Environment in emerging and transition economies

Economics of environmental compliance assurance


Empirical data and analysis in the Eastern Europe, Caucasus and Central Asia (EECCA) and other regions have shown that inadequate environmental compliance and enforcement can result in significant costs for individuals and companies and increase public spending without bringing expected results.


However, economic and financial implications of compliance assurance policies and institutions are rarely quantified. Although information exists on the incentive structure for environmentally-responsible business conduct in OECD countries, direct comparison between the OECD and transition or developing countries is not possible due to the significant differences between economic incentives for firms’ performance and overall business environment.


In this context,the EECCA countries called for more empirical analysis, and the identification of best practices that can help governments to enforce compliance with environmental requirements, to focus scarce resources where they are most needed and where they have the greatest effects, as well as to limit regulatory dealings and other forms of corruption.


In response to requests from EECCA countries and in order to allow environmental regulatory agencies and inspectorates carry out statutory functions while avoiding conflicts of interest and preventing corruption, the EAP Task Force developed a number of tools aimed at helping governments improve their approaches of estimating budgets and ensuring adequate financing for regulatory and compliance assurance needs. These tools were then tested on the ground (e.g. in Kazakhstan).