THE COMMAND-AND-CONTROL SYSTEM OF ENVIRONMENTAL MANAGEMENT Formerly, the USSR used a command-and-control system of environmental regulation. It involved a centralized determination of exactly what pollution control measure each firm or factory must adopt. This system of environmental management consisted of several elements: * a system of environmental quality standards, * a system for planning and financing environmental controls, and * a system for monitoring and controlling environmental quality. Several legislative acts established the main features of the command-and-control system and spelled out the responsibilities of various environmental protection ministries and organizations. Beginning in 1968, the USSR Politburo adopted several fundamental acts [note 1] governing the exploitation of the environment and natural resources: * the Fundamental Land Management Act of 1968, * the Fundamental Water Management Act of 1970, * the Fundamental Mining Management Act of 1975, * the Fundamental Forests Act of 1977, * the Atmospheric Air Protection Act, and * the Wildlife Protection and Utilization Act of 1980. [Note 1. Fundamental acts are short laws that establish the framework upon which other laws are built.] The USSR leaders set their environmental protection goals in the 1969 Fundamental Public Health Act. THE CONSTITUTION (THE MAIN LAW) OF THE USSR first mentioned the necessity of protecting the environment in 1977. The System of Environmental Quality Standards In accordance with the Public Health Act (USSR Supreme Soviet: 1969), the Ministry of Public Health devised and adopted environmental quality standards. Ambient standards played a key role. In the USSR, the system of standards was the Maximum Permissible Concentration of hazardous substances in the ambient environment (atmosphere, reservoirs, and soils). Introduced in 1969, the standards assumed that pollution at Maximum Permissible Concentration levels corresponded to the maximum amount of pollution the atmosphere could absorb without causing damage to the environment or to people. The Ministry has set these standards for more than 200 substances. Examples of average daily Maximum Permissible Concentration standards for urban areas (in mg/m cubed) include: * sulphur dioxide - 0.05, * chlorine - 0.03, * hydrogen sulfide - 0.008, * carbon monoxide - 3.0, * nitrogen oxide - 0.04, and * particulates (nontoxic), 0.15 (USSR Statistical Committee: 1989-1990). The Ministry established these standards based on medical requirements without concern for economics or other factors. The standards are more severe than those in many other countries (Russian Statistical Committee 1994) [note 2] and are mostly unattainable. According to 1980s data, polluting enterprises exceeded Maximum Permissible Concentration standards by an average factor of 2.5 or two and a half times worse than the law allows. [Note 2. For example, the US National Ambient Air Quality Standards for SOB are 0.08 mg/m cubed (primary annual), 0.365 mg/m cubed (primary 24-hour) and 1.3 mg/m cubed (secondary 3-hour)(Tietenberg 1992).] The cities of the former USSR had the most severe problems. For example, 16 large towns exceeded the Maximum Permissible Concentration for dust emissions by more than 3 times as much as the law allows [note 3]. Fourteen cities exceeded sulfur dioxide standards by a factor greater than three [note 4] According to the Atmospheric Air Protection Act (USSR Supreme Soviet 1980), cities could attain Maximum Permissible Concentration levels by specifying Maximum Permissible Levels of emissions for stationary pollution sources. The act also established standard concentrations of harmful substances for mobile emission sources. [Note 3. Maximum Permissible Concentration was exceeded by a factor of 6 in Donetsk and Osh, 5.3 in Frunze and Rustavi, 4 in Fergana, and 3.4 in Dnepropetrovsk, Odessa, and Makeevka.] [Note 4. Maximum Permissible Concentrations were exceeded by a factor of 6.2 in Astrakhan, 4.8 in Kirovakan, 4.4 in Krivoy Rog, 4 in Norilsk and Novotroitsk, 3.8 in Grozny, and 3 in Cheljabinsk, Saratov, Jaroslavl, and Donetsk.] But the act only controlled auto emissions of carbon monoxide. Automotive fuel standards regulated lead and sulfur emissions. These permissible levels applied to new as well as operating businesses. The State Hydro-Meteorological Committee and the Ministry of Public Health calculated the standards. The Atmospheric Air Protection Act introduced the standards to the USSR [note 5] on Jan. 1, 1980. But as with Maximum Permissible Concentrations, the Ministry enacted Maximum Permissible Level standards without considering the economic situation. They proved more optimistic than realistic. As emissions continued at substantially higher levels than marginal standards, the Soviet Ministry recognized that strict permissible level observance would force most industries to close. [Note 5. State standard N 17.02.3.02 ENVIRONMENTAL PROTECTION. ATMOSPHERE. RULES FOR SETTLEMENT OF THE PERMISSIBLE LEVELS OF HARMFUL COMPONENTS CONCENTRATION IN THE EMISSIONS OF INDUSTRIAL ENTERPRISES.] To prevent the accompanying economic upheaval, the USSR Council of Ministers adopted, by special decision, Temporary Coordinated Levels of emissions (USSR Council of Ministers 1980). These policies made it possible for enterprises to gradually cut back emissions to comply with the permissible level. Policymakers developed special emission reduction programs for large enterprises. These programs also considered all abatement costs. These temporary policies, therefore, represented a compromise between environmental and economic goals. Initially, the Ministry fixed marginal permissible levels of emissions and Temporary Coordinated Levels of emissions for the largest enterprises only. Only 14 to 18% of all polluting enterprises had such standards from their introduction until the start of the pollution fee experiment. The System of Planning and Financing Environmental Efforts Beginning in 1982, environmental planning became part of business production plans, general city development plans, and regional industrial location and development schemes. Plans included the step-by-step attainment of Maximum Permissible Levels for each enterprise. Polluting enterprises needed to first achieve the temporary levels and then, gradually, the maximum. Thus, all affected enterprises had to build special investment limits into their production plans. These investments were their main abatement activities and had to be sufficient for them to first reach the temporary and then the maximum levels. They were worked out by corresponding Ministries of the USSR and Soviet Republics on the basis of executive authorities of regional and local legislatures. A draft document for a 15-year environmental protection and rational natural resource use program incorporated the concept. This Long-Term Ecological Program went into effect in 1990 with the goal that all Soviet enterprises would comply with Maximum Permissible Levels by 2005 (USSR State Committee on the Scientific and Technological Development 1980). >From 1981 to 1990, different regions and towns developed one- and five-year abatement activity and economic development plans. The USSR State Planning Committee set state investments for environmental protection. It recommended the Long-Term Ecological Program as the primary environmental document. And the Regional Complex Schemes of Environmental Protection established the groundwork for the Program. Since 1984, these state-financed schemes were the primary environmental documents for the most polluted regions such as Lake Ladozhskoe and Lake Baikal. The schemes stipulated that abatement costs for enterprises would be separate from expenses. Funds for abatement were allocated to enterprises from the budget of a corresponding branch of a Ministry after its budget was coordinated with the state organizations responsible for environmental protection. The state agencies included the Ministry of Agriculture, Ministry of Forestry, Ministry of Water Management, Ministry of Fish Resources Management, State Committee of Hydro-Meteorology, Ministry of Public Health, Ministry of Energy, and the State Committee for Mineral Deposits. Funds for improving the infrastructure, such as sewage systems, came from local budgets and contributions from industry seeking to build new production facilities. Thus, the State Planning Committee of the USSR determined the total abatement costs. The Committee distributed part of the money among ministries that, in turn, distributed it proportionally among enterprises that had filed claims. The Committee then distributed remaining funds among the regions. Further, enterprises could take abatement expenses from the regional environmental program resources. The funds increased after 1984. Also, enterprises could allocate their resources for infrastructure construction (see figure 1). Figure 1. Allocation of Money for Environmental Uses The reallocations were intended to help industries attain environmental standards. Every year, the appropriate ministry informed enterprises about their emission reduction goals. The ministry also instructed them about their corresponding investments and limits on using investment resources such as capacities of construction organizations and materials. In this way, the government planned financial and physical aspects of environmental control. After the USSR Council of Ministers Environmental Protection decision in 1978, all construction projects had to meet certain environmental standards. Officially, large projects had to undertake an Environmental Impact Assessment. However, the USSR State Construction Committee really decided what environmental requirements they had to meet. Finally, in 1989, policymakers consolidated environmental expertise into the State Environmental Committee. Before then, the State Planning Committee and State Construction Committee of the USSR performed similar functions. Monitoring Environmental Quality and Control Policymakers assigned the tasks of monitoring and controlling environmental quality to the state organizations mentioned earlier. The State Committee for Hydro-Meteorology became responsible for monitoring ambient pollution levels. The Ministry of Public Health dealt with toxins and hazardous substances including food contamination. Before the State Environmental Committee's formation in 1989, these ministries were responsible for controlling air quality. They were responsible for establishing Maximum Permissible Levels and Temporary Coordinated Levels, controlling compliance, granting emission permits, monitoring the environment, and providing dissipation information. These ministries had inspection services with limited rights to penalize polluters. After a 1982 decision by the USSR Presidium of Supreme Soviets, they became the primary administrative units for protecting air quality. Their enforcement tools included penalties (a maximum of 100 rubles), with the official ruble exchange rate at 1 ruble = $1.6 US, criminal proceedings (rarely), and business closures (almost never). Estimating the Effectiveness of the Command-and-Control Management System As many Russian specialists have mentioned, the command-and- control system of environmental management, which lasted from 1980 to 1991, did not create sufficient incentives to improve abatement activities. Nevertheless, since 1980, harmful air emissions have declined steadily despite increases in the production of goods (see table 1). Table 1. Comparing Changes in Harmful Emission Volumes and Produced National Income in Real Prices Former USSR Russia 1976 1980 1985 1986 1987 1988 1989 1990 1991 1992 _________________________________________________________________ Total emissions 76.7 72.8 86.3 66.5 64.3 61.7 59.6 62.2 31.8 28.2 from stationary sources (mil. ton) (34.1)+ GNP (bil. rubles) 525* 619 777 799 825 875 943 1000 1300 180 (644)**,+ Deflator 108.6 90 2500 _________________________________________________________________ * Estimated ** For Russia, only Gross Domestic Product is represented in the statistical surveys. It is approximately equal to the Gross National Product for Russia. + Russia Source: Calculated on the basis of USSR Statistical Committee 1985, 1988, 1989, 1990 We believe the 1990 emission increase could be the result of better monitoring and more complete analyses following the USSR's pollution fee experiment. The pollution abatement investment data in figure 2 show, in real prices, that investments grew from 1976 to 1979, declined between 1980 and 1985, then grew again until 1991, and have been falling ever since. To understand the reductions from 1980 to 1985, consider the cost dynamics of creating and installing special equipment that captures gases and renders them harmless. Figure 2. Environmental Protection Investments for the Former USSR (in real prices) Base year for prices: 1984 Source: USSR Statistical Committee, 1985, 1988, 1989, 1990, 1992, 1993 Table 2 shows that the number of air pollution abatement facilities built and installed dropped between 1981 and 1985 compared with 1976 to 1980. At the same time, the minimum specific abatement capacity cost per unit was a low 4.5 rubles/m cubed/hour for gas. The cost per unit decrease for absorbed gases from new Temporary Coordinated Levels presented an opportunity to account for the marginal abatement cost curves for each pollution source. Thus, emission reductions were distributed among enterprises more efficiently. Table 2. "Investment" in Air Pollution Abatement Period 1976-80 1981-85 1986-90 1990 1991 1992 _________________________________________________________________ Gas Abatement Facilities (per million cubic meters of gas/hr.) 20.4 20.0 22.5 16.4 8.2 5.6 _________________________________________________________________ Source: Tietenberg 1992 Abatement investments grew between 1985 and 1990 because the Regional Complex Schemes of Environmental Protection enacted in 1984 began to take effect. Businesses required additional investments to comply with the schemes. Regional channels for distributing centralized environmental investments supplemented industrial ones. The federal budget provided resources through the ministries and regional budgets. This period was the peak of the command-and-control management systems. Command-and-control corresponded to the general planned economic management system. Its disintegration in 1991 and 1992 corresponded with that of the planned economy. If command-and- control had continued, the Maximum Permissible Levels fixed by the Long-Term Ecological Program (USSR State Committee on the Scientific and Technological Development 1980) would have been achieved by 2005. But they would have needed many more abatement investments. Experts estimated that abatement investments would have had to increase 2.2 to 2.9 times (USSR State Committee on the Scientific and Technological Development 1980). Though the command-and-control system produced some positive results, it was expensive. The systems of environmental planning and management did not encourage businesses to seek the cheapest methods to comply with Maximum Permissible Levels. Although command-and-control did not solve the former USSR's environmental problems, it did prevent some deterioration of environmental quality. Its influence on polluting enterprises was marginal, yet tangible. How will the disintegration of command-and-control affect environmental protection? Is the influence of the new system, just now taking shape, comparable to the old? What will happen to pollution dynamics after the Russian economic crisis? In 1988, All-Union and Russian Environmental Committees began to manage pollution control. In 1989, the All-Union Committee organized an experiment for introducing pollution fees. In 1991, the pollution fees began to operate throughout the former USSR. Also in 1991, the Russian Environmental Committee became the Ministry of Environmental Protection and Natural Resources, and its responsibilities increased. In 1992, policymakers adopted the Russian Law on Environmental Protection, and the Ministry continued to create modern institutions and mechanisms for environmental management.
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