WHAT DOES ENVIRONMENT LOOK LIKE IN THE BUDGET? December 2017
We all plan to spend our money carefully. “How much did I spent last month on food, communal services and for the kids, and how much do I need this month?” “I must make sure I put aside enough money to help my parents!” “Can I still afford to go on holiday this summer?” It is the same, of course, with the government: how much should the government spend and has spent of its limited resources on education? On healthcare? Food security and social needs? And what about the environment or digital transformation or innovation – the important priorities in the Programme 40 steps?
Unlike our own plans, it is not always clear where government money goes and whether it is being spent wisely. To monitor progress towards achieving environmental, biodiversity and climate change adaptation goals, the recent expenditure review tried to establish how much is being spent in these areas and by whom and whether the money has been well spent. This information will be used to improve how environment, biodiversity and climate change adaptation is funded.
UNDP–UN Environment Poverty-Environment Initiative
How did we do the expenditure review?
The review looked at the 2011-2016 budgets of all main institutions that interact with the environment at national and local level and estimated how much the government spends on the environment, and within that expenditure, what share is spent on biodiversity and on climate change adaptation. It did not analyse all adaptation expenditure, only that part which is related to environment, to see to what extent these two highly complementary areas support each other. Information was collected about the private sector and development partners (see Figure 1).
Figure 1: Annual average public and private environmental expenditure in Kyrgyz Republic 2011-2016 (KGS millions, real terms, 2011=100) ) Development partners 155
Civil society 118
Central state budget 894
What did we find out?
Although environment, biodiversity and climate change adaptation are high government priorities, central and local governments are spending very little to protect and manage all three, unlike our development partners whose expenditure to support our environmental sustainability is comparatively high. Regardless, the share of environment expenditure is extremely low, comprising approximately a half per cent of the GDP in the Kyrgyz Republic. The amount spent on climate adaptation is particularly low, varying between 12 per cent and 20 per cent of the total environment expenditure between 2011-2016. This suggests that there is little attention being paid to adaptation needs when allocating funds for environment and for biodiversity. This needs to change because ecosystems play a vital role in helping to protect us from natural disasters, such as floods, storms and mudslides – all forecast to become more intensive with a changing climate. Local government expenditure is also very low compared to the expenditure from central government. At the same time, local governments are tasked to provide vital environmental services to the population, including water treatment and waste management, but our analysis clearly points to limited expenditure in these important areas.
Share of budget spent on the environment
1%
of central government budget
0.1%
of local government budget
12%
of development partners’ spending in Kyrgyz Republic
Private sector 665
Local budgets 10
A large share of central level government funds for environment is spent on salaries (63 per cent) and much less on other operating expenditures (27 per cent) and on investments (10 per cent). This is a cause for concern because if the staff at public agencies do not have means to work and the agencies can’t invest, then they cannot work effectively. The biggest state budget spending agencies are the State Agency for Environment Protection and Forestry, the Ministry of Agriculture and the Ministry of Emergency Situations. It is important to note that despite the opportunities that mainstreaming environment and climate adaptation into the energy sector generates, particularly through energy efficiency, the expenditure of the State Committee for Industry, Energy and Minerals constitutes only 4 per cent of the total adaptation expenditure and 0.63 per cent of total environmental expenditure.
Figure 2: Total environmental expenditure by the main spending agencies in Kyrgyz Republic 2011-2016 (KGS million, real terms, 2011=100) 1200 1000
other Ministry of Emergency Situations
800
Ministry of Agriculture 600
State Agency on Environment Protection and Forestry
400 200 0 2011
2012
2013
2014
2015
Compared to the priorities of the Programme for Transition to Sustainable development, our analysis suggests that the alignment between priorities and expenditure for environment is not always clear and some important issues, such as low carbon development, energy saving and efficiency, development of incentive mechanisms and development of sustainable tourism
2016
are receiving only a small amount of funding (see Figure 3). On the other hand, the share of expenditure for environmentally sustainable measures in agriculture is relatively high, but it is not clear whether it is indeed enough for the targeted development of organic farming in the Kyrgyz Republic.
Figure 3: Expenditure for government environmental and environment-related priorities in the Programme for Transition to Sustainable Development (percentage of total environmental expenditure, 2011-2016) National development priorities
Administrative reforms 12.8% Environmental education and awareness 12.3%
Incentives for resource efficient industry 0% Environmentally sustainable agriculture 18.6%
Biodiversity protection 36.9%
Reduction of negative impacts 18.6% Low carbon development 0%
priorities for environment sector environmental priorities for other sectors
Energy efficiency 0.5% Environmentally sustainable tourism 0.1%
RECOMMENDATIONS Although the prospects for the Kyrgyz economy are bright, the state budget will inevitably experience different pressures from several sectors. Environmental planners have to understand that a sudden and drastic increase in public spending on the environment is not realistic. The expenditure review reveals several areas where spending efficiency can be improved, however. The Ministry of Finance and the spending agencies need to make sure that their operating expenditures (including the salaries, equipment, materials and other means for work) and capital expenditures are in balance with their functions. Similarly, they need to ensure better alignment between environment, biodiversity and climate adaptation interventions, and better alignment of the environmental expenditure with government priorities. The programme budget, linked with clear results about what the budget is spent on, can serve as a useful tool to achieve that. The State Agency for Environment Protection and Forestry should work together with the Ministry of Finance and with local governments to make sure that funds allocated for the environment are used for strategic key priorities. In particular:
• The tourism department should clearly prioritise support to development of environmentally sustainable tourism
• The State Committee for Industry, Energy and Minerals should prioritise energy efficiency and renewable energy investments
• The Ministry of Agriculture should prioritise
developing organic agriculture, drip irrigation and irrigation water efficiency
All these agencies need to develop and include relevant environmental sustainability measures, indicators and results in their programme budgets. Local governments are an important environmental management actor, especially in the areas of waste and waste water management. However, the funds allocated for these and other needs are very low. The State Agency for Environmental Protection and Forestry should support decentralisation efforts and delegate to local governments developing and implementing environmental protection measures as per existing legislation. The delegation of powers should be accompanied by relevant budgets, including targeted transfers from the national budget to local budgets.
In conclusion, we want to call on the government and all relevant stakeholders to contribute their share towards implementing the commitment to environmental sustainability. This need has been recognised in key government documents, including the national Programme 40 steps:
Of great importance are the issues of maintaining and strengthening the democratic foundations of the political system, the development of the socio-economic system, digital transformation, regional development, and environmental protection.
Information based on: Policy and Institutional Review for Environment Financing with a Focus on Biodiversity and Climate Change Adaptation in the Kyrgyz Republic (2017) Public and Private Expenditure Review (2017) For further information, visit the BIOFIN knowledge platform: http://biodiversityfinance.net/knowledge-platform
Photo credit: Thomas Depenbusch. Sourced from Flickr via Creative Commons (CC BY 2.0)