Indicator name: Financing the environmental protection

Key message: Environmental financing increased

Assessment: This indicator is included in the Annual Reports on the State of Environment in Serbia and on Economic Instruments for environmental protection produced by the Serbian Environmental Protection Agency. The indicator shows the trend of environmental protection financing, as well as the structure of financing sources. The main source of financing environmental protection is the budget of the Republic of Serbia, and the distribution of funds depends on the budget balance options. Other sources include provincial and municipal budgets, revenues from charges and  fees,  commercial  sector  funds, and funds can also be provided from donations, loans, international aid, instruments, programmes and funds from the EU, UN and other organisations.

Sources of environmental protection financing in the Republic of Serbia include funds from the national budget allocated through the Ministry, institutions and dedicated funds, the budget of AP Vojvodina, as well as the budgets of local self-governments, and funds that come through numerous bilateral and multilateral agreements. The most important international funds are certainly the EU pre-accession funds. Basic competencies in this area are within the Ministry of Environmental Protection. The financial framework for nature protection, especially  in  the  period  2011-2014,  was  not  sufficiently  realised,  which  was  influenced  by  several  changes  in  the  structure  of  the  ministries responsible for environmental protection, which also reflected the reduction in the allocation of financial resources for this area. For the environmental protection sector, only 0.4% of gross domestic product, i.e. 0.9%, was allocated in the aforementioned period, if local contribution from the industrial and private sector are taken into account. Funding of protected areas is mainly done from budget resources, from the use of natural resources, revenues generated from tourism, donations and other sources. Most of the budget funds coming to protected areas go to the current costs of financing institutions and employees. The Ministry of Environmental Protection, as a ministry responsible for protected areas at  the national level, finances activities in protected areas through projects, which contributes to a  greater degree of utilisation of funds for the protection and improvement of biodiversity in natural assets. In 2012, 2013 and 2014, the Ministry allocated approximately Euro 1.4 million annually to protected areas (RSD 150 million in 2012, and RSD 160 million in 2013 and 2014), while for 2015 a total of about Euro 1.7 million (RSD 210 million) was allocated. The average share of protected area funding from the state budget is around 25%. The Ministry of Environmental Protection also finances projects  in the field of nature protection, for the development of individual action plans for the protection of endangered species, the production of red books and red lists of endangered plant and animal species, and the establishment of ecological network in the Republic of Serbia. The Government allocates funds from the budget of the AP Vojvodina to the Provincial City Planning and Environmental Protection Bureau. The funds allocated by the Secretariat in 2012 and 2013 for the improvement of biodiversity and protected areas amounted closely to Euro 100 thousand per year (RSD 12 million), in 2014 about Euro 180 thousand (RSD 22 million), while in 2015 almost Euro 170 thousand (RSD 20 million) was allocated. In the period from 2009 to 2012, the financing of nature protection was also supported from the Environmental Protection Fund. The Ministry of Education, Science and Technological  Development finances the preparation of basic, technological and integral projects from various scientific fields through competitions, and therefore, researches related to the field of nature protection. According to the data of the Ministry related to financing national projects dealing with  biodiversity research for the period from 2011 to 2014, the allocated amount was approximately Euro 8.5 million (nearly one billion dinars). The Ministry of Agriculture and Environmental Protection had prepared a proposal for the IPARD II Programme of the Republic of Serbia for the new programme period of 2014-2020,  which  the  European  Commission  adopted  and  defined  Euro 175 million for  its implementation. It is planned that several sectors of agriculture will be supported through the IPARD Programme, and only agro-ecological production will be accredited for agroecological measures, while the funds for this measure will be available from 2017. In  addition  to  IPA  funds,  the  Republic of Serbia also provides support for environmental projects through donations, loans,  international assistance funds and funds and programmes from the United Nations instruments,  international organisations, such is the Instrument  for  Pre-Accession Assistance (IPA), the Swedish  International Development Cooperation Agency (SIDA), the Global Environment Facility (GEF), the World Bank, the European Bank for Reconstruction and Development, Serbia has full participation in the Seventh Framework Program for Research and Technological Development (FP7), as well as in the new Horizon 2020 cycle – the EU Research and Innovation Framework Programme.

Indicator name: Financing the environmental protection

Institution/Author: Environmental Protection Agency/Maja Krunić-Lazić

Use and interpretation:

Serbian Environmental Protection Agency in its annual Reports on Economic instruments for environmental protection in the Republic of Serbia and annual Reports on State of the Environment of the Republic of Serbia. The indicator relates to the total area of the Republic of Serbia.

The main source of financing environmental protection is the budget of the Republic of Serbia, and the distribution of funds depends on the budget balance options. Other sources include provincial and municipal budgets, revenues from charges and fees, commercial sector funds, and funds can also be provided from donations, loans, international aid, instruments, programmes and funds from the EU, UN and other organisations.

Units in which it is expressed:

Percent gross domestic product (% GDP)

Description of source data:

Directorate for Treasury; Forest Directorate; ISDAKON database; Ministry of Construction, Transport and Infrastructure; Ministry of Economy; Ministry of Environmental Protection; Ministry of Finances; Ministry of Mining and Energy; Ministry of Trade, Tourism and Telecommunication; Provincial Secretariat for Urban Planning and Environmental Protection of the Autonomous Province of Vojvodina; Statistical Office of the Republic of Serbia; Water Directorate.

Periodicity of collecting: per year

Calculation procedure:

Expenditures from the budget

Total expenditures relating to all the expenditure budget of the Republic, AP Vojvodina and cities and municipalities (including salaries) that are executed with the function Environmental Protection according to the functional classification of public expenditure.

Revenues from fees

Revenues from fees are revenues of the state budget, environmental budgetary fund for environmental protection of the Autonomous Province of Vojvodina and local environmental budgetary funds. Revenues from the state budget include fees for the pollution of the environment, for ozone-depleting substances and plastic bags, for emissions and disposed waste (60% of the fee amount), as well as fees for products that become special waste streams after the use thereof, and for packaging waste (100% of the fee amount). Budgetary environmental fund of the Autonomous Province of Vojvodina collects fees for using the fishing area. Local budgetary funds collect fees for: pollution of the environment; for ozone-depleting substances and plastic bags; for emissions and disposed waste (40% of the amount of fees) and fees for environmental protection and improvement (100% of the fee amount).

Investments from economic sectors

Investments from economic sectors demonstrate corporate investments into environmental protection (Energy and mining, Water management, Transport, Forestry and hunting, Agriculture, Tourism, Industry).

International financial support

The indicator shows international financial support – donations and loans for sectors of “Environmental protection”, “Water supply and waste management”, and “Agriculture, forestry and fishing”.

The total expenditure in relation to the gross national product (GDP) is calculated as the ratio of / GDP ratio and of expenses for protection of the Environmental Protection, and are presented as a percentage.

Most effective forms of presentation:

The best way of presenting this indicator as tables and charts that provide an opportunity to monitor progress in relation to this indicator and record the observed trends.

Updating the indicator:

Statistical data are updated once a year.

Closely related indicators

• Revenues from fees and charges

Additional information and comments

The Environmental Protection Agency collects data through the Environmental Information System, as well as in direct cooperation with relevant institutions for certain thematic areas, and prepares annual Reports on Economic instruments for environmental protection in the Republic of Serbia and annual Reports on State of the Environment of the Republic of Serbia, on the basis of articles 76 and 77 of the Law on Environmental Protection (Official Gazette of RS No. 135/2004, 36/2009, 36/2009 – state law, 72/2009 – state law and 43/2011 – CC decision, and 14/2016).

Reports provide an overview of economic instruments in the environmental sector in the Republic of Serbia based on available data, thus indirectly providing a view into achieved goals and measures of environmental policy defined in strategic and planning documents, such as: National Environmental Program (Official Gazette of RS No. 12/10), National Sustainable Development Strategy (Official Gazette of RS No. 57/08), and National Environmental Approximation Strategy for Serbia (http://www.misp-serbia.rs/wp-content/uploads/2010/05/EAS-Strategija-ENG-FINAL.pdf).

An efficient system of economic instruments should encourage the reduction of pollution, while introducing adequate financial mechanisms to motivate environmental investments. In order to achieve that, economic mechanisms must be established to signal timely and clearly to polluters and end-users of goods and services that there are economic benefits from environmental investments.

From economic point of view, economic instruments should:

• Affects the most rational use of resources;

• Be an integrated part of the overall development strategy, especially of technological development;

• Be defined by law and market based, efficiently indicating advantages of environmental protection.

Economic instruments, moreover, should provide for sound sources of financing environmental protection.

The most important features of 2017 are:

• Budget expenditures amount to 0.3% of GDP;

• Revenues from fees amount to RSD 13,315.54 million (0.30% of GDP); The largest share of 43.6% belongs to fees for emissions of SO2, NO2, particulates and disposed waste (RSD 5,801.25 million),

• Investments from economic sectors, based on the available data, amount to RSD 3,628.69 million (0.13% of GDP). The largest share of the Energy and Mining amounts to 89.2%;

• Donations to “Environmental protection” and “Water supply and waste management” were RSD 3,552 million (0.08% of GDP), and loans RSD 20,921 million (0.47% of GDP). The largest donors are Germany with RSD 1,753 million, and the European Union (RSD 1,451 million);

• Grants and subsidies, based on the available data, amounted to RSD 3,400 million (0.08% of GDP), and the largest share belongs to subsidies for the recycling industry of 77.67%.

According to the National Environmental Programme, with estimated economic growth of 5% per year, investment in environmental protection should reach 2.4% of GDP in 2019. However,  in 2017 total amount of funds for environmental protection was 1.28% of GDP.

Table 1: Financing environmental protection

Table 2: Structure of environmental protection financing in Serbia

Serbia