EPAT

The Command-and-Control System of Environmental Management


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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