Country report: Estonia 01.06.2001
Background
Estonia submitted its application for EU membership in 1995
and signed the Association Contract (European Contract) in 1995. In December
1997 Estonia was chosen as a first wave accession country, and accession
negotiations started in March 1998.
The basic document for the use of pre-accession funds, the
National Development Plan (NDP) was finalised in September 1999. For SAPARD, a
Regional Development Plan was completed in 1999, and ISPA projects were
prepared and presented to the Commission by the ministries of Environment and
Transportation. The PHARE SPP (Special Preparatory Program for Structural
Funds) is being carried out to prepare Estonia for the upcoming Structural
Funds. Although there have been delays in the formation of the entire
institutional set-up (especially the auditing and monitoring mechanisms and
fiscal schemes) it is almost completed at the time of writing.
The Estonian Government is not actively involving NGOs in
the process of selecting and preparing of projects to be financed from pre-accession
funds. There is no pro-active dissemination of information on pre-accession
funds, although some information may be found on various state institutions' websites.
There have been several cases when information requests by NGOs about
pre-accession funds were not replied to at all. There have also been cases (for
example, NDP documents) where the Estonian and English language versions of the
same document were slightly different from each other. More recently the
Government included representatives of NGOs to the ISPA environmental monitoring
sub-committee and SAPARD monitoring committee. However neither the national
ISPA national monitoring committee nor ISPA transport monitoring sub-committee
have NGO representatives.
Such shortcomings are creating tensions as people do not
have a sense of "ownership" of the projects. To avoid conflicts, the
Government (especially the Ministries of Finance, Environment, Transportation
and Agriculture) should actively distribute information about the planning and
use of pre-accession funds. NGO representatives must be included to the
committees dealing with the identification of projects, and during the
monitoring and evaluation stages of the projects.
Portfolio overview and possible
environmental consequences
It is almost impossible to estimate all the consequences of
joining the European Union, the EU itself is in a state of constant review, and
the entire enlargement process is extremely complex. The use of the well-known
precautionary principle for Estonian EU accession process would therefore make sense.
Currently the Government is pushing hard for a quick process and the quality of
preparations and negotiations remains low. The environmental impacts of the
enlargement should also be carefully assessed before any further decisions
about accession to the EU are made.
Estonia's environment will be most directly influenced by
the implementation of the EU’s environmental aquis
communautaire. With more than 200 legislative acts,
the environmental aquis is complex, and it will take years before Estonia will
manage to incorporate it fully into the national legislation. Generally the EU
environmental standards are stricter than those in Estonia and their implementation
will have a positive effect for Estonia's environment. At the same time, a
transition period should be applied for Estonia's industry to remain
competitive. .
The EU has offered its financial assistance for the full
implementation of investment-heavy EU directives (for example those dealing
with drinking water quality 80/778/EEC and waste 91/156/EEC). The 2000-2006
budget for the EU pre-accession fund ISPA (Instrument for Structural Policies
for Pre-Accession) earmarked for environmental projects in Estonia is
approximately 1.6 billion Estonian Kroons (110 million Euro). This is a rather
large amount of grant aid, as the total amount of foreign grant assistance to
Estonian environmental projects during the last decade amounts to 2 billion
Estonian Kroons. Out of this 2 billion about 1/3 came from the European Union.
It is estimated that Estonia will receive approximately 56
million Euro per year from EU preaccession facilities - about 30 million Euro
from ISPA, 12 million Euro from SAPARD and 24 million Euro from Phare 2000+.
Water and sewage projects
On the one hand, the environmental impact of sewage system
renovation projects, which will be financed by ISPA in the cities of Tartu,
Narva and Viljandi (later possibly in Tallinn and Kohtla-Järve as well), is
indeed positive. However, the conventional treatment techniques and facilities
have already been chosen, and even if they are built largely with grant
assistance the future maintenance costs are to be covered by taxpayers and
users. In the long run it could turn out that conventional solutions are rather
expensive if compared to alternative solutions, such as the use of artificial wetlands
for wastewater treatment. The Government of Estonia should become much more
pro-active in searching for and proposing alternative solutions for wastewater
treatment projects to be financed by ISPA. Knowledge of ecological engineering
exists in Estonia, and there have been several alternative treatment systems in
place already for several years.
The Ministry of Environment has stated that because of the
high minimum level of ISPA projects (5 million Euro) it failed to present two
high priority projects for Estonia. Estonia is a small country and an
environmental project of 5 million Euro would be a very large project. Even
when the Government tried to group several municipal water and sewage projects
together under one title (for planned investments in water supply and sewage
systems in 17 and 24 towns) it could not meet current ISPA requirements because
it was a packet of small projects and not one big project. It seems that the European
Commission now allows for more flexibility regarding the minimum size of
projects and so hopefully Estonia will resubmit the proposal that was
previously rejected.
Waste handling facilities
The construction of new waste handling facilities and
landfills will indeed have a positive environmental impact. There are four such
projects proposed for ISPA financing: new Tallinn-Jõelähtme landfill (in
combination with the closure of the current landfill in Pääsküla), Pärnu
regional landfill, Vaivara hazardous waste management and Paldiski radioactive
wastes storage. Newly constructed landfills will decrease the danger of
leakages to groundwater, which is currently a major problem at Estonian
landfills. However, the replacement of hundreds of smaller landfills with half
a dozen new big landfills will raise waste transport costs and the service will
become more expensive for people. The higher waste handling prices may cause
some people to start dumping their waste in forests and fields around
settlements.
Unfortunately, some regional waste management projects were
left out of the ISPA financed project list because of the 5 million Euro
minimal limit for ISPA assistance. This poses a big problem for Estonia - there
have been sizeable investments (also from bilateral grants and loans) for
water, sewage and waste management projects in larger cities. Yet it has been
very difficult to finance similar projects in smaller towns where these
facilities are either in very poor condition or do not exist at all.
Transport sector projects
While the state of Estonia's environment will definitely
benefit from environmental projects that will be financed by the EU ISPA
pre-accession program, there are developments in other sectors such as transportation,
energy and agriculture that may decrease this positive trend. Half of the 3.2
billion Estonian Kroons that ISPA is providing to Estonia in 2000-2006 must be
spent for transportation infrastructure projects. There is not much choice on
what kind of transportation projects to finance from these grants. First of
all, projects creating links with Trans-European Networks (TENs) are eligible.
TENs have been under severe critique by West-European NGOs for a decade
already, as these projects are pushing for ever increasing long-distance
freight transport with an emphasis on the construction of road networks,
instead of more environmentally friendly rail connections.
In Estonia, the Via Baltica road project (Tallinn-Pärnu-Ikla
and Tallinn-Narva) will be financed by the ISPA fund. An ISPA grant may be
requested for another road project, establishing access to the Port of Tallinn.
However, as ISPA regulations do not allow for the financing of street
construction in urban areas the latter project may fortunately not get funded.
Unfortunately, ISPA support cannot be used for the upgrading of public
transportation systems. Such investments are badly needed, especially in the
city of Tallinn. One of the urban projects in Tallinn that needs such large
scale investment is a fast tram connection from Lasnamäe to the centre of the
city.
Fortunately, the Government of Estonia has also proposed
several rail development projects for ISPA financing, although none of them
have yet been approved by the European Commission. These projects include
rehabilitation of the Tapa-Tartu railway line, construction of the Koidula
railway border station, the Tapa railway yard reconstruction and construction
of a new 6.5 kilometre Tallinn railway bypass (Saue-Männiku). Loans from the
European Investment Bank (EIB) have been used for upgrading of the
Tallinn-Narva rail line. As such it seems to be a positive development, but the
idea for this rehabilitation is to enhance the capacity of this rail line to
increase the environmentally dangerous oil traffic from Russia to ports in
Tallinn. Instead of rehabilitating this line, the Government should invest
(using bilateral grants and loans if needed) in major upgrades of passenger rail
services, including electrifying the rail line from Aegviidu towards Tapa,
which would allow for cheaper running costs for passenger trains. Cost-benefit
analysis should also be initiated to consider financing of missing railway
connections Valga-Mõisaküla and Mõisaküla-Viljandi.
Although the negotiations with the European Commission are
still in the early stages the Government of Estonia has indicated its interest
to apply for ISPA financing for the construction of a bridge that would create
a connection between Estonia's mainland and its largest island, Saaremaa.
Construction of the bridge, with a length of some 6-10 kilometres, would cost
at least 1.5 billion Estonian kroons (100 million Euro). The bridge would have
adverse environmental and social consequences. As similar cases from Europe
have shown, the bridge will become a major threat to migrating birds, especially
during the night-time. During the construction the seabed and water ecosystems
will be under a great deal of pressure. If the connection with the islands Muhu
and Saaremaa will be realized then the volume of visitors and tourists would
drastically increase, causing great stress to the islands' unique and
vulnerable ecosystems. Currently there is a ferry connection which is limiting
the number of visitors to the islands. Due to the environmental and social
problems, as well as high costs, related to the project, the bridge should not
be constructed.
Agriculture sector projects
For the financing of agriculture and rural development
projects in accession countries the EU had set up another pre-accession fund
SAPARD. Total support of SAPARD available to Estonia in 2000-2006 is 1.2
billion Estonian kroons (80 million Euro).
In order to qualify for the SAPARD support the farmer or
rural entrepreneur has to come up with 25-50% of co-financing and even then the
EU support will be transferred only after the proposed project is successfully
implemented. Such a set-up makes it almost impossible to finance small-scale agricultural
projects. With such harsh financial conditions big farms dealing with intensive
land use will be favoured.
Estonian agriculture has become much more
environmentally-friendly as the use of fertilisers and pesticides has dropped
twice during last decade. There is however a threat that with SAPARD financing
and other financial support schemes small farms will start to merge and
large-scale agricultural enterprises will intensify their production, using
more fertilisers and pesticides. In such a way, eutrophication of water in
water bodies may accelerate due to the increasing amount of nitrogen coming
from agricultural lands. The increasing use of fertilisers may also affect
groundwater quality.
It is very unfortunate that environmental projects are not
listed among priority activities eligible for SAPARD support in Estonia. It is
crucial that SAPARD support should become available for smaller scale projects
and small farms. Alternative activities (such as ecological agriculture) should
be promoted and supported by SAPARD pre-accession mechanisms.
Nature conservation
Nature conservation projects are generally not eligible for
financial assistance from EU pre-accession funds. There are however other
financial sources of the EU that are providing such assistance to Estonia. For
example, the LIFE programme of the EU is supporting Estonia's preparations for
the Natura 2000 network. There is however a lack of financing for the quick
implementation required of the EU birds directive (79/409/EEC) and habitats
directive (92/43/EEC). The pre-accession fund PHARE is involved in the Nature
2000 preparation in Estonia, but much more could be done if greater support
from pre-accession funds would be directed to nature conservation projects in
Estonia.
Although Estonia has requested a longer transition period
for the implementation of the birds directive and the habitats directive (up to
2010) the European Commission will not allow any transition periods in these
areas, and financial assistance will be badly needed.
Conclusions
One of the key priorities for the Government of Estonia is
to complete accession negotiations with the EU as soon as possible. There is
clearly a rushed process, which poses questions about the quality of preparations
for transposing EU legislation. Chapter 22 (environment) negotiations between
EU and Estonia were closed on June 1, 2001, despite concerns raised by Estonian
NGOs over the rush and lack of quality. Although there are many good
environmental projects to be financed by the EU preaccession funds in Estonia,
some developments in other sectors (especially in transportation) will clearly
have adverse environmental impacts. It is therefore vital that a thorough
environmental assessment (possibly a Strategic Environmental Assessment) be
conducted for the EU accession. So far only an inadequate Environmental Impact
Statement for the Estonian National Development Plan was prepared in late 2000.