Solutions on Pollution Issue

Funding is the most important factor in order to improve the current conditions of Vietnam. Seven principles which pollution control funds should aim to follow can be drawn from the decade of experience with environment funds of various kinds in Vietnam.

To be effective, EPFs should:

1.Have a clear and overriding objective of pollution reduction and prevention.

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2.Work according to a comprehensive pollution control plan of government which is based on credible and systematic priority setting procedures.

3.Integrate with the government pollution control and management institutions and procedures.

4.Include a strong parallel technical support facility.

5.Promote and help implement cleaner production technologies and practices.

6.As far as possible, work through existing governmental budgetary mechanisms.

7.Operate with strong transparency requirements and the obligation to regularly report on their activities to stakeholders.

The main purpose of a pollution control fund must be to prevent and reduce pollution.The primary consideration of a pollution control fund should be how best to use its resources to achieve the maximum pollution reduction in the most efficient and effective way within the fund’s design lifetime.

That objective should not be compromised even if it may require setting aside market competition principles on a case by case basis.For example, if for reasons of employment a decision is made to allow a seriously polluting firm to continue operating it may be necessary to provide a one off grant and/or loan to assist the firm meet pollution standards.It should not be permitted to continue polluting and placing workers, the local community and the environment at risk.

The financial support would be a one-off transitional subsidy provided for the wider social benefits of maintaining the operation as an employer and producer in the economy.The fund’s pollution control objective is paramount even if in the short term it may appear to be giving serious polluters a competitive advantage over other firms with a good environmental performance.In practice, international experience has shown that one-off subsidies of this kind have little influence on competitive forces within the market.

Funds must be linked to credible and systematic priority setting procedures.To be effective a fund must draw on a set of clear priorities that identify the most serious polluters as part of a government’s pollution control plan. Where resources are scarce, managers must tackle the most serious polluters.Establishing and maintaining a priority listing requires a number of steps. First, an audit of polluting firms in the area of operations of the fund is needed to find out who the firms are (their location, size, sector, ownership etc.) and the nature and extent of their pollution.

In setting priorities pollution load and the relative toxicity of the pollutants are important measures. Additional criteria for the selection of pollution control priorities include, the extent to which polluters are in environmentally sensitive areas, sectors which are either expected to grow quickly (for example, food processing in Vietnam’s case) and sectors that are regarded as strategically important for long term development (for example, the petrochemicals sector). Second, polluting firms identified in the auditing process need to have their requirements for pollution control facilities and staff training assessed, and the likely cost of the provision of these facilities estimated.

Finally, the financial situation of the firms needs to be investigated including their ability to repay loans, and whether the production facility itself is viable. As pointed out under principle 1, in special circumstances, firms which are marginal economically may be supported if there are other social, economic and political considerations which justify subsidies but where serious pollution must cease.Funds must be well integrated within the overall government pollution control and management institutions and procedures.

A pollution control fund needs to be built into the broader institutional and management environment in which it will function, so it supports and actively engages with host environment institutions to raise their capacity and reinforce their policy and planning priorities.

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