Shamali F de Silva Environment and Social Development Unit East Asia & Pacific Region The World Bank August 1999 TABLE OF CONTENTS Acknowledgments ........................ ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 BACKGROUND . . . . . . . . . . . . ................................................................... 4 2 INTRODUCTION 2.1 What is Decentralization . : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.2 Rationale for Decentralization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . 5 2.3 Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3 DIFFERENT FORMS OF DECENTRALIZATION 3 .1 Deconcentration .................................... ·. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3.2 Delegation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 7 3.3 Devolution.......................................................................... 8 3.4 Privatization........................................................................ 9 3.5 Concession Agreements and Public-Private Partnerships.................... 9 4 WHY DECENTRALIZE ENVIRONMENTAL MANAGEMENT? . . . . . . . . . 12 5 DESIGN CONCEPTS AND CRITERIA FOR DECENTRALIZATION 5.1 Political and Institutional Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 5.2 Operational and Administrative Design......................................... 16 5.3 Fiscal Design.......................................................................... 17 6 SELECTED CASE STUDIES 6.1 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 6.2 China .......................................................... , . . . . . . . . . . . . . . . . . . . . . . 20 6.3 Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 22 6.4 Uganda.............................................................................. 24 6.5 Sri Lanka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 7 DESIGN FRAMEWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 27 8 CONCLUSIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 2 ACKNOWLEDGMENTS I would like to acknowledge with grateful thanks the guidance, direction and valuable comments given by P. Illangovan, Giovanna Dore and Tanvi Nagpal in structuring this paper and the staff of EASES for their assistance and good will. I would also like to express my appreciation to Kristalina Georgieva, Sector Director, EASES for the opportunity to carry out this assignment. Many people provided information and insights; among them are Dana Weist, Ernst Lutz, Jennie Litvak, Malika and Greg Guthrie. In addition, the publications referenced in the endnotes provided invaluable information, for which I am grateful to the authors. 3 Decentralization of Urban Environmental Functions -A Design Framework for Thailand- 1 BACKGROUND The Government of Thailand and the World Bank are currently engaged in a dialogue to improve environmental governance. In this regard, decentralization is one mechanism under discussion. This paper discusses the concepts, mechanisms and criteria involved with decentralization, including five case studies from Brazil, China, Philippines, Uganda, and Sri Lanka. It also recommends a design framework for decentralizing urban environmental functions in Thailand. The paper is divided in to eight sections. The first section deals with the background; the second with the definition of decentralization, rationale and implications; the third with the different forms and mechanisms of decentralization; fourth with the basis for decentralizing environmental functions, fifth with design concepts and criteria for decentralization; sixth with selected country experiences in decentralizing urban environmental and natural resources management functions; seventh with the design framework and eighth with the conclusion. 2 INTRODUCTION 2.1 What is Decentralization? The movement from central government and planning to a more participatory and equitable form of government emerged in the early 80s. Central planning had proved to be ineffective in combating poverty and promoting development in peripheral, rural and urban areas. Disparities between rural and urban areas in economic development and income levels had widened. Conditions and living standards of the local population continued to deteriorate. All these phenomenon called for a change in the organizational structure of the government and in cognizance of this the focus of development policy has been shifting towards empowering the local and subnational levels. Today, central governments around the world are decentralizing political, fiscal and administrative functions to subnational governments and in recent times even sectoral functions, with the objective of enhancing efficiency and equity in resource allocation and public service delivery. Many definitions of decentralization have emerged but for the purposes of this paper decentralization is defined as the transfer offunctions, responsibility · or authority including planning, decision-making and management from the central government to subordinate or subnational units of government, semi-autonomous public corporations, regional authorities, private corporations or non-governmental organizations. The key elements are that there should be a transfer of functions or responsibility and a recipient that is willing to accept the responsibility. 4 Ideally, for decentralization to take place in the true spirit of the concept, there should be an elected subnational government and an enabling legislative framework. There are several forms of decentralization and these forms are determined by the method and extent to which power is transferred. Examples are deconcentration, delegation, devolution and privatization, discussed further in Section 2. There are also several types of decentralization, such as political, administrative, fiscal or economic, that are driven by specific needs. Political decentralization aims to give citizens and elected local representatives more power in decision making and requires constitutional or statutory reform and the creation of local political units. Administrative decentralization deals with operational issues such as dispersion of responsibility, planning and management. Fiscal decentralization includes both the ability to mobilize resources and also accountability for expenditure. Economic or market driven decentralization is usually accompanied by economic liberalization and is often a default option that countries resort to when faced with economic or fiscal crisis. This type is most concerned with privatization and deregulation. i 2.2 Rationale for Decentralization General reasons for decentralization: In most instances, political motives drive decentralization efforts. However, there are other general reasons that can also be enumerated as being probable causes. They are: • To involve the people who are either most affected or are closest to the subject in the decision making process and subsequently in the implementation; • To enhance efficiency by better utilizing public resources; • To equitably distribute and allocate resources; • To improve transparency in all aspects of planning and management; • To mobilize support for national policies through local administration; • To eliminate inter-ministerial rivalries leading to conflict in implementation and excessive red-tape, bureaucracy, parochialism and politically motivated recruitment and promotion. In most instances, decentralizing resource management and allocation decisions to locally elected leaders and through them to the local citizenry can improve the match between local preference and service delivery, which in tum would add legitimacy to the decisions and ensure support for policies, projects and programs. Efficiency can be improved for the simple reason that local officials usually have a better knowledge of local conditions, are more accessible to their constituents and due to proximity, have the means and incentive to be responsive. They can also be held more accountable for their performances. Decentralization could also lead to more creative, innovative and responsive programs by allowing local "experimentation", which could result in significant breakthroughs in terms of cost effective solutions, effective environmental governance and enhanced local participation. 5 Some of the sectoral areas that have been and are being considered for decentralization are transport, environment, natural resources management, irrigation and water management, power and energy, agriculture, housing, education, health care and poverty alleviation. All these sectors have an impact on the local citizenry and through decentralization could ensure their input and participation, which in may enable the establishment of realistic goals and objectives that are specific to the local area as opposed to having ambitious 11 generic objectives set by the center. Specific reasons for decentralization: In Latin America, democratization and the move from military to civil rule has been the main force behind decentralization. Since 1983, decentralization has been transforming the structure of governance. The region has seen a consistent transfer of power, resources and responsibility to subnational governments. Examples are Argentina in 1983, Brazil in 1985 and Chile in 1992 . In addition, Mexico, Colombia, Venezuela, Chile and Bolivia have engaged in political, administrative and fiscal decentralization. The sectoral functions most commonly decentralized are primary. education, highway network, health care, public security, social services, water supply, sanitation and some urban environmental functions such as solid waste management and sewage treatment. In Eastern Europe, the transition from a command to a market economy has brought with it the transfer of many central functions to local and subnational units, no doubt spurred on by the international development agencies that are involved with structural adjustment efforts. Examples are Uzbekistan, Kyrgyz Republic, Russia, Latvia and Lithuania. In East Asia, the need to improve the efficiency of urban service delivery to rural areas has been the main driving force behind decentralization. Examples are Philippines, Indonesia, Thailand and in recent times China. In South Asia, decentralization is seen as a possible solution to ethnic strife. Sri Lanka is a case in point. Extensive devolution is being considered as a possible means of solving the ethnic crisis in Sri Lanka and constitutional reform translating this in to legislation is under way. However, even at present the legislative and institutional framework for decentralization does exist and there has been some activity in this area. It must be noted though, that India has one of the most developed federal systems of government in the world and has been engaged in decentralization of all types for many years. 2.3 Implications Since decentralization shifts the focus of accountability from the center to the local level, it could possibly limit the ability of the center to respond rapidly to economic change. Also, initially the administrative and technical capacities at the local level may be inadequate and the prevalence of diverse ethnic, religious and cultural beliefs may retard the process of arriving at a mutually beneficial implementation strategy. As a result, there is the risk that service delivery and resource management and allocation may decline. Since decentralization can affect a wide range of issues from service delivery to resource management to poverty reduction to macroeconomic stability, there are cross cutting 6 impacts. Many countries have grappled with considerable challenges even when decentralizing sectoral functions. Some of these challenges are wavering political will, ambiguous policy objectives, attitude of central governments, capacity of subnational units and the legislative framework. In the absence of clear empirical evidence and conflicting interpretations, it is difficult to surmise with any certainty the relationship between growth, development, efficiency and decentralization. However, there appears to be a growing consensus that decentralization holds considerable promise as an integral component of urban and regional strategies for sustainable development. In this light, perhaps decentralization can be viewed as a management reorganization tool of the public sector, in which the rules of hierarchical bureaucracy are replaced by a much more limited set of constraints on the autonomy and behavior of subnational governments. iii 3 DIFFERENT FORMS OF DECENTRALIZATION Decentralization can range from merely shifting routine workload from the center to the devolution of powers, functions and responsibility to elected subnational governments. There are five main forms of decentralization. As mentioned before, privatization and concession agreements are viewed more as economic or market based forms of decentralization. 3.1 Deconcentration Deconcentration is the weakest form of decentralization and merely disperses or redistributes responsibilities within the central government structure, to regional branch offices or agencies. It is a shifting of the workload from centrally located officials to staff or agencies outside the national capital. There is no .elected subnational government or any other autonomous body involved. The agencies are centrally controlled, but may have some discretion in planning and implementing programs and projects, within guidelines set by the central ministry. Countries such as Indonesia, Morocco, Pakistan, Sri Lanka and Philippines have extensively used this method. iv This form may not be the most desirable in the context of decentralizing urban environmental functions, since the center retains the powers, authority and the decision making ability. The regional or branch office merely carries out the center's instructions. Deconcentration does not usually envisage a consultation process with the local community prior to planning, designing or implementation of a project, program or policy decision. 3.2 Delegation Delegation involves the transfer of specifically defined managerial functions to organizations that are outside the central bureaucratic structure. In this situation, the delegated agent acts on behalf of the central government in executing certain specified functions. The agent may be able to operate outside of some central government regulations and use discretion, but the terms and conditions are usually specified in the 7 delegation instrument. The ultimate responsibility for the functions delegated remain with the central government. The enabling legislation to delegate functions must be provided in the central government ministry statute. In some countries, delegation is looked upon as a way of maintaining public control over highly profitable or valuable resources, while removing important operational and management functions from inefficient government bureaucracies. Many international assistance agencies have created semi-autonomous bodies to implement projects, so that loans and grants may be kept separate from the normal central government budgeting and accounting process. An example is the National Development Bank of Sri Lanka which was created by the World Bank to channel funds for private sector, industrial and financial sector reforms. In East Africa, special authorities have been created to finance, construct and manage physical infrastructure projects such as highways, dams, hydroelectric facilities, railroads and transportation systems and organize and manage large scale agricultural activities. In Latin America, governments have delegated a wide range of functions from production of inputs for industrialization to provision of social services. In Mexico, those that run businesses-airlines, banks, hotels, television stations etc are called parastate enterprises. They operate under commercial law but have government officials on the board and are subject to federal government regulations. Those that provide social services-health, education, social security etc, are called decentralized organizations and are structured as institutes with their own governing boards, sources of funding and legal status but are subject to administrative law. v Delegation has been used in some countries to promote high pnonty development objectives that could not be achieved by either the central government or the private sector. Also, temporary organizations have been set up to facilitate or expedite project execution or initiate politically sensitive activities and are phased out of existence after the delegated objective is attained. Delegation could work for environmental functions, the caveat being that the organization delegated to should have a great deal of discretion in decision making. This means the how, why, what, when and where should be left to the discretion of the organization, thereby exempting the organization from government procedures and bureaucracy. It would also enable the organization to obtain the best available technology and consult with local citizenry as well. 3.3 Devolution This is by far the most autonomous form of decentralization. In this situation, not only is implementation transferred but also the responsibility and authority. The local body is usually an elected subnational government that is autonomous and independent and has its own laws, regulations and guidelines. Subnational governments have clearly defined boundaries within which they exercise exclusive authority to perform explicitly devolved or reserved functions. They are authorized to raise revenues and even enact statutes applicable in their areas of authority for the sectoral functions reserved to them. They also 8 have the ability to deal with the central government and other units of government in the political system in a reciprocal manner rather than as a subordinate. The central government through the constitution or other enabling legislation is able to devolve the function or sector to the subnational government. However, after the powers and functions are devolved, the subnational government is completely responsible for the sector or function to the extent devolved. In Sri Lanka, similarly to Sudan, elected provincial councils have been given responsibility for a number of public functions. However, in Sri Lanka the Constitution dictates the list of functions that can be devolved to provincial councils, and the functions that must be retained with the center. 3.4 Privatization Privatization and Concession Agreements can be classified as forms of economic or market based decentralization. This form completely transfers responsibility from the public sector to the private sector. It is usually accompanied by economic liberalization and divestiture of government assets and responsibilities to the private sector. Privatization can include: (a) allowing private enterprises to perform functions that had previously been monopolized by government; (b) contracting out the provision or management of public services or facilities to commercial entities; (c) financing public sector programs through the capital market and allowing private organizations to participate; and (d) transferring responsibility for providing services from the public to the private sector through the divestiture of state-owned enterprises. 3.5 Concession Agreements and Public-Private Partnerships In recent times, central governments have opted to include the private sector in the provision and delivery of utility services to the community. This is different from privatization since the government does not divest itself of responsibility for the function. It essentially retains the responsibility but contracts the function to the public-private consortium that would often operate and manage the service. This is a means of garnering private sector funds for public infrastructure provision and could also result in the transfer of technology and skills essential for modernizing a lagging sector of the economy. However, it is essential the central government has well established regulatory agencies to monitor the performance of the consortium, since often deregulation is a precursor to concession agreements. Also, from the consortium's point of view the contract must be backed by a investment guarantee agency that would safeguard against possible national catastrophe's and change of policies. There are several types of concession agreements but the most widely used are the build- own-operate (BOO) and build-operate-transfer (BOT) mechanism or a variation of these 9 two combinations. Under BOO, the consortium builds the infrastructure and owns and operates it. The ownership vests with the consortium. However, under BOT the consortium builds and operates the facility for the government. The ownership is transferred after a specified number of years to the government. In both instances, the government could stipulate operational req~irements in the concession agreement, that are subject to monitoring by the regulatory agency. 10 Correlation between Forms of Decentralization and Transfer of Functions Form Decision Responsibility Planning/ Implementation Fiscal Local Examples Making Management Management Participation Deconcentration Rarely With center Limited Transferred Not Limited Regional/Branch transferred transferred offices of center Delegation Relating to With center Transferred Transferred Within limits Within limits Semi-autonomous specific areas org-Eg. NGO Devolution Transferred With sub Transferred Transferred Transferred Extensive Elected Subnational national unit or local Unit Privatization Completely With pvt orgn Transferred Transferred Transferred Depends on pvt Private sector transferred orgn Concession To the extent With pvt Within scope Transferred J'ransferred Depends on Pub! ic-private Agreements specified org/center of agreement agreement consortium (see agreement) Table 11 4 WHY DECENTRALIZE ENVIRONMENTAL MANAGEMENT? Decentralization of the environment sector has become increasingly appealing in the aftermath of increased degradation in air and water quality, depleting forest cover, land degradation, poor implementation of legislation, lack of enforcement and escalation of health problems related to environmental hazards. Central governments around the world have been at a loss to arrest the aforementioned problems, for one reason or another, despite the mega investment projects and programs funded through internal and external sources. According to the "Environment Sector Strategy Note" vi, the most significant urban environmental problems in Thailand are air and water pollution. Contributors to air pollution are increased traffic congestion and vehicular emissions, while untreated domestic sewage and industrial effluent are the main sources of water pollution. According to the Note, the urban poor bear most of the burden of a degraded polluted environment. This is all the more reason to decentralize urban environmental functions, so that the people most adversely effected by it can have a say in the management. The local citizenry together with local and subnational governments may be able to recommend viable solutions, that have eluded the center, simply because they are better acquainted with the problems. In this context, the paper focuses on how urban environmental functions could be decentralized taking in to consideration the need to attain environmental quality while minimizing public expenditure, improving governance, creating awareness and stimulating greater public participation. For the purposes of this analysis, the gamut of urban environmental functions envisaged are air quality management, water pollution control, hazardous waste disposal, solid waste management, industrial effluent disposal and noise pollution control. The recommended approach is essentially to have a strategic implementation plan which sets achievable activity and time targets and prioritizes reforms. Policy makers responsible for decentralization efforts must be careful not to do too much too quickly. Reforms that have the greatest possibility of succeeding in a relatively short time frame and have tangible results should preferably be undertaken first. In short, a phased in program would be ideal, since it would not only "test the waters" but prevent any immediate threat to the on-going system that could upset the existing balance of the center. 12 5 DESIGN CONCEPTS AND CRITERIA FOR DECENTRALIZATION There are three main design components. • Political and Institutional design • Operational and Administrative design • Fiscal design 5.1 Political and Institutional design Political The political design refers to the legislative mechanism and includes the constitutional, statutory and regulatory framework that establishes the parameters for decentralization. To set any decentralization mechanism in motion, there must be an enabling legislative framework. If not, it must be developed and ratified or adopted by the legislative body. In the case of deconcentration or delegation, usually the sectoral ministry of the central government may be able to transfer the function through its own sectoral statute, that would provide for the decentralization activity. However, devolution is somewhat different, since usually a elected autonomous subnational government is involved and also a complete handing over of the function is envisaged, rather than merely transferring some aspects related to the function. There are essentially three levels of legislative reform that would be required. • Constitutional - The constitution should enshrine the broad principles of decentralization, including the responsibilities of the center and the subnational or local unit. It should also state the basis for operationalizing the mechanism and establishing the rules. • Statutory - In some countries, there is a subnational government statute such as a Provincial Council Statute that sets the general powers, functions, duties and the local government administrative structure of the unit on a macro level as it relates to the state, province or municipality and then a separate sectoral statute that defines specifically the rules applicable to that sector. The subnational sector statute, such as a subnational environmental protection statute, would specify the composition in terms of staffing/key positions, appointments, reporting mechanisms, accountabilities, specific powers, functions/duties, fiscal systems and applicable procedures. • Regulatory - The statutory laws will specify the regulations required to operationalize certain aspects related to the function. These would take the form of guidelines to be adopted, standard applications, license forms, approval procedures, lists of waste streams, fee structures and charges. The point being to 13 specify by regulation detail practices and measures that may require frequent amendment, since it is usually less arduous to amend a regulation than a law. Institutional Framework Since decentralization for the most part is a political process, there are various actors and institutions involved. One objective is to reduce bureaucracy and bring back in to the mainstream, groups and regions that have been alienated. Institutional framework refers to the placement of the unit within the subnational government, composition of the unit, coordinating mechanism with the center, regional groups, private sector, local citizenry and public interest groups. Other key elements discussed here are capacity, training, transparency, accountability and participation. The placement and composition will be provided for in the enabling local or subnational Statute. The coordinating mechanism with stakeholders may be included in the regulations stipulating the operational guidelines. Four fundamental functions that institutions must be able to do in order to reach their objectives are: • decision-making, which includes planning, management and evaluation; • resource mobilization and management; • communication and coordination with the center, interests groups at national level and local groups; and • conflict resolution. vii The question is, Can local communities and their governments organize themselves to perform the four functions and carry out decentralized functions effectively and efficiently? It is pertinent, in attempting to answer the question, to take a closer look at the five key elements mentioned above. Capacity Perhaps the most compelling argument in support of decentralization is that local governments' proximity to their constituents will enable better management of resources and matching of constituents preferences. However, the translation of this hypothesis to an efficiency advantage level measured in terms of implementation has had a tenuous record. This brings us to the question of what is meant by local capacity. Defining local capacity has been difficult and the debate over quantifying it has often been motivated by political concerns as well as technical considerations. However, in the context of this paper it simply means the technical, managerial and political skills of the subnational unit staff to carry out the functions transferred in an efficient and effective manner, so that the objectives or rationale identified could be achieved. Other factors that may have a direct impact on capacity are ability to coordinate and 14 integrate decisions, quality of leadership, incentives, remuneration and facilities available for the local officials. The term capacity in this context, has two dimensions. One is the capacity of the local or subnational unit officials who administer or manage the decentralization activity and the second is the capacity of the local community that would be involved in decision making and implementation. There is an on-going debate as to whether it should first be decentralization or capacity building. The traditional approach has been to build capacity prior to transferring responsibilities or revenues. However, this traditional approach is changing, as increasing evidence shows that the capacities at all levels are increasing as decentralizing systems mature. There is a growing appreciation that "management is a performance art" better learned by doing than listening. viii At present, the consensus appears to favor capacity building through the practice of decentralization. Training As mentioned, training is an inextricable component of capacity but also warrants discussion by itself. One method of enhancing local capacity is through training and practice. A portion of the funds set aside for the decentralization program can be used to contract technical expertise that is required but not available locally. The external technical expertise can also be harnessed to train local personnel, so that a local network of expertise can be developed. The success of decentralization frequently depends heavily on training for both national and local officials. In addition to building local capacity, training can be a tool for creating personal networks among various levels of government, regions, or types of government workers. One recommendation, for example, might be to train career civil servants and local politicians together to insure that they better understand what is expected of them and what they can expect from each other. Transparency As mentioned under legislation, both substantive and procedural guidelines should be well established and available for public inspection. The rules and guidelines relating to staffing, compensation, administration, contractual and other procedural matters should be gazetted. Not only must the rules be in place but the mechanism must work and appear to work in a transparent manner. Another dimension of transparency is record keeping, monitoring and evaluation. It not only helps to ensure that policy objectives are being met, but also act as warning flags early on in the process and helps make appropriate changes. The documents relating to record keeping, monitoring and evaluation should be made available to the public. Transparency is also important to combat corruption, in that more transparency would mean less scope for corruption. 15 Accountability The two most democratic principles associated with decentralization are accountability and participation. Accountability is the degree to which local or subnational governments have to explain or justify what they have done or failed to do. It works both ways. That is accountability to the center and to the local citizenry. A third level could also be added and that is horizontal accountability to other local or subnational governments. This is particularly relevant in the context of urban environmental management since air and water pollution do not respect administrative boundaries and are known to have spillover effects in to other jurisdictions. Accountability is one way of ensuring that local leaders will actually act on the needs and preferences articulated by the local citizenry. Local elections are the most common and powerful form of accountability, but other mechanisms such as citizen councils have also been known to exert a limited influence. Participation The other democratic principle associated with decentralization is participation. Accountability can be seen as the validation of participation, in that the acid test for participation is to verify whether the local citizenry could hold a subnational government responsible for its actions or non-action. If it cannot, then clearly, the participation channels are flawed and need to be reviewed. Participation also depends on the ability of individuals to group together for collective action. Catalytic external forces may be required to facilitate and build local organizational capacity before any participation mechanism could be set in motion. However, when NGOs and other public interest groups are involved, it is important to determine whose interests are being represented. Another key element associated with participation is awareness. For civil society or community groups to meaningfully participate in decision making, implementation and even to hold local governments responsible for their actions, they need to be educated and made aware of the issues. In this context, an important first step in the decentralization of environmental functions would be to carry out a public awareness program. 5.2 Operational and Administrative design The next step after establishing the legal and institutional mechanism is to design the appropriate operational and administrative structure. Extensive research and review of existing literature have not revealed a tried and tested formula for successful decentralization. Different mechanisms have worked in different countries, depending on the political will and capacity of subnational units. Centralization and decentralization should not be "either-or" conditions. An appropriate balance of centralization and decentralization is more likely work. 16 Ideally, in the context of decentralizing environmental functions, the center should retain overall national policy and supervisory functions, which would include standard setting, compliance with international treaties, coordination between local and regional groups and any other technical functions that cannot be performed satisfactorily by the subnational units due to lack of capacity or skills. 5.3 Fiscal Design Transferring financial autonomy commensurate with the level of decentralization is central to the success of the program. As mentioned before, if local or subnational units have to revert to the center for clearance, there is a strong possibility that bureaucracy, delays, red tape and even corruption could creep in to the system making it dysfunctional. Therefore, in order to carry out decentralized functions effectively, adequate revenue sources and resources, whether it be local, central or external, should be available. Equally important is the ability to make expenditure decisions, to be accountable for the funds and to plan within available resources. Financial autonomy also works both ways, which means the center cannot be held responsible to bail out unstable local governments. There are many different ways resources could be mobilized. Listed below are some examples: • Budget allocation from the center; • Self-financing or cost recovery through user-charges; • Co-financing with the private sector; • Expansion of local revenues through property taxes, sales taxes or rates; • Bi-lateral, multi-lateral or trust funds. 6 SELECTED CASE STUDIES 6.1 Brazil Brazil is faced with a multitude of diverse urban environmental problems that include inadequate basic sanitation, metropolitan air pollution, urban water pollution, poor solid waste management and localized industrial pollution. These environmental problems have also caused economic damage in terms of human health, quality of life and ecological losses. ix The Constitution establishes concurrent responsibility over environmental matters. However, the law specifying the aspects of the different tiers of government has not yet been passed, resulting in disputes between states and municipalities on zoning, licensing and inspection of polluters. As a result, valuable resources are wasted on replicating activities. This underscores the importance of establishing the legal and institutional framework, prior to commencing decentralization activities. 17 However, despite the unclear legal situation, states are responsible for pollution management. In this context, the following core responsibilities have been identified as functions for the center or Federal Governmene This list would have a relevance to a decentralization mechanism in Thailand as well. (a) The management of national pollution problems - The federal Government is responsible for national and international scale pollution problems including multi-state projects and sectors such as nuclear energy, where highly specialized knowledge is required. (b) The integration of environmental aspects in to national policies - The need to address environmental concerns at the design and formulation stage of public policy, such as industry, trade, energy, water supply, sanitation, transport etc, as well as projects and programs of national scope, such as privatization, deregulation, energy and fuel (PROALCOOL). (c) Environmental regulatory and policy framework - It is the responsibility of the center to develop the regulatory and policy framework for pollution management in Brazil, while actual environmental quality targets may vary from state to state. A uniform regulatory and policy framework helps promote transparency and establishes clear objectives both from a compliance and enforcement perspective. The regulatory framework includes the following: • broad outline of the institutional structure and responsibilities at state level • criteria, norms and procedures for environmental licensing and impact assessment • criteria for the classification of waters • standardization of data collection and information management • criteria for penalties and fines • criteria and procedures for the utilization of environmental funds • establishment of national environmental zoning (d) Establishment of national minimum standards - The states are free to establish ambient quality standards, so long as it is does not violate the national minimum standard or does not impose an external cost on other states. A transparent and effective system of sanctions should be developed for states that violate the minimum standards that could be enforced. Ex. withholding of grants (e) Prevention of unfair competition between States - Industrial and economic development could pressure States in to compromising environmental standards. Therefore, it is a federal role to impose sanctions on States that engage in unfair competition by non-enforcement of pollution standards. (f) Assistance to States - The Federal Government has an important role to play in providing assistance to States, particularly weaker States, with prioritizing activities, dissemination of best practice information, environmental quality and emissions data and the development of guidelines for pollution control. The State 18 would contracting with the Federal Government to carry out specific activities. The Federal Government would not directly enforce regulations against polluters on their own initiative, and would only do so if specifically contracted to do so, by the responsible State. Responsibilities of the state include environmental licensing, classification of water-bodies, vehicle emission control, and water and sanitation services in metropolitan areas. Most States have established Environmental Protection Agencies (EPA) that are responsible for licensing, monitoring and enforcement of environmental regulations. The EPA of Sao Paulo has been very effective and has been acknowledged as the leading agency involved with pollution control in the developing world. Responsibilities of the municipalities include zoning, water, sanitation, solid waste and drainage services. Larger municipalities are even assuming licensing functions for activities that are local. Through the issuance of building permits and regulating land use, municipalities have a significant impact on pollution control. Administrative capacity for environment is limited in most municipalities. The macroeconomic deterioration has also effected the functioning of the EP As that have also suffered a decline in performance in recent years. Common problems relating to the control and management of pollution experienced by the States are: • Lack of priority setting and cost effective intervention strategies - instead of systematically targeting high polluters, often politically motivated enforcement strategies are adopted. • Reliance on outdated command and control instruments - licensing and police powers are viewed as the comer stone of pollution control. Limited emphasis on inspection, providing assistance/incentives to polluters to improve compliance or initiating dialogue with stakeholders. • No integration with sectoral policies and planing - pollution management is not viewed as a planning tool but as a costly obstacle in the larger context of industrial development and investment. • Ineffective implementation and enforcement - standards are too stringent for states that lack capacity and are poorer. • Excessive reliance on government financing - inadequate mobilization of external resources both domestic and international and also lack of self- financing mechanisms such as taxes, charges, fees. • Weak institutions-lack of capacity, skills, accountability and poor incentives • Lack of political support for environment - particularly in times of financial or economic cns1s. 19 6.2 China The National People's Congress formally issued the Environmental Protection Act of the People's Republic of China in 1989. Since Beijing opened its first environmental protection office in 1974, environmental protection institutions have been established at all levels of government and the legal framework supporting these have been improved. According to the law, provincial and municipal governments are given a high degree of flexibility in legislating and adopting specific laws and regulations for themselves. The national government is mainly responsible for establishing broad national standards. The environmental management system established in post Mao-China grants considerable autonomy to local governments and the Environmental Protection Bureaus (EPBs) coming within their purview. In accordance with the above mentioned Law, several local governments have formulated their own policy priorities, selected policy tools, designed their own arrangements for enforcement and decided on the pace of implementation. xi This situation has brought mixed blessing for environmental protection. On the one hand, local governments now have an opportunity to tailor their environmental protection efforts to suit their circumstances and on the other hand they are constrained in their motivation and ability, when perceived conflicts arise between environmental protection and economic growth. Since local governments are now responsible for generating and retaining revenue, economic interests precedes environmental protection. There are several constraints faced by EPBs. Even though EPBs have substantial autonomy to enforce environmental regulations, since most polluting industries are either owned or sponsored by the local government, it becomes difficult for EPBs to exercise their powers impartially. The three most significant constraints are: • Lack of citizen participation Unlike in other countries, the channels of public participation in environmental management have not been developed to any significant levels. Formal public participation is not even a part of the EIA system. As mentioned before, public participation is a means of ensuring accountability, transparency and credibility. Lack of public participation and support has been a serious handicap for EPBs, who are minus a strong ally in the fight against pollution. The public voice is also the conscience that jogs or coerces the government in to action and without it open dialogue has no meanmg. • Limited enforcement The National Environmental Protection Agency (NEPA) has functional authority over all local EPBs. These lower level EPBs are at the same time part of the administrative structure of their corresponding local governments and draw their funding from the subnational government. 20 Therefore, even though NEPA has formal authority over lower level agencies in keeping with the "xitong"xii vertical structure of administration, it does not have much leverage in ensuring that they comply with national regulations and standards. Also, it has become apparent that national pollution standards are very lenient and unless local governments are motivated to impose stricter standards, the regulations are hardly sufficient to arrest environmental pollution problems. • Conflicts of interests Minimal financial support from the Central Government has driven EPBs to desperately look elsewhere to supplement meager resources. Apart from pollution fees another common source is the provision of consulting services. EPBs provide consulting services to the very industries they regulate. The service is carried to the extent that a project proponent may commission an outside agent or subsidiary of the EPB to prepare EIA reports. This practice has created a lack of credibility in enforcement, not to mention the conflicts of interest. The Environmental Impact Assessment (EIA) process is also implemented at local or municipal level. EIA reports for large and medium projects (in excess ofUD$ 30 million) are reviewed and approved by either the provincial environmental agencies or the National Environmental Protection Agency. Smaller projects are reviewed/approved by the Municipal EPB. Shanghai though is different, since Shanghai is a municipality directly under the central government. As such, the Shanghai Municipal EPB can approve projects even in excess of US$ 30 million. Smaller projects in Shanghai are approved by county or district environmental agencies. These district and county environmental agencies are also at local level and carry out residual functions of EPBs. Water and air pollution appear to be the most significant environmental problems. The World Bank's sector studies have highlighted contamination of ground and surface water and air pollution as serious consequence of growing industrial pollution, low costs imposed on various pollution, lax regulatory enforcement, and unsanitary waste disposal practices. As we have seen in China, a high degree of local government autonomy in it self, does not guarantee that these agencies will have the capacity or the motivation to deal with environmental problems satisfactorily. Appropriate assistance from the center or higher level authorities is needed to strengthen institutional and technological capabilities of local governments. In this context, not all local governments are at the same level and it would be useful to differentiate among local authorities depending on their capacity and motivation, so that valuable resources need not be spent on agencies that do not require assistance. xiii 21 Example: Water Pollution Control in Guangzhou (Canton) The municipality of Guangzhou, has developed it's own environmental policy priorities that are more specific than even national guidelines and have adopted institutional mechanisms to garner support for environmental policies by including leading cadres from all municipal agencies in the decision making process. Due to the above reasons and other factors, the Environmental Protection Office (EPO) of Guangzhou has been successful in controlling industrial water pollution. The other factors are (a) the sources or the industrial plants releasing waste water into the Pearl River are located within the jurisdiction of the EPO, making enforcement' easier than if the polluters were outside the jurisdiction and (b) fol1owing a nation~{ '," policy of "polluter pays''. princi~le, the EP,O i~ ~ble to impose and pollect fines oi,Jees : from polluters, 80% of which is(:lisbursedat thtdiscretion of the EJ-lpamong,, , ,', ' polluters t() instal1/upgrade, poUuti?n, reduction tech no logy and, 20% ~()es ill• t() the•••••• annual E,PO budge(A combination of, autol1omy,ju~~giqtio11,~Jpowe(~nd inccmtivt'.~ . worked for Gu~zghou. · · ·· ·· · · . ·..· · · .·.. · Note: However, the"EPO has notbeen successful in controlling w~t~r poll4tion due do111estic ,,\\'.~k~,. and the,.prgani~>9pntentof:the W~ter. has increased considerably. Reasons for this are the domestic 'sector is much larger ~g J'.119r~ disper~~g ma~ipgit difficult, tocontroJ,.~.ome P()JiutJ.ng so,urc~s ·~~ focatedc>utside.thejurisdictio11;• "' · inte,rference, by th.e :ififormal''.'authority stnfotl.lre, and the Ia¢k. of a develop~d rates or feessystem forimprOVeJ'.llent Of the S~~,erage Scheme. 6.3 Philippines The government began focusing on environmental .problems in the mid 80s with the dramatic political changes that swept the country. Decentralization of environmental and natural resources management functions became a strategic response to the widespread environmental problems, which intended to promote environmental awareness, education and citizen's participation in the decision making process. The Philippine Strategy for Sustainable Development (PSSD) formulated by the Department of Environment and Natural Resources (DENR), which came in to effect in 1989, played a catalytic role in integrating environment and natural resources management in to the development process. The Local Government Code of 1991 transferred many responsibilities from the central government to the various levels of local units, which included the provinces, cities, municipalities and barangays. The code also encouraged the active involvement of nongovernmental organizations in strengthening local autonomy. The functions that were transferred included community based forestry projects, most agricultural services, public works, social welfare, health and some regulatory powers relating to the enforcement of fisheries and environmental laws. xiv 22 Even though the transfer is re rred to as devolution and it does satisfy many of the criteria for devolution such as ransfer of power, responsibility, assets and financial autonomy, there are two comp nents in the transfer mechanism which appear to be some what incongruous with devolution. That is the transfer of personnel from national agencies to the Local Government (LG) and the direct supervision of LG activities by the President's office, two aspects that could impinge upon the independence and autonomy o the local governments and perhaps even give rise to conflict. In this context, dee ntralization in Philippines appears to be a hybrid between devolution and decon entration. However, viewing things fro a practical perspective, it is conceded that this model may actually help mini ize some institutional constraints that LGs usually have to grapple with at least at the inception, such as capacity, skills and inadequate training of personnel, since o 1cers at national level are certainly better equipped and trained. It is a moot point hough whether these officers would be interested in been transferred to work at lo al level, since it could be perceived as a relegation, and also whether LGs would be able to meet the competitive salaries of these personnel. From a supervisory perspective, so long as undue red tape and political motives do not take over, ce tral monitoring may ensure that relevant laws are implemented across the board and that prescribed powers and functions are not exceeded. Therefore, at the i ception stages of decentralization in a country or sector, the hybrid might be a g od institutional model to emulate. The 1991 Code also requires hat LGs and NGOs be consulted on environmental and other implications on any national projects to be undertaken in their area and that LGs should participate i the planning and implementation of such projects, irrespective of whether the function has been decentralized or not. Another stipulation of the Code that promotes participation and transparency is the provision that requires the representation of NGOs on various councils and boards mandated by the Code including prequalification, bid and award committees. The Code empowers the LGs to enter in to contractual agreements with NGOs and the private sector in jointly undertaking service delivery, environmental improvement, capacity building and development projects. The National Integrated Protection Areas System Law of 1992 (NIPAS) is another form of decentralization. It is an example of deconcentration. The law was enacted to consolidate and govern all parks in Philippines. It specifies procedures for establishing new parks, protection areas, buffer zones and defines categories of parks for management purposes, reviews and assesses existing declarations and requires public consultation and participation in park declaration, planning and management. The law also provides for an autonomous financing mechanism through the establishment of an Integrated Protected Areas Fund (IP AF), that is permitted to mobilize resources through fees, fines, contributions, donations, trusts, endowments, taxes on legal sale and export etc, . The law was operationalized by the issuance of implementation rules and regulations by order through the Department of Environment and Natural Resources (DENR). For implementation purposes, Protected Area Management Boards were established at regional level, chaired by the regional director of DENR. 23 St Paul Subterranean River National Park is an example of the above form of decentralization where LGs played a leading role. It's most outstanding feature is an underground river, which attracts many tourists. The majority of the local population are farmers. The DENR decentralized the park management in 1993 to the Puerto Princesa City Government, which was in keeping with the Strategic Environment Plan to give responsibility to the province to manage natural resources and environment. The City established a management board comprising of DENR representatives, NGOs, tribal groups and city officials. The operational flexibility and involvement of all stakeholders has made management of the park a success. A note of caution though is that if the LGs objectives differ from the center's or region's, then conflicts may arise. It is a fact that LGs, particularly in developing countries, are more in tune with economic development than environment and natural resources management. Therefore, if environmental management runs counter to economic development, then some very compelling incentives or perhaps enforcement, may be in order. In Philippines, any project which is subject to the Environmental Impact Assessment (EIA) process comes under the purview of the regional DENR, which determines whether to exempt the project or require further documentation. In the case of projects coming within a protected area under NIP AS, all activities are regulated and must be consistent with the management plan for the area. If the activity is not included specifically in the plan, then it is subject to the EIA process. Conflicts that arise between rural development and habitat conservation are usually resolved at national level. Philippines has suffered much environmental degradation in the past and even though the reform process has begun, there is a long way to go before restoration efforts can be turned to more productive use. Also, even though the legal framework for decentralization is in place progress has been slow and many exigencies do exist. However, it appears that the former centralized system of management is gradually being abandoned in favor of a more participatory model of governance. 6.4 Uganda In 1990, the Government initiated the process to prepare the National Environmental Action Plan (NEAP) with assistance from UNEP to assess the extent of the environmental problems in the country, define issues and propose remedial and preventive action. As a direct result of this initiative, the Government approved the Environment Policy in January 1994 and the National Environment Statute in 1995. A National Environmental Management Authority (NEMA) was established within the Ministry of Natural Resources to implement NEAP. The Department of Environment Protection is responsible for natural resource management, environmental education, monitoring, enforcement and information research. Lack of a regulatory framework for environment and the involvement of a multiplicity of ministries with development oriented goals and sectoral 24 responsibilities have made implementation of environmental management ineffective. There are several ongoing efforts to devolve authority and responsibility to local levels. The National Environment Statute provides for the establishment of District Environmental Committees (DEC) to manage environmental functions at local level. Amongst other recommendations, the NEAP has also proposed institutional reforms that include strengthening of environmental management capacity both at national and local levels. However, a major constraint is the lack of financial autonomy envisaged in the mechanism and also limitation of funding sources. Creating community awareness of the need to address environmental problems on a continuing and priority basis has been identified as a critical component of decentralization but the local governments ability to plan and implement programs is limited. Financial constraints further compound the limitations. The need to establish local by-laws and regulations for environmental management have been recognized but again the local capacity to develop the laws are almost non existent. Another important element that has been flagged is the integration of environmental planning with sectoral development plans and programs. One can surmise that even if Uganda is still at the very inception stages of decentralization and grappling with typical institutional and financial constraints, the process appears to be on track. On a positive note, Uganda has a extensive network of active environmental NGOs, that are both domestic and international. The expertise and community mobilization skills of these NGOs could be engaged in planning, training, education, awareness and local capacity building. Also, the NEAP document has given the country a clear vision for environmental management. Decentralization has been recognized as an important policy tool. Specific objectives relating to decentralization and local capacity building are: (i) Ensure integrated and multi-sectoral planning for environmental functions at district and local community levels; (ii) Enable local people to freely participate in environmental decisions, planning and implementation; (iii) Ensure clear linkages between various levels of local government and national agencies for environmental management; (iv) Ensure collection and dissemination of environmental information among sectors and different levels of government (v) Ensure adequate information and technical backstop from the line ministries to the local levels. xv Several donors including the World Bank and USAID are assisting Uganda with environmental capacity building. 25 6.5 Sri Lanka With the enactment of the 13th amendment to the Constitution, nine Provincial Councils (PCs) were established and a mechanism was set up to decentralize several central government functions. Even though a local government system existed even prior to the establishment of the PCs, the concept of decentralization had not taken root. The amendment to the Constitution, while making provision for the establishment of the PCs, also prescribed 3 lists containing the different sectors that would come within the purview of the PCs, the Center and concurrent with approval from the center. Environmental management came within the concurrent list; that is PCs could assume responsibility for environmental protection and management with the concurrence of the center. In order to operationalize the decentralization mechanism, a PC would have to enact a Provincial Environmental Statute (PES), specifying the institutional structure including creation of an implementing arm, recruitment of personnel, powers, functions, duties, financial provisions etc. After a PES is enacted, the PC is completely responsible for the functions contained in the statute and the center is precluded from intervening. The only instance in which the center could intervene is if the PC adopts standards that are less stringent than national standards. The North Western Province enacted a PES, with the concurrence of the center, which was a carbon copy of the National Environmental Act. At the time the Act was being drafted, the PC did not give much thought to the implementation of the functions stipulated, but soon realized they lacked the capacity, technical skills and financial resources to carry out the activities. Since they had assumed responsibility for the sectoral functions by enacting the statute, the center was precluded from assisting. This is a classic example of biting more than you can chew. In hindsight, the PC is considering scaling down the activities and amending the statute. In an effort to prevent other PCs from going through the same dilemma, a model environmental statute has been drafted, which can be adopted by PCs. The model statute has taken in to consideration institutional issues such as capacity and skills, administrative capabilities and fiscal resources. The lessons to be learnt from this experience are (a) undertake only a few activities or responsibilities initially (b) set clear objectives or targets to be achieved and (c) do a realistic assessment of available institutional capacity and skills. On a positive note, the approach seems to favor learning through the practice of decentralization, rather than wait for the system to be perfected. 26 7 DESIGN FRAMEWORK The following six step approach provides a design framework for the decentralization of urban environmental functions in Thailand • Determine the objectives to be achieved by decentralization and match these objectives with the most appropriate design/form of decentralization • Identify the functions or aspect to be decentralized • Determine the current management system for the functions • Formulate transparent decentralization rules and mechanisms • Limit the number of objectives to be accomplished to realistic levels and incrementally carry out the transfer of functions • Assign financial autonomy, both in terms of revenue and expenditure responsibilities • Develop center's ability to monitor and evaluate decentralization 7.2.1 Determine the objectives to be achieved by decentralization and match these objectives with the most appropriate design/form of decentralization As discussed under section 2, there are several different methods of transferring powers to subnational units. The methods differ in the degree of power and autonomy transferred and have different characteristics, policy implications, and conditions. Prior to deciding on the method, it is important to determine the objectives to be achieved by decentralization or transfer. On a general level the objectives vary from improving efficiency to enhanced participation and sensitivity to local needs to equity in resource allocation and public service delivery. Specific objectives could range from creating environmental awareness to improving water quality to reducing air pollution. 7.2.2 Identify the functions or aspects to be decentralized As discussed earlier, a strategic implementation plan must be prepared identifying a few activities targeting critical areas. These activities should be result oriented, tangible and assigned time targets. It may be prudent to start with activities that have the greatest possibility of succeeding in a relatively short time frame. A hypothetical example of decentralizing specific activities is given below. 27 Example Objective : Improve Water Quality Functions/aspects to be decentralized: 1. Water resources management 2. Issuance of environmental licenses for industries Activities 1. Establishment of river basin committ~es and preparation of river basin plaris. . .. .... . . 2~ Solid waste management plan to be prepar~d:yvith the parti.cipation of the local citizenry. .. · 3.• lmp~ove.uionit.C>.ring an5f}11specti?11 of industries.>:: 4. Pevelop inc;:,entives.for.W-ast~~atet.treatmellt · 5. Strength¢µ ¢nvironmental governance · ·. · 7.2.3 Determine the current management system/or the/unctions Thailand has a very extensive legislative framework for natural resources and environmental protection and management. However, environmental functions in Thailand are for the most part managed centrally and there are several central government agencies involved with the implementation of environmental protection and management functions. This has resulted in overlapping responsibilities and reduced efficiency. The National Environmental Quality Maintenance and Promotion Act (NEQA) of 1975 amended in 1992, created a National Environment Board elevated to ministerial level by the amendment. The 1992 revisions also decentralized some functions to the provincial level. Provincial authorities are now responsible for the annual preparation of the Provincial Environmental Action Plans (PEAP). However, the Governor of each province is appointed from the central administration raising serious doubts about the meaningfulness of decentralization. The participation of the local citizenry in the planning process also still remains a major challenge. The economic crisis have had both negative and positive impacts on the environment sector. Industrial downturn and reduction in consumption levels have lead to less air pollution and a decrease in waste generation. Yet, the positive impacts are temporary and with the economic recovery, air and water pollution may reach pre- crisis levels. xvi On a positive note, in 1997 amendments were made to the Thai Constitution which established the enabling constitutional provisions for decentralization of environmental functions. Article 290 of the Thai constitution states "local administrative organizations have powers and duties to manage, preserve and exploit natural resources and environment in the area of the locality". 28 Therefore, in terms of legislation what is now required to operationalize a decentralization program for urban environmental functions in Thailand would be a local sectoral statute establishing the parameters, objectives and other substantive provisions and requisite regulations in the form of rules and procedural guidelines. As mentioned before, the regulations can be easily amended as required. 7.2.4 Formulate transparent decentralization rules and mechanisms The rules should specifically encompass the following: a) Issues relating to finance and reporting, control mechanisms, monitoring, evaluation and accountability; b) Operational rules and guidelines relating to personnel such as hiring procedures, tenure, remuneration, compensation/benefits schemes; c) Procurement and contracting procedures for equipment and services; d) Standard application forms, licenses, renewal forms and other relevant procedural forms; e) Techniques to include the local public in the decision making process; f) Criteria to select NGOs if and when it is decided to delegate certain aspects. 7.2.5 Limit the number of objectives to be accomplished to realistic levels and incrementally carry out the transfer offunctions This is related to 3.2.1., where the underlying concept is to "keep it simple". Simple in the sense, to initially limit the objectives to a manageable number keeping in mind the capacity and skills of the local or subnational unit to manage and administer the functions decentralized. Central planners or policy makers should assess the strengths and weaknesses of public and private sector organizations in performing different types of functions, prior to developing elaborate plans for decentralization. Another design consideration, is to realize that capacity and skills differ widely across local or subnational governments. Therefore, applying standardized macro decentralization reforms may not work. 7.2.6 Assign financial autonomy, both in terms of revenue and expenditure responsibilities Here again the form of decentralization selected is the key factor. However, which ever form is selected, financial autonomy consistent with the transfer method is an important element. If local or subnational units have to revert to the center to obtain approval for every financial transaction, it will severely handicap and retard the process. Also, there is every reason to assume that traits such as bureaucracy, delays and indifference will creep back in to the system. Subnational units should be 29 encouraged and permitted to mobilize national and local resources for programs initiated by them. This not only creates financial independence but also enthusiasm and interest on the part of the local officials and other contributory stakeholders. It is conceded however that some financial control is required if autonomy is granted to local or subnational units. In this regard, financial accounting and reporting could be made a statutory requirement, leaving the procedural aspects to rules and guidelines. The rules and guidelines will spell out the breadth of coverage, consistency with accepted formats, comparability with other similar activities and level of clarity required. 7.2. 7 Develop center's ability to monitor and evaluate decentralization Many countries that engage in decentralization have weak or inadequate mechanisms for citizens and higher levels of government to monitor, evaluate and support decentralization. This could limit the level of success and effectiveness of this policy instrument. Monitoring and evaluation goes beyond financial reporting. Depending on the decentralization objectives however, the need for monitoring will differ, but it is certainly a important element that should be taken seriously. Apart from regular financial and physical tracking of program performance, the monitoring system needs to assess the participatory processes, transparency, accountability, equity, effectiveness of institutional and operational linkages, and technical aspects of local management regimes. The local public must be made aware of the objectives, targets and activities of the decentralization program so that they could effectively participate in the decision making process and be activists for change. Regular monitoring and evaluation also helps ascertain weaknesses in the system at an early stage and enables reform that could prevent a major crisis. Evaluation also helps identify those adversely effected by the program, enabling recompense. 8 CONCLUSIONS Decentralization is not a panacea for all public sector ills but there are several mechanisms that can be adopted to minimize some of the formidable constraints.· xvii • The first step is to bring together all key agencies that are currently major players on the environmental management front in Thailand, in a participatory process to ensure greater consensus on how to proceed. Some of the agencies are the National Environment Board, the Ministry of Science, Technology and the Environment, the Ministry of Agriculture and Cooperatives and the Department oflndustrial Works to mention a few. 30 • Since at present there are several agencies involved with environmental management and as a result overlapping of functions, it may be necessary to employ some checks and balances to eliminate any power struggles and formalize the system. • The objectives or long term goals for environmental management should match with the strategic approach taken, so that the efforts fit in with the macro picture and are not taken in isolation. • Adopt mechanisms to involve the local citizenry in the planning and decision making process. • Service delivery and investments in infrastructure should take m to consideration both supply and demand perspectives. • Decentralization should be viewed in broader institutional terms than merely shifting power from the center to the local levels. To this extent, decentralization will expand the gamut of stakeholders and carve out a role for the centralized agencies, private sector, non governmental organizations and CIVIC groups. • Finally, a incentive or reward scheme for good performance may be in order. So that enthusiasm, interest and creativity could thrive. i Jennie Litvack and Jessica Seddon, "Decentralization Briefing Notes": World Bank Institute, 1999, P 2 ii G Shabbir Cheema and Dennis A Rondinelli, "Implementing Decentralization Programmes in Asia: Local Capacity for Rural Development", UNCRD Synthesis Report Series No 3, 1983, PP 3-6 iii Shahid Javed Burki, Guillermo E Perry, William Dillinger, "Beyond the Center: Decentralizing the State": World Bank Latin American and Carribean Studies, June 1999 iv Dennis A Rondinelli, John R Nellis, G Shabbir Cheema, "Decentralization in Developing Countries: A Review of Recent Experience": World Bank Staff working Papers No 581, 1983, P 11 v Ibid, PP15-19 vi EAP, The World Bank, Thailand Country Management Unit, "Thailand: Environment Sector Strategy ~.ote, Building Partnerships for Environment and Natural Resources Protection'', 1999 vu Nonnan Thomas Uphoff, "Local institutions and participation for sustainable development'', l~temational Institute for Environment and Development: Sustainable Agriculture Program, 1992, Pl6-18 vm Jennie Litvack and Jessica Seddon, "Decentralization Briefing Notes": World Bank Institute, 1999, P 45-48 ix Brazil Country Management Unit, The World Bank, "Brazil: Managing Pollution Problems'', 1998 x Ibid xi Shui-Yan Tang, Carlos Wing-Hung Lo, Kai-Chee Cheung and Jack Man-Keung Lo, "Institutional Constraints on Environmental Management in China: Environmental Impact Assessment in Guanzhou and Shanghai", China Quarterly, 1997 xii Barbara J Sinkule and Leonard Ortolano, "Implementing Environmental Policy in China", 1995, PP14-21 xiii Carlos Wing-Hung Lo and Shui-Yan Tang, "Institutional Contexts of Environmental Management: Water Pollution Control in Guanzhou, China", Journal of Public Administration and Development, Vol 14, 53-64, 1994 31 xiv Ernst Lutz and Julian Caldecott, eds., "Decentralization and Biodiversity Conservation", A World Bank Symposium (Washington DC: World Bank), 1996, PP 93-105 xv The World Bank, Staff Appraisal Report, "Republic of Uganda: Environmental Management Capacity Building Project", 1995 xvi EAP, The World Bank, Thailand Country Management Unit, Thailand Environment Sector Strategy Note, 1999, PP ix-xv, 16-20, 40-44 xvii Paul Smoke, "Designing and Implementing Public Sector Decentralization in Developing Countries", Department of Urban Studies and Planning, MIT, 1997 32