Draft Category I paper for the
Belgrade Ministerial Conference
“Environment for Europe”:
Mobilising Finance for Environmental
Priorities: Recommendations for the Future
Craig Davies
PPC Executive Secretary
Tenth Meeting of the EECCA Environmental Finance Network
Paris, 22-23 February 2007
Background to the paper
• The sixth “Environment for Europe” Ministerial Conference
is taking place in Belgrade on 10-12 October 2007
• The conference will include a session on “Environmental
Financing”, with representatives of the private sector and
IFIs
• A draft Category I paper (for consideration by Ministers)
on environmental financing in EECCA and SEE has been
prepared jointly by the PPC, EAP Task Force, REC for
Central & Eastern Europe and the World Bank
• The paper is intended to provide recommendations on
future actions to support environmental financing and
provide a basis for discussions on financing issues at
Belgrade
Objective and scope
• Objective of the paper:
 To identify actions that can be taken by actors in the
EfE process to ensure that adequate levels of finance
are available for environmental improvements in
EECCA and SEE countries to meet commitments
under the Environment for Europe process
• Scope of the paper:
 A brief assessment of the trends in environmental
expenditures and access to finance in the region
 A consideration of the roles of public, private and
international sources of finance and the opportunities
these present for supporting environmental
improvements
Main findings of the paper
• Access to finance, both public and private, to address
environmental challenges has improved across the EECCA
and SEE regions, especially in oil- and gas-rich countries
• But this has not always led to environmental improvements
due to the needs for policy and institutional reforms and
barriers to project development
• In low-income countries these problems are compounded
by more limited access to affordable finance
• Action is required by EECCA and SEE governments, donor
country governments, international bodies including IFIs
and the private sector to find innovative ways of optimising
flows of environmental finance
Recommendations for Ministers (I)

Environmental expenditure as a percentage of GDP in
EECCA and SEE needs to increase to levels comparable
to those in CEE countries net of EU funds;

Environment ministries can help to achieve this by
supporting mid-term budget frameworks and preparing
sound environmental investment programmes within these
frameworks;

Donors and IFIs could align their assistance plans with
such programmes, while using more performance-based
aid instruments to create clearer incentives for results;

To take advantage of Kyoto Protocol financing
mechanisms the eligible countries should implement
adequate legal and institutional frameworks by 2008.
Recommendations for Ministers (II)

Environmental ministries could encourage more private
sector finance by implementing market-friendly reforms of
environmental policies and institutions;

Sustained donor grant co-financing is required to make IFI
loans accessible for low-income countries;

Middle-income countries could attract more international
finance by making it more accessible at sub-national
levels; donors could help by providing market friendly aid;

Assistance is needed to build the capacity of potential
project proponents to prepare viable environmental
investment projects.
Next steps in the finalisation of the paper
• Draft paper was approved in principle by the Executive
Committee of the Working Group of Senior Officials on 15
February
• Delegates asked for the final draft to be made more
reader-friendly and for the language to be made less
prescriptive
• Draft paper now to be presented at the Joint Meeting of the
EAP Task Force and PPC on 15-16 March for approval
• Final version to be completed, taking into account all
comments received, and submitted to the Environment for
Europe Secretariat by 1 May
Key issues for consideration
• Does this paper capture the key financing issues to be
brought to the attention of Environment Ministers at
Belgrade?
• Have the drafters successfully kept the focus on issues
that are within the mandates of Environment Ministers?
• What further refinements should be made to the report
before it is finalised?
• How can EECCA governments support the paper’s
messages during the preparations for the Belgrade
Ministerial Conference?