.

Both entities have been preparing the Law on theEnvironmental Fund, which is an attempt aimedtowards providing separate funds to finance support forenvironmental issues.

At present the main source of finance for develop-ment is the international community such as theEuropean Commission and USAID, and IFIs such as theWorld Bank, the European Bank of Reconstruction andDevelopment (EBRD) and the European InvestmentBank (EIB).

The list of possible financing sources includes:

• the Ecological Fund in Bosnia and Herzegovinaunder the provisions of the new Law on theEcological Fund;

• international assistance from the GlobalEnvironmental Facility (GEF);

• United Nations Environment Programme (UNEP);

• UNDP;



• Multi-Annual Indicative Programme 2002-2004;

• EU/EC National CARDS Assistance Programme;

• EU/EC LIFE-Third Countries;

• Multilateral Fund of the Montreal Protocol;

• Adriatic-Ionian Initiative (AII);

• MAP;

• METAP;

• World Bank/International Bank for Reconstructionand Development (IBRD); and

• USAID.


The domestic economic situation has hardlyallowed for high environmental investment expendi-tures. The driving force for the initiation and imple-mentation of EIPs has been incentives from the donorcommunity.

The few EIPs undertaken in the last three years areeither small-scale infrastructure development projectsin the water and wastewater sector or nature conserva-tion projects.

Despite much potential, annual GDP is expected togrow to USD 1,100 per capita by 2004, which is still low.Thus, the role of foreign funding as a driving force islikely to remain dominant in the short to medium term.Therefore, incentives from donor organisations remainimportant, if not the main driving force. Post-war recon-struction assistance continues to be utilised.

Lessons learnedSources for financing EIPs have been very limited.

Domestic sources are lacking and international fundinghas concentrated on institutional development.

A substantial part of foreign funding is channelledthrough bilateral agreements. A coordinating frame-work for such bilateral assistance does not exist.

The weak economy of the country is not capable ofproviding adequate income to the budget, and thefinancial policy of the country is very restricted.Environmental activities are not the top priority of thecountry, which is reflected in an extremely low rate offinancial support to this area.

A new ecological fund, which is being planned,needs to be designed very carefully. Predicted econom-ic development suggests that the size of such a fund willbe rather limited. Further fragmentation of limiteddomestic sources should be avoided. Without a detailedspending programme the efficiency of the fund may bevery low.

BulgariaBulgaria is an accession country that is expected

join the EU in 2007.


The revision of the Environmental Protection Act(EPA) took place during four years from 1996 to 1999.This revision adapted Environmental ImpactAssessment (EIA) procedures to the updated EUDirective, specified new possibilities for EIA by localauthorities, reformed environmental inspectorates andthe local level with NGO participation, and consider-ably tightened sanctions, including fines, in cases ofviolation of legislation.

Bulgaria has continued its progress in terms of trans-position of the EC environmental acquis as well aspreparing for implementation of legislation. However,implementation, together with the need for increasedadministrative capacity and the cost of alignment,remains a major challenge.

Some progress in the integration of the environmentinto other policies has been made in areas such as agri-culture and transport, but generally the use of sustain-able development approaches remains limited in otherareas of economic interest. For example, the recentenergy strategy, whilst placing emphasis on energy effi-ciency, incorporates environmental aspects in a limitedand inconsistent way.

A framework for implementing EIPs is established inseveral programmes, action plans and sectoral plans. TheNational Strategy for Environment and Action Plan 2000-2006 defines priority areas for EIPs. From a financing per-spective, however, programmes developed in connec-tion with utilising EU pre-accession funds are also veryrelevant. Such programmes are the National Instrumentfor Structural Pre-accession (ISPA) Strategy and theNational Economic Development Plan 2000-2006.

The Environmental Protection Fund (NEPF) wasestablished in 1992. Its management, operations,sources of revenue, areas and types of spending, etc.are contained in the regulation for collection, spendingand control of funds. The NEPF was adopted by theCouncil of Ministers by decree 278/92, and later byrevised decree 168/95.

Pollution charges are collected nation-wide into non-budgetary accounts held by the Ministry of Finance. Ofthe total, 60 percent (from payments for permitted emis-sions) and 70 percent (from fines for excess emissions)are transferred to the NEPF, and the remaining 40 per-cent and 30 percent, respectively, to the municipalities(Municipal Environmental Protection Fund). It is notclear how the money is divided among the individualmunicipalities, but apparently it is not proportional tothe amounts paid in by their own residents.



At the end of 1995, Bulgaria and Switzerland signeda Debt for Nature Swap Agreement. The funds weredevoted to the implementation of the BulgarianBiodiversity Conservation Programme. The manage-ment of these funds was entrusted to the National TrustEcofund, which was created in 1996 as an independentinstitution for this purpose.


Institutions and organisations participating infinancing EIPs are the following:

• National and municipal budgets: from 1996 to 1999,the share of direct state subsidies for environmentalinvestments amounted to 1.0-1.3 percent of GDP.

• The National Environmental Protection Fund hasprovided interest free loans or grant subsidies forprojects in the field of its priority actions. Priorityactions include the development of monitoring andlaboratories as well as nature conservation. Thefund is the basic co-financing institution.

• The National Trust Ecofund manages funds from theDebt for Nature Swap Agreement. It primarily pro-vides grants for a rather broad range of projects.

• International funding organisations: the EU throughits PHARE and ISPA programmes is the dominantinternational funding organisation.

Practically the full range of financing mechanism isapplied. These are:

• direct/capital investment subsidies;

• grants and donations;

• budget financing;

• soft loans (interest-free or at below-market interestrates);

• loans at market interest rates and conditions;

• equity (participation with share capital);

• issuance of bonds;

• technical assistance (project preparation/manage-ment, technical assessments, EIA, training etc.); and

• guarantees or insurance schemes.


The EU accession process drives environmental leg-islation as well as institutional and policy development.Bulgaria has continued its progress in terms of transpo-sition of the EC environmental acquis as well as prepar-ing for implementation of legislation. However, imple-mentation, together with the need for increased admin-istrative capacity and the cost of alignment, remains amajor challenge.

Pressure from market forces is also present to a lim-ited extent as a driving force for implementing EIPs.

In 1998, the Ministry of Environment and Waterssupervised the implementation of 41 projects with inter-national financial participation. Eleven new projects werelaunched in 1998 while five were completed. A number ofprojects exist in the fields of water protection (11), air pro-tection (two), solid waste management (three), biodiver-sity protection (four), environmental legislation (four),and other areas (three). The projects involve either insti-tutional reinforcement (22) or investment (19).

Environmental protection investment was EUR 91million in the year 2000. This is 0.7 percent of the GDPand amounts to EUR 11 per capita. The share in GDP isnot too low compared with other accession countriesbut the per capita figure is at the low end in that inter-national comparison.

There have been all types of projects undertaken inthe last five years. Many environmental infrastructuredevelopment projects have been initiated and several ofthem implemented. Public sector EIPs in the wastewater and waste management sector amounted to EUR39 million in the year 2000 which is a good indicator forthese type of projects.

Pollution abatement projects have also been imple-mented. These were dominantly end-of-pipe invest-ments. There were a few cleaner technology projects,mostly for demonstration purposes.

Some nature protection investment has also beenundertaken, but these types of EIPs are decreasing inproportion to others.

Cleaning up contaminated sites has been undertak-en, but mostly in connection with privatisation and onlyin limited numbers. Investment projects in monitoringare usually part of technical multi- and bilateral foreignassistance programmes.

Lessons learnedIn general Bulgaria deals seriously with its environ-

mental problems. The country has a good strategy underthe National Strategy for Environment and Action Plan,which is also stipulated at lower administrative levels anddetermined for each environmental medium. To realisethe priorities and goals of the programmes and plans,measurements have been determined for the various sec-tors (air, water, and waste) and responsible organisationsfor the environment have been determined.Environmental legislation is completely harmonised withthe EU legislation, so the framework of an institutionalsystem is available to realise environmental goals.

There is a problem, however, with the realisation ofgoals. A lack of a creditable monitoring network meansthat decision-making does not always work correctly.

A recent review of finances for EIPs in Bulgariaclaims that the major problem is not simply a lack ofavailable finances but also:



• insufficient institutional and professional capacityfor preparing projects for financing from differentsources;

• a lack of an effective user charge payment systemfor environmental services; and

• affordability considerations at the household andmunicipal level.

CroatiaThe Croatian economy is one of the strongest in the

SEE region.


The Law on Environmental Protection sets theframework for environmental protection.

The National Environmental Strategy (adopted in2002) stresses the importance of a development strate-gy based on the principle of sustainable developmentas well as the need for planning in accordance with EUapproximation.

On the basis of the NEAP, a Priority Action Plan(PAP) has been prepared containing the highest priori-ty actions and projects. The PAP contains 61 policy andinstitutional studies and investment projects. The PAPstudies and projects range from developing a nationalwaste management strategy through marine and waterpollution control projects to the rehabilitation of wastedisposal sites and the establishment of environmentalinformation systems.

The Overview of the State of Biological andLandscape Diversity of Croatia together with theProtection Strategy and Action Plans contain theNational Strategy and Action Plans for the Protectionof Biological and Landscape Diversity (NSAP, adopt-ed in 1999).

The National Water Protection Plan (adopted in1998) includes numerous water protection objectivesand measures. The document defines measures for thepreservation of water quality and for the prevention andreduction of water pollution as well as implementationmeasures with time schedules.

Although air quality monitoring is relatively good,the Ministry of Environmental Protection and PhysicalPlanning (MEPPP) lacks enforcement capacity, espe-cially while the economic conditions of many pollutingenterprises are fragile. Economic instruments have sofar not been employed. The major polluters in the ener-gy and petroleum sectors remain state-owned, althoughthey are designated for privatisation. Although compli-ance plans with industry are not used yet, some indus-tries (especially privatised enterprises with some for-eign ownership) have voluntarily adopted ISO 14000

standards. While plans and international obligationsexist to eliminate lead and further reduce sulphur infuels, their implementation has been delayed.

As far as water protection, the monitoring systemsare relatively good. A rather comprehensive system ofcharges for water extraction, urban and industrial sup-ply and wastewater discharge is in place.

The legal framework for waste management is rela-tively well-developed, with MEPPP having the primaryregulatory role. However, enforcement is laggingbecause some goals are not realistic under the presenteconomic conditions, staff is insufficient and training isinadequate. Regulations need to be harmonised withthose of the EU. Implementation plans should be devel-oped with particular attention to the separate collectionand reuse of packaging waste, paper, glass, old tires,used oil, and old cars. Fees cover the operational costsof the present partial system but make no provision forcapital investments.

The National Environmental Action Plan (NEAP,2002) stresses the need of public-awareness raising andpublic involvement in the decision-making process.The NEAP itself was developed with a high degree ofpublic participation.


In principle, domestic funding sources include boththe state budget and banks. However, significant fund-ing is provided only by the state budget.

Data is available on foreign technical and financialassistance for environmental protection in the period1996-2001 from the Ministry of EnvironmentalProtection and Physical Planning. Foreign technical andfinancial assistance committed for environmental pro-tection between 1996 and 2001 amounted to nearlyUSD 2.0 million with the highest contributions by theUN, EU, USA, Monaco, the Netherlands and Germany.

Additionally IBRD grants amounted to USD 2.5 mil-lion between 1997 and 2001.

In 1998 a contract was signed by the Republic ofCroatia and the IBRD for a loan for the ReconstructionProject for Eastern Slavonija, Baranja and WesternSrijem. A part of the loan includes the financing ofmunicipal wastewater treatment plant reconstructionand the extension of a wastewater collection system.

In 1998 another contract for a loan of USD 36.6 mil-lion for municipal environmental infrastructure wassigned. The loan relates to the establishment of waste-water treatment facilities in Kastela and Pula Bays. TheEBRD has provided loans of ECU 52.5 million in thejoint World Bank/EBRD municipal environmental infra-structure project. In 1998 the EBRD signed a loan ofECU 45 million for a significant waste managementproject for the Zagreb municipal waste disposal site.

Since the signing of the Stabilisation and Association



Agreement with the EU in 2001, Croatia has had accessto a limited number of EU funding programmes.

Recently the Fund for Environmental Protection andEnergy Efficiency (FEPEE) was established. FEPEE is anew institution, which will start to function only infuture. The increased need for co-financing of larger EU(pre-accession) funding might result in changes inbudgetary financing. The size of bilateral foreign assis-tance might decline in the medium term if EU fundingincreases.


Croatia considers EU requirements as guidance fordeveloping its environmental legislation, institutionsand policies. Therefore, the driving force for EIPs is thenational legislation and policy which are in the processof being harmonised with EU requirements. This driv-ing force is usually effective but a potential danger isthat it is not grounded in the institutional and econom-ic realities of the country.

Pressure from market forces is also present as a driv-ing force for implementing EIPs.

The share of environmental investment spending inGDP was 0.2 percent in the year 2000. This is not toohigh a share compared to the accession countries.Similarly, environmental investment spending is in thelow range at USD 11 per capita.

There have been all types of projects undertaken inthe last five years. Several environmental infrastructuredevelopment projects have been initiated and several ofthem implemented. EIPs on wastewater have increasedin particular. The overall increase in environmentalinvestment expenditure was 121 percent and theincrease in water and soil protection was 170 percent inthe year 2000.

From 1999 to 2000 investments by the governmentand enterprises changed in the following manner:

• Total environmental investment increased by 121percent.

• Air quality protection investments increased by 65percent.

• Water and soil protection investments increased by170 percent.

• Nature conservation investments decreased by 28percent.

• Other environmental investments increased by near-ly 400 percent (however, their share in total envi-ronmental investments was only 3 percent in 2000).

Pollution abatement projects have also beenimplemented: for example, the conversion of thePlomin power station to imported low-sulphur andlow-ash coal.

Nature conservation projects were financed by inter-national sources such as through the LIFE programme.These projects, however, addressed mostly awarenessraising and institution building.

Lessons learnedIn Croatia, the field of environmental protection is

regulated by different administrative bodies with frag-mented authorities. This prevents the application of anintegrated approach of environmental protection.Nevertheless, the process of developing the NEAP wasa promising sign; the NEAP was planned with a highdegree of stakeholder participation (MEPPP, other min-istries, expert institutions, private sector, and NGOs).

The MEPPP lacks enforcement capacity and thisproblem is exacerbated by the difficult economic situa-tion of many polluting enterprises. Some environmentalprotection authority is transferred to the regional level,to the county offices and to the municipal level. Thecounties have a minimum of one to two persons incharge of environmental protection. The situation in thecities could be better, because the municipalities gener-ally have no environmental officials.

So far, economic instruments to enforce compliancewith environmental regulations have not beenemployed. Some industries (especially privatised enter-prises with some foreign ownership) have voluntarilyadopted ISO 14000 standards. The FEPEE will be estab-lished as an extra-budgetary fund to finance environ-mental projects in the form of soft loans, grants and sub-sidies, and to attract international funds. Croatia appearsto be attracting foreign funds effectively also today.

Political will to improve environmental financing isoften weak. Environmental issues are still consideredthreats to economic growth and resources are oftenallocated arbitrarily to other “more important” issues.Environmental problems are not perceived as priorityproblems and budgetary funding is far below the needs.For example, the estimated funds needed for thenational network of air quality monitoring for 2002-2007 are USD 6.2 million whereas in 2002 only USD0.27 million were provided for that field. Other exam-ples are local communities that lack the funds neededfor waste management.

The FEPEF’s role, once the fund becomes operational,will be also limited. The fund is not expected to improvethe situation of environmental financing significantly.

To sustain Croatia as an attractive place for tourismrequires increases in wastewater and waste manage-ment infrastructure development.

FYR MacedoniaThe economy of FYR Macedonia is still inefficient

and has not been restructured. It is estimated that in



1998 the grey economy was responsible for 40-50 per-cent of the country’s GDP. The country is highlydependent on external factors (private and officialtransfers, foreign direct investments and export).

Since the very beginning of the 1990s FYRMacedonia has started moving toward a market econo-my. Now the country is tackling the situation and tryingto overcome the negative consequences of the recentpolitical crisis of the year 2001.


The framework law on environmental protection isthe Law on the Environment and Nature Protection andPromotion adopted in 1996 (Official Gazette No.69/96), which follows the principles of the 1994 ModelLaw on the Environment of the Council of Europe. Itregulates some of the basic rights and obligations ofstate administrative bodies with environmental respon-sibilities, such as those concerning the submission ofenvironmental and nature protection data to theMinistry of Environment and Physical Planning. The lawseems very comprehensive, embracing nearly allaspects of environmental protection. On the otherhand, it would be very difficult to implement andenforce, because its provisions are too broad in terms ofappropriate procedures. Unfortunately, the law is notyet consistent with the environmental legislation of theEuropean Union.

There are no provisions on time limits for publicauthorities to respond to requests or complaints, nor onconditions when the request can be refused, nor onhow to make information available, nor on the formand nature of the information to be provided. In gener-al, public awareness about NGOs remains low, partlybecause of the strong centralisation that has existed inthe country. Despite this fact, NGOs have become keyplayers in the implementation of a wide range of envi-ronmental policies and projects.

The NEAP was prepared for the five-year periodfrom 1997 to 2001. However, in early 2002, it was stillthe operative plan. Its priorities are to:

• improve air and water quality;

• conserve biodiversity (especially in Lakes Ohrid,Prespa and Dojran);

• reforest and preserve existing forests;

• strengthen the management capacity of institutionsresponsible for environmental monitoring; and

• enforce environmental legislation.

The Public Investment Programmes (PIPs) for theperiod 2000-2002 and 2001-2003 stress the need for theimprovement of the environment. The priorities setforth in these programmes are

• construction of wastewater treatment plants andestablishing water quality monitoring;

• air quality protection and monitoring;

• gradual substitution of existing fuels with cleanfuels;

• construction of regional and other types of dumpstations;

• recovery and maintenance of forests; and

• sustaining biodiversity with adequate managementof natural rarities.

For the PIP period 2000-2002 the total cost of proj-ects was estimated at USD 1,556.82 million.


In FYR Macedonia environmental projects arefinanced not only by the funds that are provided fromthe central state or local budgets and the Fund forEnvironment, but also by foreign assistance. The latterrepresents quite an important source. The weak bor-rowing capacity of the country and its inability to pro-vide the required domestic co-financing limits absorp-tion of foreign funding.

The Fund for Environment was created in April 1998within the Ministry of Environment. At the moment thefund still remains under the auspices and responsibilityof the ministry. The finances of the fund are used inaccordance with a programme based on NEAP andLocal Environmental Action Plan (LEAP) priorities.

The fund has an annual inflow of approximatelyUSD 720,000 (MKD 50 million). Expenditures havetaken the form of grants and co-financing arrangements(often with the United States Agency for InternationalDevelopment). In future the fund intends to make avail-able both grants and loans to industry and government.

To improve this process, fund officials have beenvisiting municipalities and local government officialsto identify potential environmental investment proj-ects. The fund has prepared a list of priority projectson the basis of applications. This long list of possibleprojects provides little guidance on how to allocatethe limited resources of the fund among the widevariety of projects. A strategy should be developedand it should specify appraisal criteria which have tobe met by projects in order to receive financing,including requirements such as environmental effec-tiveness and cost-effectiveness.

Most extra-budgetary resources for environmentalprojects are provided by multilateral aid agencies, IFIsand individual foreign governments. Major donororganisations providing assistance are the EU, WorldBank, USAID, UNDP and GTZ. The 2001-2003 PIP indi-cates environment projects amounting to a total of USD



16.27 million, of which USD 10.77 million would befinanced by foreign donors.

Projects receiving EC funding in 1999 includestrengthening the capacity of the MEPP (EUR 2.15 mil-lion) and the supply of air quality monitoring stations(EUR 750,000). The first project supports the efforts ofthe MEPP to approximate FYR Macedonia’s environ-mental legislation to the EU’s legislative acquis, tostrengthen its environmental monitoring and enforce-ment capability, and to improve its awareness raisingand general public information skills. The objective ofthe second project is to support the completion of FYRMacedonia’s ambient air monitoring network and tofacilitate the implementation of the new EU acquis-approximated Air Quality Directive.

Projects receiving EC funding in 2000 include theprotection of the River Vardar from chromium pollution(EUR 1.0 million). This project aims to protect the RiverVardar from chromium pollution caused by leakagefrom an industrial landfill of chromium waste.

Projects receiving EC funding in 2001 include theassistance in the implementation of the NationalEnvironmental Action Plan, which should contribute tosolving pressing environmental problems, create condi-tions for sustainable development and thereby facilitatethe future integration of FRY Macedonia into the EU.The activities include preparation of the second NationalEnvironmental Action Plan (EUR 0.7 million), prepara-tion of seven solid waste feasibility studies and invest-ment proposals (EUR 1.35 million), and the procurementof environmental monitoring equipment (supplying fiveair quality monitoring stations, EUR 1.2 million).


The FYR Macedonia considers EU requirements asguidance for developing its environmental legislation,institutions and policies. Therefore, the driving force forEIPs is national legislation and policy, which is in theprocess of harmonisation. This driving force is usuallyeffective but a potential danger is that it is not groundedin the institutional and economic realities of the country.

The pressure from market forces is also present as adriving force for implementing EIP.

In the past three years, environmental spending hasbeen very limited and has not exceeded 0.5 percent of GDP.

The difficult problems the country faces, the depthof the measures that are to be undertaken, the country'smodest financial capacity and limited possibilities forindebtedness impose a demand for the more intensiveengagement of foreign capital and donations, as well asselective indebtedness in accordance with the repay-ment capacities of the country.

Lessons learnedThe establishment of responsible institutions and

their legal status is almost completely developed.Harmonisation with EU and international standardsdoes not exist but will be realised in future.

It is expected that the political determination tostrengthen environmental protection will graduallyincrease as EU approximation becomes more promi-nent on the political agenda. A major driving force forEIP implementation remains national legislation andpolicy, which is more and more shaped by the EUaccession process.

One of the biggest weaknesses in the implementa-tion of environmental standards is the general nature ofthe regulations; i.e. there is no categorisation of pol-luters according to type of industry nor the amount andtype of pollution. Consequently, there are no emissionslimit values (for example, for wastewater discharge) forindividual sources of pollution as to their size and type.

RomaniaRomania is one of the accession countries which is

expected to join the EU in 2007.


The 1995 Law on Environmental Protection sets thelegal framework for environmental protection. A set oflegal documents regulates air protection, for example,on the protection of ambient air and air quality standardsin protected areas. The Water Strategy from 1995 aims atthe rational use of water resources, while the 1996 WaterLaw sets the framework for water management and pro-tection. Regarding waste, no national waste strategy orwaste management programme exists. The policy objec-tives of municipal and industrial waste management arescattered throughout various governmental documentsand the 1999 NEAP. The overall regulatory framework ofenvironmental protection is more or less established.Lower level regulations, however, which would be nec-essary to implement the laws often do not exist.

The Environmental Protection Strategy (the latest ver-sion covers 2000-2004) integrates environmental princi-ples and priority objectives. The environmental policy isreflected in the National Medium-Term DevelopmentStrategy of the Romanian Economy. One of the sevenNational Strategic Development Axes of the NationalDevelopment Plan (NDP) for 2002-2005 is the protectionand improvement of the quality of the environment.

The NEAP is a practical application of current gov-ernmental environmental policy. A number of otherspecific environmental strategies have also been drawnup in the framework of preparation for EU accession.

For several years the Ministry of Waters andEnvironmental Protection (MWEP) has planned toestablish an environmental fund, which would have abroader revenue base. Investment activities would also



be extended to cover environmental remediation andother environmental protection activities, as well asenvironmental training and education.

The first Law on the Environmental Fund waspassed in 2000. Its amended version was adopted in2002, making the fund operative. The fund is the maineconomic instrument in fulfilling the projects of NEAP2001-2004. Its revenues are collected from varioussources (such as revenues of selling dangerous sub-stances and wastes; pollution charges; donations, grantsand international loans; and charges paid for licencesand permits). It is expected that the fund will begin itsoperation in the year 2003.

The institutional framework of law enforcement(monitoring and implementing agencies) has to a greatextent been established. A wide variety of documentsreflecting the objectives of environmental policy havealso been prepared. However, the implementing regu-lations and concrete programmes with implementationmechanisms and corresponding funding are lacking.

The list of environmental legislation adopted byRomania is rather long. However, most of the recentlegislation has been prepared without full consultationwith stakeholders (other ministries, businesses andNGOs), without a precise assessment of the implemen-tation costs, and without securing the financial andhuman resources necessary for law enforcement.Therefore, the implementation of many laws is likely toprove impossible and such laws will probably have tobe amended.


The banking sector, like other sectors, is open to pri-vatisation and foreign investment. At present, domesticlending is deemed too risky or unprofitable. Banks aremore interested in alternative investments including, forexample, deposits abroad. The banks are not likely toget involved in environmental investments until the pri-vate sector starts working under market conditions.

Between 1998 and 2000 the MWEP implementedprojects co-funded by PHARE Environment, PHARECross-Border Cooperation, and the PHARE Multi-Country Programme (USD 38 million). Within PHAREEnvironment, there is a component for strengtheningthe capacity of the MWEP. As part of this coopera-tion, two “twinning projects” are being implementedjointly with France (water quality) and Germany(waste management).

Romania is participating in the third phase of theLIFE-Nature and LIFE-Environment programmes (2000-2004). Between 1998 and 2000 the MWEP managedLIFE-supported projects for a total value of approxi-mately EUR 4.0 million.

Between 1996 and 2000 capacity building at theDanube Delta Biosphere Reserve Administration was

technically and financially supported by the IBRDthrough the GEF (USD 4.5 million). The Romanian gov-ernment also contributed to the project (USD 0.45 mil-lion). The Management of Biodiversity Conservationproject (1994-2004) aims partly at setting up andstrengthening the managing structures of the Retezatand Piatra Craiului national parks. The project is finan-cially supported by the IBRD through the GEF (USD 5.5million), the Romanian government (USD 2.4 million)and the National Administration of Forests (USD 0.9 mil-lion). A project on agricultural pollution control under arecent grant by GEF-IBRD is in its preliminary stage,amounting to USD 0.3 million (the total value is expect-ed to be USD 12-15 million).

The IBRD also supported some large industrial proj-ects (the rehabilitation of the petroleum industries, therehabilitation of the power sector and the restructuringof the mining system), which implicitly includedaspects of environmental protection.

In 2002 the MWEP put together a Catalogue ofPriority Environmental Projects based on the proposalsreceived from the local Environmental ProtectionInspectorates. This catalogue contains 501 projects, thefinancial value of which is estimated at EUR 2,556 mil-lion. The shares of various financing sources in the proj-ects listed in the catalogue are as follows:

• state budget: EUR 110.8 million;

• extra-budgetary sources: EUR 5.9 million (for exam-ple, the Environment Fund);

• EU funds: PHARE, ISPA, Special AccessionProgramme for Rural Development (SAPARD);

• GEF–IBRD; and

• REReP.

Most of the 286 projects retained in the 1999 NEAPconcern water facilities. ISPA is regarded as a key fund-ing source for those projects. In the short run, ISPA willspend EUR 1,053 million on wastewater treatment andwater management over a period of seven years. Theminimum domestic contribution to a project co-financed by ISPA is 25 percent, which Romania will finddifficult to afford at present.

For environmental infrastructure, grants of EUR 120million per year will be available for Romania from 2000until 2006.

The Ministry of Finance coordinates the financialaspects of ISPA and MWEP is responsible for the tech-nical aspects of ISPA.

The ISPA Environment Strategy has identified about120 project proposals (70 percent for water, 25 percentfor urban waste management, and five percent for airprotection). Two percent of the Romanian grant is pro-vided as technical assistance to municipalities to devel-op projects, applications and tendering documents.



Projects amounting to EUR 308.8 million have alreadybeen approved by the ISPA management committeeand will be co-financed by ISPA.


The EU accession process drives environmental leg-islation as well as institutional and policy development.Environmental policy objectives, instruments and legis-lation have been introduced as part of harmonisationwith EU requirements. Romania has continued itsprogress in terms of transposition of the EC environ-mental acquis as well as preparing for implementationof legislation. However, implementation, together withthe need for increased administrative capacity and thecost of alignment, remains a major challenge.

This driving force is usually effective but a potentialdanger is that it is not grounded in the institutional andeconomic realities of the country.

The pressure from market forces is also present to alimited extent as a driving force for implementing EIPs.

Total expenditure on environmental protectioninvestment amounted to EUR 180 million in 2000. Thisaccounted for 0.4 percent of GDP and amounted toEUR 8.0 per capita. Both the share of GDP and the percapita figure is at the low end compared to other acces-sion countries.

Environmental investment expenditure by the publicsector amounted to EUR 19.5 million in 2000. Out of that,73 percent was allocated to wastewater management.

Environmental investment expenditure by indus-try was EUR 121 million in 2000. Public and privatefirms specialised in providing environmental servicesspent EUR 37 million on environmental investment.Half of the investment was spent on waste manage-ment and the other half was spent on wastewatertreatment. Nature conservation investments fell drasti-cally (by 60 percent).

All types of projects have been undertaken duringthe last five years. Many environmental infrastructuredevelopment projects have been initiated and several ofthem implemented. Pollution abatement projects havealso been implemented. These were predominantlyend-of-pipe investments. There were a few cleaner tech-nology projects, mostly for demonstration purposes.

Some nature protection investment has been alsoundertaken, however these types of EIPs have adecreasing share of total investment.

Cleaning up contaminated sites has been undertak-en but mostly in connection with privatisation and onlyin a limited number. Investment projects in monitoringare usually part of technical multi- and bilateral foreignassistance programmes.

Lessons learnedIn recent years Romania has made progress in the

transposition of the environmental acquis. However,much of the new legislation appears to have been adopt-ed without due consideration for the administrative andfinancial resources necessary for its implementation.

In its 1997 opinion, the European Commission con-cluded that Romania would have to place a higher pri-ority on environmental issues, implement focused envi-ronmental accession strategies and work programmes,significantly increase financial and other resources anddevelop its administrative capacity. It was estimatedthat if these steps were taken, full transposition of theacquis could be achieved in the medium to long term.The opinion also noted that compliance with legislationrequiring a sustained high level of investment could beachieved only in the very long term. This is also sug-gested by the comparison of the environmental invest-ment expenditure between 1996 and 2000 with the esti-mated compliance investment needs in the EUROSTATreport. This figure is 5 percent in Romania, which is atthe low end among the accession countries.

Since the opinion, Romania has transposed a consid-erable amount of legislation, but has not developed theadministrative or the financial resources to implement it.

Romania should focus further efforts on developingimplementation capacities and should ensure that lawsinclude realistic deadlines and cost assessment. Lawsshould also be proposed only after carrying out suffi-cient consultation. At the local level, significantresources are needed to improve the status of existingstaff, to recruit new inspectors, and to train them ade-quately. Coordination among ministries on environmen-tal issues needs to be improved and Romania shouldintegrate environment protection requirements into thedefinition and implementation of all other sectoral poli-cies in order to promote sustainable development.

According to an interview, the Romanian statedoes not encourage businesses to make environmen-tal investments and banks to grant environmentalloans. Nevertheless, economic growth is expected,which is likely to allow more environmental invest-ments by enterprises.

Serbia and Montenegro — MontenegroDevelopments in policy and institutional setting

The key legislation for environmental protectionis the Law on the Environment. The law set up thebasic principles of environmental protection, includ-ing polluter and user pays principles, environmentalimpact assessment, biodiversity conservation, accessto information and public participation. However,not all the necessary by-laws have been developedto implement these principles, which makes the



legal framework weak and fragmented. This in turnhas a negative impact on the enforcement of thebasic principles.

In 2001, a strategic document on the country’s sus-tainable development entitled The DevelopmentDirections of Montenegro as an Ecological State wasendorsed. It defines several key areas for developmentof priority programmes and projects. One local and tworegional environmental action plans have also beendeveloped. In March 2003 the Government ofMontenegro adopted the Economic Reform Agenda.The main goal of Agenda is to establish a modern envi-ronment protection system that provides the foundationfor development of Montenegro as an ecological statewith key parameters being to harmonise with EU regu-lations and requirements, as well as to adhere to inter-national conventions.

The formulation of environmental policies has beenrather centralised, with low involvement of local gov-ernments and the industrial/business sector. The role ofNGOs has been rather limited and the same applies foracademia.


Past years are characterised by minimal investmentsin environmental protection measures from domesticsources, while notable international assistance to thesector did not start until 2001.

General government budget financing is the onlydomestic financing mechanism. The Law onEnvironment defines sources of financing environmen-tal protection, and it stipulates that all the environmen-tal charges, taxes and fines are to be paid to a specialsub-account within the state budget. In practice, thisenvironmental account does not exist and allocationsfor environmental expenditures are distributed directlyfrom the central budget.

Other sources, which include business or privateinitiatives, are not developed, and their participation islimited. Despite the achievements of recent years, thefinancial market in Montenegro remains underdevel-oped, with capital markets trading at very low levels.

EIPs in recent years have mostly been financed byvarious international organisations. Major sources ofinternational finance are USAID, World Bank, EIB,EBRD, European Agency for Reconstruction (thisagency is also a significant donor in the case of Serbiaand Kosovo), and German bilateral assistance.


The major driving force for the initiation and imple-mentation of EIPs has been incentives from the donorcommunity and IFIs.

The few EIPs undertaken in the last few years are

either smaller scale infrastructure development projectsor pollution abatement projects in the energy sector.

Lessons learnedFinancial constraints experienced both in govern-

ment and industry/business sectors shaped the nationalfinancing of environmental improvements throughoutthe 1990s. Two action plans were prepared. Oneencompassed 51 measures, the total cost of which wasestimated at approximately USD 110 million. The meas-ures were to be financed jointly through enterprises'own resources, central budget subsidies and municipalresources. Since 1993 when the plan was adopted, lessthan one fifth of the necessary funds have been provid-ed and invested — around EUR 12 million from theenterprises' resources and another EUR 8.0 million frombudgetary sources. In another programme, the total costof 57 short and medium term measures (1999-2007) list-ed in the programme was estimated at EUR 90 million.The programme includes measures such as applicationof abatement techniques like the desulphurisation offlue gases (FGD) in stack gases. To date, only seven ofthese measures have been implemented, with minimalbenefit to the environment. These two examples alsoshow that environmental investment planning has notalways been realistic.

So far, obstacles in mobilising IFI resources werelinked to the lack of sectoral strategies and low institu-tional capacity of public utility companies in meetingfinancial and other requirements. Even though substan-tial increases in service prices were recorded at the endof last year, water and waste-user charges remain wellbelow the cost-recovery level. Public utilities requireinstitutional reform to improve efficiency of servicedelivery and to ensure financial sustainability andaccountability.

Although the budget of the Ministry of EnvironmentProtection and Physical Planning has increased inrecent years, it is still insufficient to finance necessaryenvironmental projects and activities. In addition, thereis hardly any cooperation between MEPP and otherministries when environmental projects are concerned.

At the same time, new laws contribute to the intro-duction of a clearer division of the fiscal relationshipbetween central and local governments. This is expect-ed to have a beneficial impact on the ability of munici-palities to execute their own budgets. This is especiallyimportant bearing in mind the poor financial state of themunicipal utility companies, which are responsible forinvestments in waste and water and sanitation sectors.

New sources of environmental investment can beexpected in light of the recent government decision tochannel one third of the revenues from privatisation ofthe Yugopetrol company into environmental protectionprojects.



SerbiaMore than a decade of industrial disintegration has

severely limited the economic opportunities availableto the local population. Real unemployment rose in the1989-2000 period from approximately 467,000 to almost690,000 people, with the official unemployment rate in2000 approaching 26 percent.


The Reform Agenda of Serbia includes buildingcapacities to implement a preventive and long-termenvironmental protection approach, introduce thepolluters pay principle and fully implement interna-tional conventions and other standards in relevant sec-tors.

The main challenges for the near future include:

• the rehabilitation of identified environmental “hotspots”;

• reversal of the destruction of natural resources;

• improvement of the production and disseminationof environmental information;

• improvement of air and water quality;

• improvement of municipal water supplies andsewerage; and

• development of an efficient waste-managementstrategy for industrial and municipal solid wasteand waste water.

All of the listed elements ensure environmentallysound development in industry and the energy andagricultural sectors.

The situation at the beginning of 2001 was markedby fragmentation and overlapping of environmentalresponsibilities and inadequate cooperation amonggovernment institutions and between the governmentand the NGO sector.

At the initial phase of the 2001+ reform strategy inSerbia, the environmental sector was treated as a long-term priority. After June 2001, however, when the gov-ernment of Serbia accepted priorities in the environ-mental sector in the years to come, it became clear thatpolitical commitment exists and that Serbia will movetowards (environmentally) sustainable development,with selected short-term priority measures and activi-ties. This strong commitment was expressed by a deci-sion that relevant authorities have to prepare thegrounds for a new Ministry of Natural Resources andEnvironment and a new Framework Law on theSystem of Environmental Protection.

In addition, the establishment of close coordina-tion between the Ministry of Environment and othergovernment ministries, NGOs and the private sector,the government will ensure future economic develop-

ment, privatisation and rehabilitation to be less harm-ful to the environment. The National Assembly forSustainable Development of the Republic of Serbiawill be a good mechanism for cross-cutting issuesbetween sectors towards sustainable development.The time frame for this activity is from now, continu-ously step by step.

The right to get information on the state of theenvironment is a constitutional right of all citizens ofSerbia and Montenegro, guaranteed by the federal andrepublic constitutions. The right of individuals, i.e.associations of citizens, to demand and receive eco-logical information, is pursuant to the commitment ofstate bodies to inform the public on the issues of envi-ronmental protection. Public participation in passingregulations on environmental protection is providedby the right of citizen initiative for enacting certain reg-ulations, the right to express opinions and proposalsduring public hearings on the drafts laws, and the rightto vote in an organised referendum. Direct and infor-mal public participation in the creation of public opin-ion on environmental protection is realised by pub-lishing and distributing leaflets and brochures, by pub-lic media, participation in the work of non-govern-mental organisations, etc.

Through the late 1990s, many non-governmentalenvironmental organisations were registered in Serbiaand Montenegro. Although the number of organisa-tions is considered relatively high, if the structure oftheir activities is compared with the standards andactivities in west countries, it can be concluded thatonly a small share of these organisations is active andthat they are still in the initial phase of development.


The financing sources of EIPs are budget subsidiesand foreign assistance. In 2001 approximately USD 0.1million was allocated to EIPs.

Economic instruments and environmental financ-ing mechanisms in Serbia are still underdeveloped.The entire system is based on principles which are notpursuant to the principles of market economy. Theeconomic mechanisms of environmental protection orfor restricting environmental degradation includecompensations for the tenure of natural resources,taxes, insurance, incentive earnings, voluntary contri-butions, loans and other economic incentives.

Significant funds for resolving environmental prob-lems were provided by the Donors Conference held inBrussels on June 30, 2001, when about USD 95 millionwas planned for spending through 2004, of whichUSD 11.2 million is intended for the remediation of“hot spots.”

In consideration of national environmental priori-ties, the remediation of environmental hot spots is



among the main immediate challenges. This activityfalls into two sub-groups: UNEP post-conflict remedia-tion and remediation of other environmental hot spots.

Efforts to clean up UNEP identified hot spots con-centrate on those locations where the risk of adversepublic health effects, soil pollution and groundwatercontamination is the highest. The total cost of theimmediate action clean-up programme (environmen-tal humanitarian assistance in connection with the1999 conflict) has been estimated at USD 20 million,out of which some 40 percent has been secured. Itseems that no strong commitments exist to fulfil thisactivity at the proposed level.

Remediation of other environmental hot spotsshould start with a methodology of prioritising actionsand ranking hot spots and should continue with astrategy and implementation of remedial measures.


Serbia's legislative and institutional framework is inplace. Enforcement and monitoring, however is frag-mented. This is accompanied by the economic hardshipof recent years. The situation, therefore, does not createstrong motivations for EIPs. The major driving force forthe initiation and implementation of EIPs has beenincentives from the donor community and IFIs.

There have been a few small-scale environmentalinfrastructure development projects. Investments in envi-ronmentally friendly technologies have been limited.

Lessons learnedThe evident constraints to implementation of EIPs

have been, and still are, the lack of up-to-date environ-mental strategic documents, insufficient environmentalinformation management, as well as low institutionalcapacity for implementation and enforcement of envi-ronmental principles.

The adoption of the Law on EnvironmentalProtection in Serbia (1991) was an attempt to create anefficient system of financing environmental protection.

For all the above reasons, it will be necessary tointroduce additional financial schemes for the involve-ment of the national budget and municipal budgets, IFIsand capital from domestic banks and the private sector.

During this period only a very small number of newwater facilities were built while old ones were very poor-ly maintained. Many of the new facilities are not yet fin-ished because of a lack of financial resources and unsat-isfactory project management (from different sources andwithout any rational economic logic). So the paradox isthat a lot of the unfinished water construction projectshave depreciated in value by perhaps 50 percent. Olderfacilities have fully depreciated after 30 years.

The way to create the financial resources for water

management is through payment for the use of water,extracting construction materials from water flows, andground drainage. All such payments are concentrated inthe budget of the Republic of Serbia and a portion in thepublic enterprise “Srbijavode” (Serbia water), which is astate owned enterprise with the authority to governwater management, i.e. the maintenance of water-relat-ed construction in the republic.


The Kosovo economy has steadily deteriorated dur-ing for the past decade. After the war there was literallyno plant working or no publicly-owned company thatwas able to continue its work without getting emer-gency aid. After the recent armed conflict in Kosovo,the territory is governed by the civil authority of theUnited Nations Interim Administration Mission inKosovo (UNMIK) and is effectively a UN protectorate.

According to international donor organisations, theemergency phase ended in 2002. In 2003 donor agen-cies are focused more on investments related to institu-tion building.


The administrative and institutional framework forEIP financing hardly exists. A draft short and mediumterm action plan for the environment was developed in2001. However, priority areas and clear targets are notdefined in that document.


Grant financing from international sources is theonly observable financing mechanism.


The driving force for the very limited number ofEIPs has been incentives from the donor community.

There is practically no information available on thetypes of EIPs.

Lessons learnedSource for financing EIPs has been very limited.

Domestic sources are lacking and international fundinghas concentrated on reconstruction after the war.Nevertheless, a coordinating framework for such bilat-eral assistance still does not exist.

The administrative and economic future of the terri-tory is still rather unclear. While it is clear that the incen-tive from donor funding is going to be more or less theonly motivation for environmental investment, thestrength of this force cannot be predicted.



Conclusions based on the national assessments

Based on the regional overview, three types ofdevelopment patterns for EIP implementation can beidentified. These are:

• EIP implementation driven by national environmen-tal legislation that is based on transposition of EUrequirements;

• EIP implementation based on national environmen-tal legislation with the aim of alignment with EUrequirements; and

• EIP implementation driven by donor assistance.

EIP implementation driven by transposed EU requirements (Bulgaria and Romania)

Economic restructuring and some pollution abate-ment measures have reduced environmental pressurefrom old, rather large industrial sources. Environmentalinfrastructure in the wastewater and municipal waste sec-tor is in a state which can pose threats to human health,and it certainly does not meet transposed EU require-ments. There are extended lists of polluted sites due topast contamination of state-owned sources. Rich biodi-versity is threatened and ignored by EIP implementationdue to concentration on investment-heavy directives.

EU accession as a driving force is usually effective,but a potential danger is that it is not grounded in theinstitutional and economic realities of the country.

With economic growth, continued privatisation andrestructuring, market pressure can become a moreimportant driving force to initiate EIPs. This drivingforce will generate abatement projects focused mostlyon cleaner technologies and end-of-pipe issues.

The number of environmental infrastructure devel-opment projects is likely to grow. An increased numberof pollution abatement projects can be expected in con-nection with the enforcement of legislation like theIntegrated Pollution Prevention and Control (IPPC) andthe Large Combustion Plants directives.

The importance of investment projects in monitor-ing will be kept due to the shift from legal harmonisa-tion to enforcement of new EU-compatible environ-mental legislation.

Nature conservation investments will probably con-tinue to be only a small part of EIP implementation.

Some changes are expected within some of the organ-isations connected to EIP financing. An increased needfor co-financing projects subsidised by EU funds and theneed to “additionality” of the EU subsidies are and will bebehind those changes. The experience of CEE countriesshows that these forces increased direct budgetary subsi-dies and reduced the scope of extra-budgetary spending.

Some increased interest from the commercial bank-

ing sector can be predicted. Completely new institu-tions or financing mechanisms, however, are not likelyto emerge.

Increased implementation of environmental infra-structure will need to consider households’ financial con-straints. Even if investment costs are heavily subsidisedby EU funds and central budget subsidies, covering theoperational and maintenance costs from user charges canreach the budget limits of poorer households. Therefore,the professional capacity to carry out willingness to payand affordability analysis should be largely extended.

The main assistance should go into strengthening thecapacities, both in the public and private sector, to bringa project idea into physical implementation. This entailspreparing project designs with a package of financingsources and tender documentation where appropriate,and supervising implementation. Procedures for regularproject impact monitoring should be established as well.

EIP implementation with the aim of alignment with EU requirements (Croatia and FYR Macedonia)

Economic restructuring and some pollution abate-ment measures have reduced environmental pressurefrom old, rather large industrial sources. Environmentalinfrastructure in the wastewater and municipal wastesector is in a state which can pose threats to humanhealth. There are extended lists of polluted sites due topast contamination of state-owned sources. Rich biodi-versity should be protected.

It is expected that the political determination tostrengthen environmental protection will graduallyincrease as EU approximation becomes more prominenton the political agenda. A major driving force for theimplementation of EIPs remains national legislation andpolicy, which is more and more shaped by EU alignment.

With economic growth, continued privatisation andrestructuring, market pressure can become a moreimportant driving force to initiate EIPs.

The number of environmental infrastructure devel-opment projects is likely to grow if alignment with EUrequirements is strengthened further.

An increase in the number of pollution abatementprojects can be expected in connection with economicgrowth, privatisation and economic restructuring.

Increased implementation of environmental infra-structure will need to consider the financial constraintsof households.

The main assistance should go into strengtheningcapacities, both in the public and private sector, tobring a project idea into physical implementationthrough preparing project designs with a package offinancing sources.

Establishment of an environmental fund can helpsecure extra-budgetary resources. This in itself, howev-er, cannot contribute significantly to an increase infinances. Examples in the region show that despite the

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existence of such a fund, the level of per capita envi-ronmental expenditure may remain low.

EIP implementation driven by donor assistance[Albania, Bosnia and Herzegovina, Serbia andMontenegro, Kosovo (territory under UN interimadministration)].

The general features of the main environmentalproblems are that economic decline has reduced envi-ronmental pressure from old, rather large industrialsources. Due to lack of maintenance, environmentalinfrastructure in the wastewater and municipal wastesector is in a state which can pose threats to humanhealth. Rich biodiversity should be protected.

Economic realities suggests that donor funding willremain the dominant financing source in the mediumterm. However, with a strengthened environmentaladministration and a realistic spending strategy, it is possi-ble to increase the role of national legislation as a drivingforce. This requires investment spending on monitoring.

Increased implementation of wastewater infrastruc-ture will need to consider the financial constraints ofhouseholds. Even if investment costs are heavily sub-sidised by foreign donors and central budget subsidies,covering the operation and maintenance costs fromuser charges can reach the spending limits of poorerhouseholds. This also calls for low cost solutions forenvironmental infrastructure projects.

Strengthening of institutions should focus onimproving the efficiency of utilising donor financing. Aproperly prepared and endorsed NEAP with accompa-nying financing strategies could facilitate the coordina-tion of fragmented donor-funded projects. There is aneed for capacity building to train local policy makersand experts to “navigate” through the rules of variousdonor and IFI funding mechanisms.

The new ecological fund, which is planned, needs tobe designed very carefully. Predicted economic devel-opment suggests that the size of such a fund can berather limited. Further fragmentation of limited domesticsources should be avoided. Without a detailed spendingprogramme the efficiency of the fund may be very low.

Chapter 4: Regional recommendationsThere is practically no country in the region in

which internally-evolving national legislation was themajor driving force for priority EIP implementation.Therefore, we concentrate on recommendations forcases where the major driving force is

• national legislation developed in response to EUapproximation;

• market pressure;

• donor incentives.

Assisting EIP implementation when the driving force is EU approximation

Bulgaria and Romania are countries where EUapproximation is the strongest force. Together with thesigning of the Stabilisation and Association Agreementsfor other countries of the region, legal harmonisationwith EU environmental legislation is becoming adeclared policy objective. Therefore, it is relevant toidentify regional recommendations for assisting priorityEIP implementation when national legislation and poli-cy development is motivated by EU accession.

Key issues in hindering implementation of priorityEIPs are the following:

• New legislation is passed regularly without detailedeconomic impact studies, particularly withoutaffordability analysis.

• Consultations with the public during the process ofintroducing new legislation is not well-developed.

• Political will is still weak to pursue enforcement ofthe new legislation.

• Identification of priority EIPs is not structured.

• Domestic resources are fragmented.

• Changes are needed in policy and institutional set-tings that can influence the issues above.

Environmental infrastructure development projects

There are several so-called investment heavy direc-tives in EU environmental legislation. Many of theserequire large-scale investment in environmental infra-structure for municipal services. Examples are thedrinking water, urban wastewater and landfill direc-tives. These directives are in the process of being trans-posed into national legislation. In Romania and Bulgariaoverall cost estimates for complying with these direc-tives have been done, but in other countries such esti-mates have not been published.

The cost estimates, however, are not contrasted withthe availability of financing resources in a systematicway. It means that no specific financing strategy is pre-pared for the wastewater sector, for example. Thereforethe need for detailed cost estimates and the preparationof financing strategy should be a required policy tool.Assistance should be provided for countries in the formof practical tools for both detailed cost estimates for com-pliance and the development of a financing strategy.

Better ex ante analysis of introducing new legislationcan assist in project identification as well. Project identifi-cation usually takes the form of a call for projects withoutmuch detailed guidance on the characteristics of the pro-posal that could be submitted. Prioritisation of the submit-ted proposals becomes a very difficult task. Since it is alsohighly political, the need for transparent and not overly

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complicated prioritisation methodology is obvious. Compliance with transposed EU legislation is sub-

sidised by EU assistance programmes. Access to longterm loans is also arranged. The bigger the financingneed of an EIP, the more complicated the financingpackage becomes. In turn, that implies that the require-ments for a successful project design become morecomplex and difficult to meet. The capacity for prepar-ing such a project design — including applications fordifferent funding sources — is a bottleneck. Assistanceis needed for creating such capacity. The creation ofenvironmental funds is often supported by the claimthat it can contribute to such capacity development.Such a function of the fund can be fulfilled only if thenecessary number of qualified staff is hired and furthertrained by the fund.

We should point to one important experience fromthe accession countries. It is that once this bottleneck iseliminated — i.e. capacity is developed for projectdesign — another problem might become the limitingfactor. This problem is that when proper “packaging” isapplied, it is then revealed that many project ideas/pro-posals cannot be converted into successful projectapplications. Among the key reasons for this is that theproposed project is not affordable to local communities.

Funding sources also have conditions defined forEIP implementation. In the case of EU funding, forexample, the application of various rules in supply andwork tenders developed by the International Federationof Consulting Engineers (FIDIC) are required. Expertisein the preparation of tender documentation and tendersupervision is largely lacking. Training material for CEEcountries is available. This should be utilised in relevantSEE countries as well.

Ex post evaluation has little tradition in the region.Methodologies, including information system develop-ment, should be tailored for the region to start theprocess.

Pollution abatement projects in production processes

The main institutional and policy constraint on theEIPs in this area is the lack of institutional capacity andtools for enforcement. This issue, however, is tied to theneed for assessing the economic reality of new legisla-tion. Credible compliance can be established only if arealistic implementation plan is prepared for majortransposed legislation. Financing reality might call forphased-in implementation.

Information dissemination is also the key to improv-ing this type of EIP implementation. Small and mediumsize enterprises in particular lack information on possi-bilities for cleaner technologies and also on informationabout subsidised financing. One should not forget,however, that in a market economy, the private sectoris often quick to learn how to get access to subsidies.

Nature conservation projectsSince EU nature conservation legislation does not

have requirements as specific as the heavy investmentdirectives, nature conservation investment expendituresmight be declining. The political will to strengthennature conservation measures should be generatedthrough increased public pressure.

Information should also be presented and trainingfor policy makers conducted on how to link nature con-servation and protection to some of the common agri-culture policy (CAP) subsidy rules. One example ofsuch a rule is subsidising “no production”, which meansthat a subsidy can be obtained if a piece of land is notcultivated or not cultivated extensively.

Environmental monitoring projectsDevelopment of the environmental monitoring sys-

tem is an important element in EU environmental poli-cy. For example, the PHARE programme provides sub-sidies for projects in this field. There is a need, howev-er, to assist with the development of a realistic integrat-ed strategy for developing the monitoring system.

Assisting EIP implementation when the driving force is market pressure

The possibilities and also the need to assist EIPimplementation when the motivation is market pressurearise mostly for pollution abatement projects in produc-tion processes.

The key assistance area is information disseminationon options for applying energy saving measures, clean-er technology, and waste minimisation.

Assisting EIP implementation when the driving force is incentives from foreign financing organisations

When economic and social development doesinduce sufficient environmental protection measures,foreign donors and other funding organisations oftenpromote EIPs. The key issues in the implementation ifEIPs driven by foreign funds are:

• ensuring co-ordination among fragmented assis-tance programmes; and

• generating sufficient interest and commitments inthe recipient country.

At very low levels of economic development, grantassistance is the dominant form of financing. Higherlevels of economic development generate opportunitiesfor limited borrowing of preferential loans.

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The key limiting factors in environmental infrastruc-ture development projects are:

• securing the source for local contribution; and

• improperly handling affordability issues at the oper-ation phase.

Securing local contribution is tied to the problem offragmentation of foreign assistance. Sector strategydevelopment can contribute to the alleviation of theproblem. The World Bank often assists with the devel-opment of such strategies. However, the overall financ-ing limitation (envelope) is not always properly consid-ered in those strategies. Therefore the methodology ofsuch strategy development should be strengthened intothe direction of preparing feasible financing strategies.

Methodology is also available for assessing the will-ingness to pay and affordability issues at the householdlevel. However, affordability arguments are used to dis-guise the lack of political will to create sustainablefinancing structures for operating water and wastewaterinfrastructure. Therefore, there should be more empha-sis placed on political acceptability analysis.

Nature conservation projectsNatural resource protection and nature conservation

projects are often generated by the interest of foreigndonors. Sustainability of these projects is a critical issue.Ex post monitoring of impact of these projects shouldbe done regularly. Wide dissemination of success sto-ries and causes for failure should be organised.

Environmental monitoring projectsFragmentation and ad hoc solutions are the biggest

danger with EIPs of this type. Developing monitoring sys-tems and buying monitoring stations are favoured targetsfor international assistance. In many cases, these invest-ments are not integrated into the recipient country’s prac-tices. This can be due to the lack of monitoring pro-grammes. One solution is to finance monitoring invest-ment only if a comprehensive and realistic monitoringprogramme already exists. Assistance should be providedfor developing such programmes. However, that mightbe possible only at certain level of internal developmentof environmental legislation and institutions.

AppendixFinancing packages

The interaction of supply and demand determinesthe actual size and mix of finances for the implementa-tion of EIPs. The most probable financing packages forthe major types of EIPs are identified below.


Environmental infrastructure development projectsusually establish facilities for publicly or jointly provid-ed environmental services. They often entail largerscale investment. Many of these projects aim at provid-ing environmental services to households. Most of theseprojects are initiated and undertaken by municipalities.

Municipal water and wastewater infrastructurefinancing at the stage of establishing the basic networkand treatment facilities is dominated by central govern-ment subsidies; it is combined with municipal govern-ment financing and long-term loans from commercialbanks or from banks specialised in servicing municipal-ities. There are examples for establishing specialisedextra-budgetary funds for funding these types of EIPs,such as the French river basin funds or the revolvingfund in the US. In some countries, targeted governmentsubsidies are managed by a selected, dedicated bank,such as Kommunal Credit in Austria.

In later stages of environmental infrastructure devel-opment, the share of long-term loans and other forms ofprivate sector financing increases. Other forms of pri-vate financing can be equity investment, municipalbonds, etc. The ultimate source of financing in case ofloans or any other private sector financing is the usercharge payment by households and other users.

Solid waste management facilities are also largelyfinanced by central government subsidies; it is combinedwith municipal government financing and long-termloans from banks. The loans are repaid from future usercharge revenues. Some of the waste management facili-ties are connected to the legal obligations of producers(for example, a take-back system related to packagerecycling requirements, or waste electronic equipment— WEE) or incentives for recycling (for example, estab-lishing a “green dot” system). Those investments arefinanced by the private sector’s own sources in combina-tion with central budget or extra-budgetary subsidies.

Investment projects in hazardous waste facilities aresubsidised by the government from budgetary or extra-budgetary sources. Long-term loans from special banksare often important financing sources. Loan repayment isbased on the future revenue from fees and user charges.

The major financing sources for municipal environ-mental infrastructure development are internationalgrant financing (for example, the EU ISPA fund, theCohesion Fund) and IFI loans. Domestic governmentsubsidies are often channelled as co-financing to EIPsselected for such international financing.

Since international requirements are not necessarilyconnected to domestic economic development likeinternally evolving requirements, there can be substan-tial affordability problems both among households andenterprises. Therefore, the use of long-term loans from

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the banking sector is more limited even at a later stageof development than it is when the main driving force isinternally evolving legislation.

Enterprises might undertake EIPs in order to becomemore competitive. Market pressure does not triggerenvironmental infrastructure development too often.One area could be recycling infrastructure development.These are usually smaller scale investment projects.

The main element in a financing package is theenterprises’ own finances, which can be from accu-mulated past profit or a commercial loan. Enterprisesalso seek government or international subsidies ifany are available.

This allows for only smaller scale environmentalinfrastructure development projects. The financingpackage usually includes foreign and domestic grantsubsidies and possibly IFI loans.

Pollution abatement projects in productionprocesses and provision of services

If the driving force is internally-evolving nationallegislation, enforced environmental legislation mobilis-es the private sector’s own sources, either from pastearnings or from commercial loans. Government subsi-dies might be available for special projects for a limitedtime period (for example, tax credits if an environmen-tal standard is met before the legally determined dead-line, or a subsidy from an energy saving fund).

If national policy and legislation have developed inresponse to international requirements it is often passed

without implementing proper enforcement structures.Therefore enterprises can be reluctant to implementneeded EIPs. Incentives for compliance is often providedthrough subsidies. Therefore subsidy elements (domesticand/or international) can be more dominant than theenterprises' own sources in a typical financing package.

In a growing market economy, the pressure to cutcosts can encourage transitions to technologies savingenergy and raw materials. These are usually financed byprivate sources, including commercial bank loans.

Enterprises also seek government or internationalsubsidies if any are available.

This allows for only small-scale demonstrationEIPs. The financing package usually includes foreignand domestic grant subsidies and private enterprises’own resources.

Nature conservation projectsThe main form of financing is budgetary finance.

Special extra-budgetary funds are sometimes also estab-lished for specific types of investments.

International funding combined with budgetaryfunding is the major type of financing package.

Clean-up of contaminated sitesFinancing this type of project can be the most com-

plicated among EIPs. Clean-up costs can easily be veryhigh and real estate speculation can affect the imple-mentation of these investments.

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en•dan•gered spe•cies (en dān’jerd spē’shēz), 1. a species at risk of extinction in Central and Eastern Europe because of human activity, changes in climate, changes in predator-prey ratios. 2. Pteromys volans: a rare mammal, most active during the night, usually found in the hallows of old aspen trees in the northeastern forests of Latvia, commonly referred to as the flying squirrel. 3. Latvian Mammalogical Society: a Latvian NGO trying to create micro-sanctuaries for endangeredspecies such as the flying squirrel with the financial support of the Regional Environmental Center.

e

THE REGIONAL ENVIRONMENTAL CENTER FOR CENTRAL AND EASTERN EUROPE

(REC) is a non-partisan, non-advocacy, not-for-profit international organisation with a

mission to assist in solving environmental problems in Central and Eastern Europe

(CEE). The center fulfils this mission by promoting cooperation among non-govern-

mental organisations, governments, businesses and other environmental stakeholders,

and by supporting the free exchange of information and public participation in envi-

ronmental decision-making.

The REC was established in 1990 by the United States, the European Commission and

Hungary. Today, the REC is legally based on a charter signed by the governments of

28 countries and the European Commission, and on an international agreement with

the government of Hungary. The REC has its head office in Szentendre, Hungary, and

country offices and field offices in each of its 15 beneficiary countries which are:

Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia,

Hungary, Latvia, Lithuania, FYR Macedonia, Poland, Romania, Serbia and

Montenegro, Slovakia and Slovenia.

Recent donors are the European Commission and the governments of Albania,

Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, the Czech Republic,

Denmark, Estonia, Finland, Germany, Hungary, Italy, Japan, Latvia, Lithuania, FYR

Macedonia, the Netherlands, Norway, Poland, Serbia and Montenegro, Slovenia,

Sweden, Switzerland, the United Kingdom, and the United States, as well as other

inter-governmental and private institutions.

THE REGIONAL ENVIRONMENTAL CENTER FOR CENTRAL AND EASTERN

EUROPE (REC) is a non-partisan, non-advocacy, not-for-profit international organisa-

tion with a mission to assist in solving environmental problems in Central and Eastern

Europe (CEE). The center fulfils this mission by promoting cooperation among non-gov-

ernmental organisations, governments, businesses and other environmental stakehold-

ers, and by supporting the free exchange of information and public participation in

environmental decision-making.

The REC was established in 1990 by the United States, the European Commission and

Hungary. Today, the REC is legally based on a charter signed by the governments of

28 countries and the European Commission, and on an international agreement with

the government of Hungary. The REC has its head office in Szentendre, Hungary, and

country offices and field offices in each of its 15 beneficiary countries which are:

Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia,

Hungary, Latvia, Lithuania, FYR Macedonia, Poland, Romania, Serbia and

Montenegro, Slovakia and Slovenia.

Recent donors are the European Commission and the governments of Albania,

Austria, Belgium, Bosnia and Herzegovina, Canada, Croatia, the Czech Republic,

Denmark, Estonia, Finland, Germany, Hungary, Italy, Japan, Latvia, Lithuania, FYR

Macedonia, the Netherlands, Norway, Poland, Serbia and Montenegro, Slovenia,

Sweden, Switzerland, the United Kingdom, and the United States, as well as other

inter-governmental and private institutions.

Developing a Priority Environmental Investment Programme for South Eastern Europe

Developing a Priority Environmental Investment Programme...

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