Экономические науки / 13. Региональная экономика

Cherednichenko I.G.

Public institution “Institute of environmental economics and sustainable development of national academy of sciences of Ukraine”, Ukraine

 

 

Sources of funding for water supply projects and programs for water conservation in the Dnieper basin

 

Dnieper is the main water artery of Ukraine. The water intake area of Dnieper is 504, 000 km2, of which 19 % is Russian, and 23% Belarusian territory. By the channels Dnieper-Donbass, North Crimean, Kakhovsky and the watercourses Dnieper-Kirovograd, Dnieper-Mykolaiv, 3-6 km3 of water flow are redeployed outside the basin area. The main industrial output with a predominance of metallurgical, chemical and coal industries, the largest power facilities and irrigated lands are concentrated in the Dnieper basin where local water resources are substantially lower than the requirements in them.

According to our data, the Dnieper’s water resources cover 64% of national needs, including 69% of industry, 76% of energy, 63% of iron and steel industry, 50% of chemistry and petrochemistry, 66% of agriculture (of which 79% for irrigation of lands) and 50% of municipal needs.

The largest pressure on the water resources is at the section from Dniprodzerzhynsk hydro-electric power station to the Dnieper estuary. Here the non-recoverable water withdrawal amounts to nearly 75%, and the discharge of polluted waters to 82% of their overall volume in the basin. The main volume of the non-recoverable water withdrawal is generated in the Dnipropetrovsk (14%) and Kherson (23%) regions as well at the water transmission by channels. The industrial enterprises of the Dnipropetrovsk and Zaporizhia regions are responsible for the majority of pollution of the water resources of Dnieper; they account for some 70% of the polluted effluents in the basin.

Consequently, the problem of water supply to the water users in basin in the required quantity and of the specified quality is of national and international importance. Thus, in our opinion, it would be logical to conduct an analysis of systems of financial support for the water economic complex in the countries located within the Dnieper river basin.

The Nationwide target programme of the water management and environmental rehabilitation of the Dnieper river basin for the period till 2021 maintains that the measures financing is carried out at the expense of state and local budgets as well as of other sources not prohibited by law. The scope of financing is determined annually during preparation of the draft law on the State Budget of Ukraine for the respective year taking into account the real possibilities of the state budget.

In accordance with the data of the Water strategy of Ukraine for the period of 2011-2020 years, it is envisaged to finance measures as to the modernization of the water-economic complex at the expense of the state budget, local budgets and extra-budgetary funds [1].

In parallel with the financing of the goals of the state level, it is planned to support the regions in the exercise of their authority in the sphere of ensuring the safety of hydropower facilities. In doing so, it is necessary to enhance the effectiveness of the budget expenditures that are effected in the form of subsidies.

In the context of the financial implementation of certain state authorities in the domain of water relations delegated to the local government bodies, the measures that are financed at the expense of the local budgets are secured by the respective increase of the amount of government funding. At the same time, the said increase can be partly achieved also at the expense of the budgetary redeployments.

The cost structure and main financing directions will be reviewed at various stages of the implementation of this Strategy, owing to the focused objectives designed to stimulate the attraction of private investments into the water and reclamation complex and improvement of distribution of authorities.

The extra-budgetary funds of predominantly business origin will be used for the introduction of the water reuse and water recycling and circuit systems, reconstruction of wastewater treatment facilities with implementation of innovative technologies.

Stimulating attraction of private investments into the water sector, also with a view to create the water reuse and water recycling and circuit systems, reconstruction and modernization of wastewater treatment facilities with implementation of innovative technologies shall be carried out through the provision of the state support in the following forms:

Subsidizing interest rates on loans taken out by water users for the implementation of the projects related to introduction of clean technologies and rational water use;

Granting of state guarantees for loans attracted by water users and used for financing of the investments into the water sector;

Establishing of grace periods for payments for the use of the water objects for the water users which implement investments into innovations into the water-economic complex;

Granting of publicly funded loans to water users.

Therefore, it is possible to draw a conclusion that the main source to cover the expenses for the modernization of the WEC are inter-budgetary transfers and increased tariffs for the water supply and wastewater disposal services for various groups of water users, resulting in the increase of social tension and reduction in the quality of services provided, taking into account the norms of the Ukrainian legislation as to the access of the citizens to good quality drinking water.

The availability of general water resources during the average water year in Belarus is 5,8  thou m3 per capita, in Europe as a whole – 4,6, in Poland and Ukraine – 1,7, and in the same time in Russia – 30  thou m3. The sources to meet the expenses of the modernization of the water supply and sewerage complex in the Republic of Belarus are funds of local budgets and private investors subject to provision for them of the appropriate conditions. Thus, А. Gurynovych stresses that the modernization and development of the WEC should be carried out in conformity with the estimate indicators of the master plans of development of area, building and sanitary laws and regulations as well as with the environmental requirements, taking into account the reliability of the said systems under influence of destabilizing factors of natural and technogenic origin. Pursuant to the Water Code and the Law of the Republic of Belarus “About drinking water supply”, the general government bodies, local Councils of deputies, executive and administrative bodies “should carry out development of programmes, planning of measures as to the rational use and protection of water”, “development and implementation of targeted territorial programmes and plans of actions in relation to creation, maintenance and development of the drinking water supply systems, improvement of the quality of drinking water and its rational use, protection of the sources of drinking water supply against contamination, obstruction and depletion, and of the drinking water supply systems against damage”, as well as “elaboration of the respective sections in the projects of social and economic development”. The above-mentioned provisions of the laws are not executed due to the absence of technical normative laws and regulations that would define the methodology, procedure of drafting, coordination and approval of targeted territorial programmes aimed at creation and development of the drinking water supply system, improvement of the quality of drinking water and its rational use, protection of the sources of drinking water supply against contamination, obstruction and depletion. The main emphasis as to the development of measures of state support for the financial rehabilitation of the WEC enterprises should be put on the formation of the market-based mechanisms of financing of the investment projects in the water supply and wastewater disposal sector [2].

The Water Code of the Republic (Chapter 20, p. 82) stipulates that financing of programmes and measures as to the rational use and protection of water is implemented at the expense of: the Republican and local budgets; the Republican and local budgetary targeted conservation foundations; funds of legal and natural persons; banking loans; voluntary contributions of legal and natural persons, including foreign ones, public associations; other sources. The water strategy of the Republic of Belarus for the period till 2020 maintains that the harmonization of the legislation of EU countries will assist in increase in the image and attractiveness of the country for increased investments into the country’s economy.

Consequently, the financing of the modernization of the water-economic complex of Belarus is secured by the international banking institutions (IBRD – Water Supply and Sanitation Project (ID P146493) – overall value 90 million of unit of exchange) and budgets of various levels and is characterized by the strenuous centralization of decision making as to allocation of resources by the responsible state authorities.

The financing of the water-economic complex of the Russian Federation is based on the targeted programme approach that was commonly used in the Soviet Union, at the same time, data on investments are publicly available [3], which is a sign of a European approach to the solution of the water problems. As indicated in the Programme [3], the Russian Federation is among the best resourced countries in the world in terms of water (20% of the world reserve of ground freshwater). The availability of the water resources across the country amounts to 30,2  thou cu m per capita p.a. which greatly exceeds a minimum established by the United Nations necessary to meet the demands – 1,7  thou cu m. However, these resources are distributed across the country’s territory very unevenly. In the developed regions of the European part of Russia where more than 70% of population and productive capacity are concentrated, only 10% of water resources are found.

Analysis of possible options to resolve the problem of financing the water-economic complex with the use of a targeted planning method is presented in the Concept of the federal targeted Programme “Development of water-economic complex of the Russian Federation in 2012-2020” which has been approved by the decision of the Government of the Russian Federation of 28 July 2011 No. 1316-р. During elaboration of the Programme, two options of development of the water-economic complex of Russia were considered.

The implementation of the inertia scenario provides for ensuring of water management goals and the use of existing instruments for public support to construction, reconstruction and repair of the water management infrastructure facilities.

The modernization scenario of the development of the water-economic complex provides for comprehensive water management activities relating to renewal and protection of the water facilities, overcoming local water deficit in certain regions of the Russian Federation, reduction in a number of unserviceable hydraulic engineering structures, including those without an owner as well as to development and modernization of the state supervisory network.

As an economic stimulus measure for attracting private investments to implement the above-mentioned activities, it is planned to use the instrument of subsidizing interest rates on loans obtained for implementation of the investment projects as to construction and reconstruction of sewage treatment facilities and introduction of water reuse and water recycling and circuit systems. The subsidy instrument provides for covering of a part of interest payments for the use of the borrowed funds at the expense of the budget funds in the amount of 3/4 of refinancing rate established by the Bank of Russia.

It is specified in the programme [3] that the expenditures of budgets of the Russian Federation’ subjects and municipal entities for carrying out activities in the area of water resources amounted in 2008 to 9,4 billion rubles, in 2009 to 9,9 billion rubles, in 2010 to 8,1 billion rubles inclusive of the subsidies mentioned as well as subventions for the delegated authorities of the Russian Federation in the sphere of water relations. At the expense of budgetary appropriations of the Russian Federation’s subjects and municipal entities, the financial provision of fulfillment expenditure responsibilities was carried out. However, these costs did not exceed 15-20% of value of measures conducted.

In general, in our opinion, the financing system of the water-economic complex of the Russian Federation is of two-fold nature; on the one hand, more rights are granted to the municipal entities which is confirmed by the source [4, p.4], and on the other hand – all projects require approval at the highest level, considerably complicating their introduction due to disparity of interests of federal and local authorities which is confirmed in the sources [4,p.3; 5, p.4]. It is obvious that, on the one hand, Russia aspires to an innovative development of its water-economic complex where interests of a personality will be primary, but on the other hand, it tries to maintain the hierarchical system of financing the water-economic complex of the Soviet Union where the interests of the state are predominant, which is quite logical taking into consideration the uneven distribution of water resources.

The accomplished analysis of the financial provision systems in the countries of the Dnieper basin has shown that the process of a systemic reorganization of approaches to financing the activities as to the implementation of the approved programmes of rational use, renewal and protection of water resources continues in all countries, however, in general the main source is the state budget and funds of international financial organizations.

 

References :

1.                Водна стратегія України на період 2011-2020 років (проект). Розроблено Інститутом водних проблем і меліорації НААН (М.І. Ромащенко, д.-р. техн. наук, проф., акад. НААН; П.І.Коваленко, д.-р. техн. наук, проф., акад. НААН Ю.О.Михайлов, д.-р. техн. наук) та Держводагентством України (В.А. Сташук д.-р. техн. наук, М..Я. Бабич). [Електронний ресурс] – К.:  ІГіМ НААН, 2010, Режим доступу –  http://www.scwm.gov.ua/fls/vdr.htm

2.                Гуринович А. Водоснабжение и канализация: проблемы и решения [Електронний ресурс] // Строительство и недвижимость. – 2008. – №3-4. Режим доступа – http://www.nestor.minsk.by/sn/2008/03/sn80311.html

3.                Программа "Развитие водохозяйственного комплекса Российской Федерации в 2012-2020 годах" [Електронний ресурс] // Федеральные целевые программы России – Режим доступу – http://fcp.economy.gov.ru/cgi-bin/cis/fcp.cgi/Fcp/ViewFcp/View/2014/403/

4.                Банщиков М. Основное взаимодействие сосредоточить на законодательной деятельности // Муниципалитет. – 2013.– №1. – С.3-6.

5.                Банщиков М. Системное моделирование развития городов: новый уровень стратегического муниципального управления. Доклад.  [Електронний ресурс]Режим доступу –  http://pismoref.ru/4151617361.html