Public subsidies

A subject of wide discussion today is how to integrate environmental concerns
with the economic policies in developing countries. Many developing countries
have formulated environmental control rules and regulations, and national
environmental action plans. However, the effectiveness of these measures in
solving environmental problems has been limited due to weak institutional
structures and high costs involved in implementing the regulations and programs
formulated. In this context, potentially cost-effective solutions such as market based
measures, and policy mix of regulations and incentives, are now widely
being recommended as major tools for environmental policy integration.

The existence of policy distortions such as in price and property right policies
often hampers the process of environmental policy integration. This study is aimed
at analyzing the existing distortions and their environmental impacts in different
sectors of the economy in Nepal. Measures are suggested for environmental and
economic policy integration at both the sectoral and economy-wide levels and
research themes are identified that will contribute to achieving those objectives in
Nepal.

This study also aims at giving an overview and analysis of the present status
of environmental economics initiatives in Nepal. It was executed mainly by doing a
literature study and using existing materials available in Nepal and in particular in
the IUCN Nepal Environmental Economics Programme.

Economic Development and the Environment
The first part of the study emphasizes that the developments of the economy and
protection of the environment are moving in opposite directions. However,
sustainable economic growth requires alternative measures so that the environment
will not be negatively, and will preferably be positively, affected by development
process.

Pricing Policy
Analyses have shown that subsidies and taxes in every economic sector that may
leave a positive initial effect on the economy (sometimes putting a big strain on the
government budget) because an adverse impact on the environment. The
degradation of soil, water, biodiversity, air and other natural resources often entails
high future costs and thus leaves a negative impact on the economy in the long
term. These pricing policies are not sustainable.

Economic Valuation
It was realised that economic valuation of natural resources can contribute to
further quantification of environmental impacts in each sector of the economy.
Several methods of valuation can be categorized in the Physical Linkage and
Behavioral Approaches.

The methods in the first category create cause-effect relations of events in
the past and use the principle that the value of averting the environmental damages
equals the costs that would be incurred to mitigate the potential damage. An
example is establishing an environmental-economic link between environmental
degradation and productivity. The methods in the second category measure
people’s preferences, assuming that these represent the value they attribute to
different scarce goods (including environmental goods). The application of these
methods is hampered by a lack of information, undeveloped and distorted markets
and a low level of education and awareness. These methods are subject to wide
debates.

Policy Prescriptions
A constellation of policy prescriptions is also presented for environmental policy
integration in each sector of the economy for Nepal. These include fiscal and
economic measures for working towards a sustainable agriculture, greening of
degraded forest lands, making urban transport more environment friendly, greening
of industries, and managing water to meet the growing demands. It is suggested
that in-depth studies in each sector are useful towards designing and implementing
various measures outlined for policy integration.

Green Accounting
Introduction of the Green Accounting concept can correct the current
misleading calculation of GDP and make explicit the cost of environmental
degradations and resource depletions that occur simultaneously with economic
growth. This concept can be an important tool for policy integration.
The existing analytical frameworks for national accounting are comprehensive
but complex and use is suggested of a partial approach for changing the System of
National Accounts in Nepal. Data compilation, calculation, analysis and policy
integration are provided for several important resources. The practical framework
designed consists of basic steps for building environmental statistics, applying a
Geographic Information System (GIS) for physical accounting and methods for
arriving at environmentally corrected GDP.

Research on Environmental Economics has often been limited by financial
constraints. Previous studies give only an overview of the problems. The priorities
for in-depth research on environmental policy integration have so far been
identified in the areas of: quantification of environmental impacts of perverse
incentives, estimation of incremental costs of biodiversity conservation, implement
action of the Environmental Protection Act (1997) and measurement of the
impacts of international trade agreements on environment and of the
environmental policy on trade competitiveness.

It is proposed that these studies be performed by IUCN Nepal, and
governmental agencies in collaboration with national and international institutions
to obtain sufficient insight into the cause and effect relationships between the
economy and the environment.

Provided by donors, multinational and UN agencies. Identification of which
environmental research areas are most vital to society is one of the basic steps for
efficient utilization of available resources. In this section, several specific areas are
outlined for in-depth research and analysis in order to design and implement cost effective measures for reducing natural resource scarcity and improving
environmental conditions. Box 6.1 provides six major research priorities suggested
for environmental policy integration in Nepal.

There is a presumption that all financial aids granted by the State or through State resources to certain service providers have a negative impact on the competition between Member States. Even smaller aids in the transport sector may have a distortive effect. In this context, the stand-still clause in article 108(3) TFEU shall ensure that the presumptive negative effects are held under control and the principles of proportionality, transparency and non-discrimination are observed as well. The scope of the prohibition rule in Article 107(1) TFEU has nevertheless been narrowed in the case law and according to this amended definition of State aid for public service interest, the focus falls on the existence of a real advantage granted by the public authorities instead of the distortive effect of the financial measure under review. The existence of a real advantage has to be disclosed by applying a simple formula that inputs the necessary costs, the reasonable profit and the possible extra-revenues incurred in fulfilling public service obligations.
May this formula be too simple in order to ensure an effective control of State aid? Should the legal approach adopted by the case-law be tuned according to the effect doctrine? These are the main questions that the present study endeavours to answer.

SUMMARY
The privatisation of Melbourne’s trams and trains has been an expensive failure. By
June 2006, the privatised system will have cost $1.2 billion more in public subsidies
than continued operation by the former Public Transport Corporation; by 2010 this
difference will blow out to $2.1 billion. This is not counting the above-inflation fare
rises at the end of 2003. Services have not improved, despite claims to the contrary;
nor are the claims of a capacity crisis on the rail system correct. Private bus services
consume large subsidies to provide poor services which carry low patronage levels.
Private operators are blaming the system’s problems on insufficient subsidies, and
are lobbying for increases. But the reverse is the case: train, tram and bus operators
will receive $1.2 billion this year in subsidies and fares – more per head than firstclass
overseas public operators such as Vancouver’s Translink.
Privatisation has not served the public interest. The State government is preparing a
‘transport and livability statement’, which will reiterate proposals for public transport
improvements and extensions from previous documents, such as Melbourne 2030
(released in October 2002). Regardless of the merits of these proposals, they cannot
be delivered affordably or effectively under the current institutional arrangements.
The tram and train franchise agreements were released (quietly) late last year and
we have analysed their contents. The franchises will expire on 30 November 2008,
unless the state government gives notice that it wants to extend them. Such notice
must be given by 30 November 2007 (only 19 months from now), but can be given at
any time. If no such notice is given, then Melbourne’s trains and trams will revert to
public ownership at 3am on 30 November 2008 without the risk of compensation
claims.
We recommend that instead of extending or renewing the franchise agreements, the
state government replace them with a new public transport agency modelled on the
very best in the world, such as those in Vancouver, Zurich or even Perth. We make
detailed recommendations about the best way of establishing a dynamic, efficient,
accountable public body to spend the annual $1.2 billion budget.
The new public transport agency would have a small staff, no more than 30 or so,
selected from the best people in the world. It would also have a governing board that
meets in public and shares information with the public. The agency would need to be
established well before the franchises expire in 2008, so it could ‘hit the ground
running’ when it takes over the operation of services. It would then be charged with
upgrading, integrating and extending trains, trams and buses to world’s-best
standards.
We are presenting these proposals to the Victorian community and the state
government for consideration between now and 30 November next year (the last day
on which the government can give notice that it wants to extend the Yarra Trams and
Connex franchises). In the meantime, we call on the government not to extend the
franchises, so the community has a chance to have a say about putting the public
interest back into public transport.

The goal of this study is to suggest a new approach, called metabolism of
research organizations, which analyzes how labs consume public funding to manage
their structures. A case study of one of the biggest European public research organizations
reveals that public funding for research is mainly used for the cost of personnel,
which has a growth rate higher than revenue (state subsidy and public contracts over
time). This imbalance of growth rates within public research body under study seems to
be a source of organizational inefficiencies. This new approach can support best
practices of R&D management.

This paper examines public work programs, wage subsidies, and tax credits under enabling state public assistance subsidization governance to enable young third-country immigrants' (TCIs) transition to work in Austria, Finland, and Czechia. Existing research pointed to enabling state market-based subsidization governance that stimulates employment but faces implementation challenges. Based on documents analysis, this paper concludes a convergence of the selected entities towards conditional hiring subsidies regulatory governance with lack of transparency that administers young TCIs transition to work. However, Finland differs from Austria and Czechia with maintenance subsidies earmarked to recruitment, job rotation and sharing, whereas Austria and Czechia focus on recruitment. The outcome points to recommodification of labour. This is relevant to selective targeting in a neo-liberal real politic setting, but imperative to inefficiency and divisiveness that may impair vulnerable people's labour market participation, penalize belongings, jeopardize sustainable finance, social cohesion, and open democratic values in contemporary crisis-related society.

Co-written chapters include:
- General principles of government in intervention in housing
- The European Experience (Typologies and European housing policies;  Financing and Subsidy; Distributional Issues; Emerging cross national trends
- The European Union and Brazil dialogue (Key areas for dialogue between Brazil and the European Union)