Romania - Environment strategy paper

Report No. 10613 RO Romania Environment Strategy Paper July 31, 1992 Infrastructure Operations Division Country Department I Europe and Central Asia Region FOR OFFICIAL USE ONLY MI CROFICHIE COPY Repovrt No.: 1C613-RO Type: (SEhC) T.itle: ENV2IROMENTAL STRAT'EGY P'APER Author: DICKERSON,.M. Ext. :32959 Rooin:I512:3 Dept. : EC1IN JONTLY PREPARED (;OR-E'SPA-USrAID-EC-WEIO Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS 'urrency unit = lei USSi c 225lei (as of June 1992) WEIGHTS AND MEASURES dl deciLiter .g milligram MW Megawatt(s) ha hectare(s) mrem roentgen equivalent man - pmn particulate matter of 10 kg kiLogram the amount of ionizing microns or Less km2 square kilometer radiation equivaLent to ppm parts per million m3 cubic meter biological effect of one ppb parts per billion Mm3 million cubic meters roentgen of x or gama rays Pg microgram CHEMICAL ELEMENTS AND COMPOUJNDS AlF3 Aluminum fluoride CuS2 Cupric sulfide N2 Nitrogen P205 Phosphorus As Arsenic Fe Iron Na3SIF6 Sodiun pentoxide Ar Argon GeO2 Germanium dioxide fluorosilicate Pb Lead Br2 Bromine HCN Hydrocyanic acid NaF Sodium fluoride Rd Radon CaF2 Calciun fluoride Hg Mercury NH3 Ammonia Se Selenium Cd Cadmium HF Hydrogen fluoride NH4NO3 Ammonium nitrate S02 Sulphur dioxide Cl2 Chlorine H3As Hydrogen arsenide Ni Nickel TeO2 Telluriun dioxide CO Carbon monoxide H2S Hydrogen sulfide NO Nitrogen monoxide W02 Tungsten oxide CO2 Carbon dioxide H2SO4 Sulphuric acid NOx Nitrogen oxides V205 Vanadiun pentoxide Cr Chromium K Potassium NO2 Nitrogen dioxide Zn Zinc CrO3 Chromnium trioxido KCL Potassium chloride NO3 Nitrogen trioxide Cu Copper K20 Potassium oxide 03 Ozone CuO Copper oxide Mn Manganese P Phosphorus ABBREVIATIONS AAOS Ambient Air Quality Standards BOD biochemical oxygen demand CaC Command and Control COD Chemical Oxygen Demand CZM Coastal Zone Management DO Dissolved Oxygen EC European Community EIA Envirorvnent Impact Assessment ESP Electrostatic Precipitators GEF Global Envirorvnmental Facility ICIM Institute for Envirorinental Engineering IUCN International Union for Conservation of Nature & Natural Resources MAC Maximum Allowable Concentration MARPOL International Convention for Prevention of Pollution from Ships MoA Ministry of Agriculture MoE Ministry of Environment MoF Ministry of Finance and Economy MoH Ministry of Health Mol Ministry of Industry MoLSP Ministry of Labor and Social Protection MoT Ministry of Transport NGO Kon-Goverrvmental Organization NCS National Committee for Standards OECD Organization for Economic Cooperation & Development OSHA Occupation Health and Safety Act - USA PETROM National Oil Company of Romania PIU Project Isplementation Unit PHARE Program for Restructuring Assistance (formerly Pologne-Hongrie Assistance a ta Reconstruction Economique) RAFIROM National Holding Company for Romanian Refineries RAN Enterprise for Coal Production Marketing RBA River basin Agency RECCEE Regional Envirornment Center for Central and Eastern Europe RENEL The Romanian Electricity Regie Autornne RONGAS National Gas Cooperation of Romania SS Suspended Solids TDS Total Dissolved Solids VOC Volatile Organic Compound WHO World Health Organization US AID United States Agency for International Development US EPA United States Environmental Protection Agency  FOR OMFICIL4 USE ONLY ROMAANIA ENVIRONMENT STRATEGY PAPER TABLE OF CONTENT FOREWORD . . . . . . . . . . . . . . . . . . . . . . . i Executive Summary . . . . . . . . . . ................ . .iii 10 POINT PLAN OF ACTION ..... . . . ..... . .. . . . ...... . . xii I. POLICIES. . ....... . . 0 . ..... . 2 A. Macroeconomic Structural Adjustment and Impact on Environment 2 B. Targeted Environmental Policies . . . . . . ...... ..... . . 5 C. Effective Mix of Policies .... . . . . . . . . ........ S. a D. Privatization . . . . .. ............ 9 E. Industry ....... .. . . . . . .. .. ...... .. . . 11 F. Energy . ........ . ...... . ..19 0. Agriculture and Natural Resources .... . . . ...... . . 27 Forest Resources .. . . . . . . . . 31 Fisheries . . ........... ... .. .. . 32 Wildlife . . . ............. . . .35 Parks and Protected Areaa . . . . . . . . . . ...... . . . 35 The Danube Delta ..... . . . . . . . . . ....... . 37 The Danube ..... .. . .. . . . . . .. . .... .. . 39 Coastal Zones . ...... . . . .... . .. . .40 The Black Sea . .... . .. . . .. . . . ....... . 42 Cultural Heritage. ... . ....... . .......... 43 H. Global Issues . . . .-................... . . 43 II. THE PRIORITY AREAS . . . . o . . ... . . . . . . . . . . . . . . 45 III. LEGISLATIVE AND INSTITUTIONAL ASPECTS ... .48 A. Legislation.. . ... .50 B. Institutions ................ . 52 C. Training and Technical Asistance . . . .54 D. Enforcement . . . . . . .. . .56 Standards . . . . . . . . . . . . . .56 Air . .... 56 Ambient Air Quality Standards. . . .56 Emisions . . . .. . . . .58 Water 0. . . . ...60 Ambient Water Quality Standards .60 Effluent Standards . . . . . . . . . . . . 61 Monitoring . . . . . . . . . . . ..62 Air ....* ... * . ........ 62 Water ......................... 64 Solid and Hazardous Waste .66 The Inspectorate . ...........67 IV. ENVIRONMENT MEDIA . . . . . . . . . . . . . . . ..... . . . 67 A. Air Pollution . . . . . . . . . . . . . . . . . . . . . . . 67 B. Water Management - Pollution Control and Abatement . ..70 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  C. So1.d Waste . . . . . . . . . . . . . . . . . . . . . . . . . . 77 D. Hazardous Waste . . . . . . . . . . . . . . . . . . . . . . . . 77 E. occupational Health and Safety ....... . . . ....... . 80 P. Environmental Health . ....... . . . . . . . .*...... 82 G. International Relations . ...... ..... . . . . . .. 84 V. PUBLIC PARTICIPATION AND NGOS .. ........ . . . . . . . . . . . . 84 VI. INVESTMENT STRATEGY ......... . 88 A. Investment Strategy . . . . . . . . . . . . . . . . . . . . . 88 B. External Financing ... . . . ... ...... . . . . . . . . . 90 C. A Preliminary Investment Program ... . . . . . ...... . . 90 D. Environmental Impact Assessments ... . . . . . . ..... . . 92 VII. THE ACTION PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . 93 Action 1 . . . . . . . . . . . . . . . . . . . . . . . . . . 95 Action 2 . . . . . ................ 98 Action 3 ................... ...... 98 Action 4 .. . . . ............... .... 100 Action 5 ................ . . . .... 102 Action 6 ......................... 104 Action 7 .......................... . 105 Action 8 .......................... . 106 Action 9 . . . . . . . . . . . . . . . . . . . . . . . . . . 106 Action 10 ... . . . . . . . . ...... . . . . . . . . . 107 ANNEXES 1. Current Air Quality Standards for Principal Pollutants . . . . . 109 2. Training and Technical Assistance Needs . . . . . . . . . . . . 110 3. List of Priority Areas ..................... 4. Environmental Health ... . . ...... . . . . . . . . . . . 112 CHARTS: Organization Chart -- Ministry of Environment Water Pollution in Romania Major Pollution Sources: Arges River Basin Major Pollution Sources: Olt River Basin Major Pollution Sources: Prahova River Basin MAPS: Romania: State of the Environment (IBRD 23703R) The Danube Delta (IBRD 23813)  FOREWORD 1. The Environment Strategy Paper (ESP) has been prepared as joint exermise by the Government of Romania, US AID, US EPA, the Operations Service of EC-PHARE, and by ths Environment and Health Centre (WHO) and the World Bank. Preparation follows a pralirinary mission in October/November 1991 and a mission (the Joint Mission) to Romania in February, 1992. In addition co the tasks of the Joint Mission, preparation work for the ESP was also supported by five Romanian/Joint Mission Working Groups covering: (i) Economic Aspects; (ii) Energy and Environment; (iii) Environment Legislation; (iv) The Priority Areas; and (v) River Quality Improvement. The Working Groups functioned well and included representation from a number of other ministries, appropriate Inutitutions and from several Regies Autonomes. 2. Romanian participation was coordinated by Mr. Angheluta Vadineanu, Secretary for State for Environment and Mr. Petre Marcuta, Under Secretary of State for Environment, under the overall authority of Mr. Marcian Bleahu, Minister for Environment. There was also participation by other ministries including Finance, Industry, Agriculture, Health and their related Institutes; and also Regies Autonomes RENEL, RAFIROM and others. The February Joint mission comprised: WORLD BANK Mr. Maurice Dickerson, Task Manager Mr. am O'Brien-Kumi, Energy/Environment Economist Mr. Walter Stottman, Water Resources Specialist Mr. Takao Ikegami, Sanitary Engineer Mr. Felix Jakob, Municipal Development Specialist Mr. Bernard Baratz, Principal Environment Specialist Mr. Donald Theiler, Director, Air Quality Bureau, State of Wisconsin Mr. David Bare, Senior Scientist, KBN Engineering (Consultants) Mr. Clyde Hertzmann, Epidemiologist (Consultants) (separate mission) The following Bank staff also assisted: Messrs/Mmes M. Bromhead, A. Khawaja, and S. Lintner US A.I.D. Mr. Toby Pierce, Natural Resources Officer, USAID Team Leader Ms. Lori Freer, Environmental Specialist, Development Technologies Mr. Joseph Califf, Senior Enigineer, Environment Strategies, Inc. Mr. Rick Ellis, Chairman, Advanced Waste Management Systems, Inc. Mr. James Harrington, Chairman, Coastal Zone Management Commission, North Carolina Mr. James Wolf, Agricultural Engineer/Agronomist Development Alternatives, Inc. US E.P.A Mr. Dan Beardsley, Director, Regional Technical Assistance Office of International Activities Ms. Ruth Greenspan Bell, Senior Attorney, Office of General Counsel Mr. William Rice, Deputy Director, EPA Region 7 Ms. Amy Evans, Regional Technical Assistance Office of International Activities  ii Mr. Jurgen Megner, Economist, Head of Secretariat and Economic Division Daniol Fnvironmental Protection Agency Mr. Eckart Meyer-Rutz, Bundesministerium Fuer Umwelt Naturschutz und Reakorsicherheit WHO Dr. Michael Krzyzanowski, Epidemiologist Environment Strateoy Workshoo 3. The draft ESP was reviewed by the Romanian authorities through a Workshop which was held 26th - 28th May, 1992. The Workshop was chaired by the Minister of Environment (Mr. Marcian Bleahu) with day to day management by the Secretary for State (Mr. Angheluta Vadineanu) and attended by participants from Romanian Ministries and Institutions, Regies Autonmes (including RENEL), and NGOs; International representation included US EPA (Mr. William Rice), US AID (Mr. Richard Hough (station chief), Ms. Alexi Panehal, Ms. Gianina Moncea), EC- PHARE (Mr. Jurgen Magner), G-24 (Ms. Andrea Fenneez), the European Bank for Reconstruction and Development (Mr. Timothy Murphy, Mr. Jerry Muscat), IUCN (Ms. Liz Hopkins) and the World Bank (Messrs. Dickerson, O'Brien-Kumi, Stottman and Bare [consultant)). The Workshop was also attended by Mr. Bog Jorgensen leader of the EC-PHARE financed Institutional Development Program and his team. This final version of the ESP includes the Workshop findings. 4. The ESP has drawn extensively on: (i) the Romanian National Report to UNCTED; (ii) earlier World Bank Environmental Reports on Czechoslovakia, Poland, Yugoslavia, and Bulgaria; (iii) the 1992 World Development Report on the Environment; and (iv) "Patterns of Environmental Management" by Charles Weiss, Jr and others. The ESP was prepared in parallel with an Energy Sector Study for Romania and the appropriate findings and recommendations are common to both. 5. For the World Bank, EC1 Infrastructure is the responsible divisior (Me. Paula Donovan, Division Chief) of the Europe, Central Asia Department 1 (Mr. Michael Wiehen, Director). The designated reviewers were Messrs. Andrew Steer (ENVDR) and Peter Whitford (EMTEN). Technical PaxDers The following Technical Papers are available on request from EC1 Infrastructure Divisions Technical Paper No. 1 - Economic Incentives Technical Paper No. 2 - Some Aspects of Air Quality Control in Power Generation Technical Paper No. 3 - Water Manageaent Technical Paper No. 4 - Health Effects Technical Paper No. 5 - Uavironmental Health-Institutions and Equipment Technical Paper No. 6 - Environsent Legislation Technical Paper No. 7 - Air Management Stratagy  iii ROMANIA ENVIROMNT STRATEY PAPER Executlve summary 1. The purpose of the Environment Strategy Paper (ESP) is to define an environment strategy for Romania that wills (a) in the short term, reduce, in the most economic manner, current and likely severe impacts of environmental degradation on human health; and (b) build up a framework which will foster a long term economically sustainable acceptable environment. The paper recommends a '10 Point Plan of Action" with most actions to be initiated within twelve months to set the stage for achieving these objectives (attached to this summary and detailed in Section VII). All the recommended actions are of major priority; while eesponsibility for undertaking most of the actions will rest with the Ministry of Environment (MoE), some will be the prime responsibility of other ministries, principally the Ministries of Finance, Industry and Agriculture. A strong proactive stance will be called for on the part of the Ministry of Environment to implement the strategy. Such a stance will require the full support of the Government of Romania. Causes and Efecte 2. Severe hazards to human health are found mainly in highly localized industrial areas. The post-World War II industrialization strategy adopted by Romanta focused on the development of large energy intensive metallurgical, chemical and machine building industries. Over the years, induetry (including energy) has accounted for 63-66% of GDP per year. However, the policies of maintaining low energy and other input prices to industry, increased reliance on domestic resources regardless of costs, and soft budget constraints faced by enterprises encouraged inefficient use of energy and other resources. Further, with no pricing of the cost of using the environment the result was to use the environment as a free good -- with consequent degradation. 3. The result of the severe degradation has been most felt in fourteen localized en7ironmental "hot spots" -- not unlike those found in other parts of Eastern Europe and also in less obvious but pervasive areas of the country (see Annex 3 and MAP). While 802 predominates, many of the other emissions from the industrial processes pose much greater hazards to human health. In two of the more severe priority areas, Baia Mare and Copsa Mica, emissions of lead are of particular concern and the adverse effect on children in these areas has been documented. With some of the areas in valleys, frequent temperature inversions accentuate the effects of the emissions. About 30% of river lengths are polluted. Much of the toxic pollution emanates from industrial sources. Some large areas of ground waters are polluted both by industrial and oil industry waste (Ploesti) and also by nitrates, mostly from agricultural activities. Adjacent to nearby industrial facilities, hazardous waste dumps abound -- often mixed with municipal waste. Natural resources have also been affected and both pollution and poorly planned economic activity have affected the Danube Delta -  iv a large natural biosphere -- and the Black Sea. Fortunately, the current rapidly changing economic scene is having some positive effscts on the environment. The Changing Situation 4. The economic reform program is bringing about major changes in the economic climate with the removal of subsidies, adjustment of energy and industrisl input prices to economic levels, hard budget constraints on enterprises and the gradual introduction of a market economy. The impact of the reform process is beginning to be felt and with it, a positive impact on the environment. Industrial production is down and so are the directly related emissions and discharges. Air quality is now not quite so bad in the Priority Areas .d the black "snow" of carbon and particulates not quite so heavy. With the increase in prices of energy and most other inputs, production lines (but not major plants) have been closed and energy production is less than half installed capacity. While some closures have been due to lack of raw materials (including natural gas) many are due to uneconomic operations and the failure of obsolescent equipment. Since 1989, GDP has declined by about 20% with the impact on energy intensive industry being particularly large. With Government's intention to remove all subsidies and soft budget support, massive restructuring of the major industrial polluters is inevitable. However, to moderate the large increase in unemployment, government support for these industries may continue longer than would be desirable either on economic or environmental grounds. Any environment strategy adopted by the government must recognize this changing situation and be both flexible and pragmatic in its aims. A Pragmatic Strateesy S. The ultimate goal of an environment strategy is clear. The strategy should be such as to encourage economic growth in an environmentally acceptable manner. However, during this transition period in Romania, there is a need for a pragmatic least cost based environment strategy that not only takes a long view in terms of a desirable environmental regime and the timing and marshalling of resources to achieve this state, but also identifies and addresses immediate priorities. Immediate priorities may be health related, may be directed at stopping irreversible actions or may be the critical actions required now to lay the foundation for a future environmental framework. While there may be tradeoffe between environmental improvements and growth, in Romania, the process of transition and economic restraint provide a unique opportunity to achieve both objectives. 6. Toxic emissions and discharges which are hazardous to health represent an immediate priority. Stopping the discharge of cyanide to a dump which leaches rainwater to a nearby river, preventing the further contamination of groundwater from enhanced oil recovery and controlling the emission of lead and other toxic particulates are a few of the immediate actions which are required. Thn actions should preferably be initiated by agreement between the proposed local Environment Protection Councils and the industries or by Government regulation. Brief environmental audits may be called for to confirm or identify pollution sources and needed actions. On public health grounds, the government should consider direct budget support for low cost immediate actions  v of high impact to industries likely to remain open longer than 12 months, e.g. the procurement of filter bags (Action 3). Policies 7. improving the environment requires a mix of macro, sector and targeted policies. The principal actions at the macro level should be directed at getting the prices right and will be primarily directed at improving the national economy as a whole with environmental improvement benefiting from the process. Such actions include the continuing policy of removal of subsidies, raising prices to their economic level and, in general, the removal of the soft budget constraints (Actions 1 & 2). At the sector level, for industry, the policies will include using the restructuring process as an opportunity to include environmental meaaures in the rehabV . on, upgrading and development of new processes. Any Government and/or externi awsaistance (such as that of the Bank) should be predicated on the conduct of an environmental audit and the inclusion of environmental measures in the program of the industry to be assisted1/ (Action 4). Similarly for energy and particularly power generation, environmental measures should be built into both the proposed rehabilitation program and into the energy strategy for the future2/ (Action 4). For agriculture, the emphasis should be on improved resource management and agricultural practices including increasing the price levels of forestry products, improving fertilizer and animal waste management, and agreeing on fish catch levels with other Black Sea riparian countries (Action 9). S. Targeted policies are required where the use of the environment is not valued appropriately in market transactions. During the transition period and until a fully functioning market economy has evolved, clearly targeted policies of the command and control approach are called for to complement the macro economic measures in managing the Romanian environment. Nevertheless, in parallel, Romania should continue to develop economic instruments (already introduced for water) to influence polluter behavior. These would include charges for the application of the polluter pays principle (emission fees, taxes on polluting inputs etc) with eventual permit trading. The Government should use a phased approach to introduce some modest instruments beginning with emission fees at appropriate levels in late 1993 (Action 1). Environmental Audits 9. A key to improving the environmental performance of an enterprise is the carrying out of an environmental audit. The need for such audits would be established based on criteria such as type of firm, its likely output, the toxicity of its waste stream etc. The outcome of such an audit will not only 1/ To be included in the World Bank's proposed loan for Industrial Restructuring project. The need to address environmental concerns is being included in the World Bank's proposed "Restructuring of the Petroleum Sub- sector", and "Power, Coal and Lignite Sub-sectors Rehabilitation and Modernization" projects.  v. pinpoint high priority actions to be taken and the least cost ways of accomplishing theae, but will also indicate where taking low or no cost actions can improve environmental performance am well as improving plant efficiency. An independent environmental audit team would assess the environmental ctate of &n enterprise and assist in developing a program of remedial actions. hso independent audits have not bQen the practice in Romania, there is a nelld to build this requirement into appropriate legislation (including that covering privatization) and to build up a Romanian environmental private sector audit service industry. This build up will best be accomplished through joint ventures with foreign firms experienced in this field (Action 4). An Environmental Framework Leaislation lC. While the past circumstances justify an ad hoc approach to address immediate health hazards, laying the foundation for future environmentally benign economic growth, requires careful consideration. First and foremost is the need to enact enforceable environmental legislation. Current legislation dates from 1973 and, due to both the political and economic systems of the time was largely unenforceable. A new law is required so that all concerned are aware of the environmental rules under which they will operate. This is particularly important to investors both local and foreign, considering investing in enterprises being privatized. A new law, which has been under preparation for some time now, has recently been approved by the cabinet and is awaiting debate and enactment by Parliament. The Joint Mission had made suggestions as to the content of the law. The mission suggested that the new law should concentrate on activities having an adverso impact on human health and should provide for public involvement in environmental decision making. One of the top priorities then is the enactmant of a general law on the environment by end 1992 and the enactment of the priority associated detailed ordinances by mid 1993 (Action 1). Institutions 11. Not only is enforceable legislation required for an environtental framework, but also sound environmental institutions staffed by well qualified and motivated p'ople. The Ministry of Environment (MoE), which was creatcd in 1990, covers a variety of responsibilities including setting water managemenv and forestry policy as well as being responsible for nuclear issues. Headquart red in Bucharest, it also has 41 Branch Agencies -- one in each Judet. While the MoE intends to follow the modern approach of integrated environment management (i.e. all media mar-gement within one organization), with the economy and the environment e. a state of transition, it has recognized as a principal priority, the need to restructure and staff the MoE organization to meet its future responsibilities. Fortunately capable staff exists but functions and responsibilities need to be better focussed. Particularly required is the need to reinforce its role as the principal coordinating ministry for environment, and to define its relationship with the increasingly autonomous local governments. Accordingly, EC-PHARE is financing an Institutional Development and Training Program to meet this need. The Program has just commenced (Action 5).  vii 12. Managing the onvironment is a relatively new skill and while Romanian ability is high. there is a considerable need for training at all levels. With a change of economic and political ;ystema, there Ls a major need for training in modern organization and staff management. Using the EC-PHARE Program, the MoE should take the lead ifi managing environment training programs and should strengthen its training division for this purpose. A list of training requirements is givon in Annex 2 to the ESP. Standards 13. Environmental standards are also a cornerstone of an environmental framework. Those for Romania need to be reviewed and some for ambient air rolled back such that they are less severe and more in line with thoose of the EC. Slmilarly, the ocedures by which they are measured need to be modified such that they reprenent exposure of people to the pollutant. Em.soion standards are required to identify polluters and to set up -Tia-3ions charging mechanisms. Thus a top priority is the setting of emissions standards by end 1992. These uhould be set as a target. Their achievement should be stretched out through compliance schedules. Water ambient standards are generally satisfactory but the classification of waters should be revised to reflect not the current state of the river as at present but rather the proposed water use (Action 6). Compliance Schedules 14. Compliance schedules are a useful means of implementing a gradualist approach to enforcement. While the final standards are set, the permit to be issued to an enterpriae will include a time frame oier which the standards must be met. The time frame can be related to the toxicity of the pollutant and to the economic situation of the enterprise concerned. Schedules can be negotiated on a sub sector basis (i.e. all the steel industry) and on an industry by industry basis. Interim achievement targets should be set to assess the performance of the enterprise in reducing its emissions/discharges (Action 4). Monitorina 15. Romania is fortunate in having an extensive air quality monitoring network. However, with the MoE and the Ministry of Health conducting monitoring, there in duplication and overlapping between the agencies. Except for health requirements, the MoE should be responsible for national environment monitoring including air quality monitoring. EC-PHARE is assisting the MoE in defining and developing such a monitoring system. V'oE proposals for a national integrated monitoring system should be reviewed by the EC-PHARE. Although -*pability is high thr:e are a number of operational deficiencies and the ESP contains detailed recomme- ations to remedy these. Monitoring equipment is required -- particularly equipment (including mobile units) for measuring emissions. A review should be made of the water monitoring reqgirsments in the light of the proposed river basin authority water management approach (para. 18). Structured monitoring of solid and hazardous waste sites should be introduced (Action 5).  viii The- ILpPectPrate 16. The Inspectorate has not been able to enforce the environmental laws and regulations due to lack of political support, low fines and scant measuring equipment. With the introduction of the new envirornental law (para. 10), emisaion standards, ezaisoion meaouring equipment, and training, the inspectorate will be in a position to bogin the enforcement process. Enforcement will be largely through compliance schedules (Action 5). Air Quality Manacement Strategy 17. A number of ruxated actLons need to be taken to lay the groundwork for an air quality management strategy. These include (inter .lia) the introduction of air quality regulations, improvinq the organization both at headqtarters and in the Branch Agencies, wider use of models, and the introduction of emission fees. Extensive training is also raquired (Action 1). Water Manacement - Pollution Control and Abatement 18. While there are immediate priorities which must be addressed to reduce toxic discharges -- particularly from industry, there is a need to plan a long term strategy for water management. A River Basin approach to water management is recommended whereby each River Basin Authority (RBA) links water quality with quantity and balances the use of water among different users in an economically optimum manner. .sach Authority would follow policy set by the MoE but would be autonomous within its own basin in raising revenue from water users on a full cost recovery basis and from waste water discharges through permits on a polluter pays principle. Proposals, cn a pilot basis, for instituting an RBA should be developed by mid 1993 for later introduction in possibly the Arges and/or Olt and/or Siret river basins (Action 1). Solid Waste 19. Most land fills in Romania are operated in an unsatisfactory manner. Of top priority is the clarifying of responsibility as to the agency which sets solid waste policy. Decisions on solid waste management and disposal should only be taken on the basis of feasibility studies which, as is normal practice, shoulci consider all technically viable options and choose the solution on the basis of a cost benefit analysis or if this is not possible on the basis of least cost. In most cases, it is unlikely that incineration will prove a viable option; well designed sanitary landfills are likely to prove the solution for some tima to come (Action 1). Hazardous Waste 20. Apart from immediate actions -- particularly in the Priority Areas, the first step to improve the current haphazard disposal of hazardous waste, is the preparation of a Hazardous Waste Management Strategy (HWMS). This should expound a gradualist approach to improving management and disposal. To prepa..:e an HWMS will require an assessment of the present situation including a rudimentary classifying of the present dumps. First priority should be given to improving the management of the present and future flows. Second priority should  ix be given to site cleanup. While MoE should take the lead, it will have to work in close coordination w4th the Ministry of Indusery and the users and dischargers of the waste. As part of the HWMS the private sector should be mobilized first in joint ventures with experienced foreign firms to assist with assessment of waste streams and dumps and second in the future to perhaps set up regional disposal facilities (Action 1). 21. Hazardous waste has recently been imported into Romania on a non- government basis from some other OECD countries without proper arrangements being made for its transport, storage or disposal. While it is understood that the long term intention was for external financing being secured for the construction of hazard waste incinerators, the import of another country's hazardous waste is fraught with risk and some thought should be given as to why the waste is not being disposed of in the home country. A commission is currently studying the issue and legislation has recently been passed to control further importation. Importation should certainly not be encouraged and the MoE should prepare the HWMS before considering any further dealings in another country's hazardous waste. Sensitive Areas 22. Irreversibility of environmental degradation is the principal issue affecting sensitive areas and cultural heritage. Indeed many historic buildings have been destroyed and the Danube Delta and Black sea are under threat. To pursue sound sensitive areas management, there is a need for a strategy on protected areas management and the step by step implementation of staffing and protection measures (Action 10). Occupational Health and Safety 23. The conditions under which many Romanian workers operate are unsafe and hazardous to health. Incentive practices discourage improvement, equipment is not available or, being poorly designed, is not worn and toxic emissions abound. In-factory monitoring is inadequate, and enforcement of regulations that do exist is minimal. The government is aware of the situation and has passed new regulations; however, much remains to be done. Action 7 lists a comprehensive series of steps to be taken including (inter alia) preparing an inventory of equipment needs, phasing out of hazardous workplace incentives, and initiating health and safety audits. Environmental Health 24. While some data on onvironmental health exists it is of a limited nature. The existing systems of data collection related to the health status of the population (registered morbidity, cancer register, mortality statistics) need to be improved. Training and equipment are needed to strengthen environmental epidemiology. Public Participation and NGOs 25. The public has a major role to play in both formulating environmental strategy and reviewing investment proposals. The principle of public of  x involvement therefore should be included in the proposed environment legislation and the details in guidelines (Action 8). Public participation would be assisted by the formation of local environment councils which would also include representatives from the local MoE Branch Agencies, the trade unions and local government. At the center, the MoE needs to met up a focal point for interaction with the public, NGOs and for the dissemination of information. While there are many NGOs, who act locally, there in a need for them to coordinate their activities and they have taken steps in this direction by recently holding the first Romanian NGO Environment Conference. The MoE needs to give further recognition of the value of NGO participation and its invitation to the to participate in the ESP Workshop was constructive from all sides. Nevertheless further actions are required to assist the NGOo with their training needs, tap their offers of volunteer assistance and develop a business relationship to further environmental improvement in the country. Such improvement is required in the level of public awareness of environmental issues and both the MoE and the NGOs require to formulate plans to raise the public interest. Such actions will include an improved dissemination of information in attractive publications and, with the Ministry of Education, the teaching of environment at primary and secondary school levels. Environment Investment Strateqv 26. Environment investment strategy will be driven by environmental legislation which will largely follow the broad recommendations made in the.s ESP. The legislation and the related detailed ordinances and compliance should be clear and unambiguous such that industry, energy and others are aware of the environmental standards which they will have to meet, the mechanisms for achievement, and the penalties for non-compliance. Most commercial and private companies will bear the cost of environmental measures themselves. The Government's principal role in influencing non-public funded and private sector environmental investment is in this strategy setting stage. It is therefore important that the strategy and implementing mechanisms steer investors towards least cost solutions to meet the required standards. Even then, through the formal mechanism of operating permits and compliance schedules, adequate time should be allowed for achievement of standards. 27. Where public funds are involved, the MoE and the NoF should prepare guidelines as to determining priorities amongst competing proposals. Some principles would include the need for feasibility studies and risk assessments, using a least cost approach where the economic benefits cannot be quantified, and the carrying out of Environmental Impact Assessments at a level consistent with the likely impact of the proposal. With their increased autonomy, local governments will need assistance in priority setting; this could be provided by the MoE. 28. Criteria for establishing an investment program can be established including such indicators as pollutant toxicity, population exposed etc. To reduce toxic particulate emissions,of high priority are the rehabilitation of baghouses and electrostatic precipitators of metallurgical industries and coal fired thermal power stations, and reductions in emissions and waste of the refinery and petrochemical industry. While all should be studied, of low  xi priority would seem to be the completion of major municipal waste water schemes to a high level of treatment. 29. Only partial information in currently available on environmental investments. There are am yet no estimates of the likely costs of industrial restructuring or that of rehabi.._.tating or constructing priority municipal waste water treatment plants. In the electric generating sub sector, the annual costs to rehabilitate electrostatic precipitators are likely to be around US$20 - 30 million in 1991 prices for the next ton years. Using OECD experience, total annual expenditure on environment related investments could be of the order of 1% of GDP annually or US$200 - 250 million oqzivalent per year. This figure would include the environmental measures built i'nto the industrial restructuring process which in many cases, will also increase process efficiency. 30. Setting up an environmental fund is a useful mechanism both for providing some financing for environmental investments and also as a means to set priorities. The fund should be efficient, non-discretionary and should be transitional in nature. While initial funding will be from the budget, the fund will eventually receive revenue from economic instruments, including pollution charges and product taxes. 31. External financing should be pursued for some environmental investments; grant financing should be sought for professional services and training. The introduction of a sound environmental strategy with standards based on known health risks should not be overly influenced by total costs. Rather, compliance schedules should be used to stretch out the impact of the standards. 32. The MoE should set up an economics division and obtain technical assistance to develop methodologies for analyzing the impact of environmental measures and for screening proposals. The economics division would also be responsible for developing economic instruments. conclusiona 33. To sum up, the economy and the state of the environment are in transition. While toxic emissions and discharges which are a known hazard to health should be dealt with on an urgent basis (and most of these are in the Priority Areas) a gradualist approach should be adopted to enforcing environmental standards. Nevertheless, the transitional period should be seen as an opportunity to introduce environmental measures on a least cost basis into the process of change -- particularly in industry. There is therefore an urgent need to put an environmental framework in place including the introduction of an achievable law on environment and the strengthening of environment institutions. The Government should announce its intention to improve the environment in Romania and should use the following suggested 10 Point Plan of Action" for this purpose.  xii ROMANIA ENVIRONMENT STRATEGY "10 POINT PLAN OF ACTION" 1. By end 1992, enact general environmental legislation and between mid 1993 and mid 1994, introduce a mix of detailed priority administrative and economic measures. 2. By end 1993, remove any remaining subsidies and price support from activities having a negative impact on the environment. 3. By end-1992, take action in the Priority Areas to reduce to safe levels emissions/discharges and waste which are extremely hazardous to health Direct budget support should be considered for the most urgent actions. 4. By end 1992, introduce measures whereby, in accordance with certain criteria; (a) industry and energy will conduct audits of their environmental performance; and (b) acceptable least cost environmental measures will be included in the industrial and energy restructuring and development and privatization process. S. By end 1992, commence the upgrading of existing environmental institutions and institute training programs on the basis of integrated environmental management. 6. By end 1992, set environmental ambient and emission standards consistent with those of the EC or similar as targets to be achieved in accordance with individual source and area compliance schedules; and, with the exception of S02, with achievement at the latest by 2005. 7. By end 1992, introduce and commence enforcement of the occupational health and safety standards and begin to take action to reduce the more obvious health risks to workers. 8. By end 1992, ensure NGO and public participation in environmental management with adequate information being made available to them. 9. By mid-1993, include measures within agricultural policy to reduce environmental degradation within the sector and the, environmentally degrading spillover effects from agricultural activities. 10. By mid-1993, prepare detailed strategies to protect and manage ecologically sensitive areas (including the Danube Delta), coastal zones and cultural heritage. Prior to mid-1993, using a step by step approach but on an urgent basis, the strategy should initiate management, planning, staffing and protection measures at area level.  ROMANI-A ENVIRONMENT STRATEGY PAPER The Setting 1. As with other Eastern European countries, pollution is generated mainly by industrial, energy and urban sources and is severe but localized. There are about fourteen areas of severe localized pollution and environmental degradation and these are known as Priority Areas (Annex 3 and Map). Typically, these are the areas. in which major industry is located. In the north west, Baia Mare is the more notorious with emissions and waste from copper and lead smelting. At Zlatna, the pollution is generated by aluminum smelters, and at others Ploesti and Pitesti, the pollution is generated by refining and petrochemical complexes. Concentrations of toxic air pollution are particularly high near non-ferrous smelters. For example, in Copsa Mica, each year up to 280 tons of lead have been discharged into the atmosphere resulting in lead levels in children being four times higher than normal. Over long distances, rivers are severely polluted and lifeless, carrying much of their industrial pollution to the Danube (and to the Black Sea). Emissions of oxides of sulphur and particulates from energy producing sources are high and the latter severe. Sanitary disposal of solid waste is minimal; the management of hazardous waste is unsatisfactory. Ground water is reported polluted in several areas and non point source run-off from agricultural chemicals is contributing to river pollution and eutrophication. Further pollution information and data are included in the body of the report. 2. The Government has recognized the need to address environmental concerns and several initiatives are underway. A Ministry of Environment was created in 1990, and a new environmental law is under discussion. In the Priority Areas, pollution has lessened but still exceeds WHO standards. Most enterprises are aware that restructuring will require the incorporation of environmental controls and some have prepared plans for these. 3. Given the changing circumstances, the thrust of the ESP is action oriented and its recommended Plan of Action is considered its prime objective. The environmental issues faced in Romania are similar to those faced by other Central and Eastern European countries. For this reason, the ESP concentrates on developing approaches to address these issues rather than detailing a past situation only too well known to the Romanians. 4. The report is in seven sections as follows: I POLICIES II THE PRIORITY AREAS III LEGISLATIVE and INSTITUTIONAL ASPECTS IV ENVIRONMENT MEDIA V PUBLIC PARTICIPATION AND NGOS VI INVESTMENT STRATEGY VII THE PLAN OF ACTION  2 I. POLICIES A. Macroeconomic Structural Adiustment and Imoact on Environment. 1.01 Romania has embarked on an ambitious macroeconomic adjustment program to transform itu economy from a centrally planned to a market economy. The adjustment program is being supported by a second IMF Stand-by, and a World Bank First Structural Adjustment Loan currently under preparation. The scope and timing of environmental improvement measures should be closely linked with the pace of the transition to a market economy. 1.02 In the past, Romania war insulated from changes which had a major impact on OECD countries in the 1970e and 1980s. The steep increases in world energy prices led to restructuring of inefficient industries, and the shift towards more service oriented products. Romanian industries made no efforts at restructuring to save energy and other inputs, because these were obtained at very low prices. In addition, the barter trade arrangements with its former CMEA partners obscured the true costs of inputs to Romania. The policy of self- sufficiency at any cost adopted by Romania from the early 1980s exacerbated inefficiencies throughout the economy. This has led to intensity of energy use in Romania 3-5 times those of OECD countries. As a result, the environment has suffered serious degradation. 1.03 The policies of growth with no regard to environmental costs are of the past. In view of the significant damage done to the natural environment, the Government is committed to a future development policy that integrates environmental considerations. Such a policy would enable conservation of natural resources, avoidance of irreversible damage to the environment, and achievement of long term sustained economic growth. Without such a development strategy, the cost of restoration of the natural environment in the future will be prohibitively expensive. Moreover, in the long run, economic growth would decline with the continued use of the environment as a sink. 1.04 The introduction by the Government of policies that now force producers to compete in open markets should lead eventually to restructuring away from heavy industries and towards generally les polluting lighter industries and services. Favorable impacts on the environment will come mainly from price liberalization and remove of subsidies; privatization, ownership, and competitive markets; taxation ind the reform of interest and exchange rates. The impacts of these policy changes, so far, can be seen in the down-sizing of operations _n a number of enterprises and outright closures for reasons of unacceptably high inefficiencies, uncompetitiveness and pollution impacts. About 30% of copper smelting, 40% of aluminum smelting, and about 50% of lead and zinc processing capacities have so far been closed for a combination of the above reasons. It is, therefore, imperative that, prices of energy, other industrial inputs, water, forestry and other natural resources be raised and maintained at economic levels. Specifically, all remaining subsidies on energy products should be reduced by 50% by end-1992 and, by end-1993, electricity, coal and natural  3 gas, wood, water and other natural resources should be priced at economic levels (Action 2 & 3).3/ The Influence of Reforms 1.05 The case of the former East Germany is an example of how sweeping macroeconomic reforms can impact favorably on the environment. Until recently, air pollution was a serious problem in East Germany due to the high levels of pollutant emissions from industrial and thermal power plants. The radical macroeconomic reform has resulted in the closures of some unacceptably high cost and highly polluting industries. 1.06 Figures 1-4 also show the likely impacts on energy demand and pollutant emissions of macroeconomic reforms - mainly the adjustment of energy prices to economic levels and introduction of hard budget constraints - on enterprises. This was based on a study by the Vienna Institute of Economics of the CMEA-7 countries. The study considered energy demand under two scenarios: (i) continuation of command economy; and (ii) radical deregulation of all energy prices. These scenarios should cover the likely spectrum of actual political events expected to range from continued central planning over muddling through, and to radical deregulation. Figures 1 and 2 compare energy demand under the two scenarios, and 3 and 4 show emissions by type of pollutant. Thus deregulating energy prices will encourage conservation and substitution - oil and gas instead of coal and lignite, and all types of emissions are reduced consequently. Although, the assumption of rapid transformation to a market economy is optimistic, it is to illustrate what might happen if such a scenario was to hold. What may actually happen, in the case of Romania, lies in between these two scenarios. 1.07 Favorable impacts on the environment also come from the changes and developments in sectoral policies introduced by the Government. Those policy changes are encouraging enterprises, in the short term, to adopt good operating management actions to save on inputs to enhance their competitiveness and survivability. The present stock of industrial capital in Romania is ill-adapted to the new relative prices of inputs and energy. Across the manufacturing sector, longer term actions are being initiated for restructuring. This will lead to modernization of technological processes for improved efficiency and favorable environmental impact for those that can survive a competitive market system. Yf This need for a stepped approach in consistent with the SAL and was a point strongly made during the May, Workshop.  4 XK.0.T.O.L _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ scoo H 1500 - 1000 ,) . .. n