HIGH LEVEL POLICY DIALOGUE ON INCLUSION OF ENVIRONMENTAL SUSTAINABILITY IN BUDGET GUIDELINES AND ENVIRONMENTAL FISCAL REFORM

Transcription

1 THE UNITED REPUBLIC OF TANZANIA PRESIDENT S OFFICE PLANNING COMMISSION HIGH LEVEL POLICY DIALOGUE ON INCLUSION OF ENVIRONMENTAL SUSTAINABILITY IN BUDGET GUIDELINES AND ENVIRONMENTAL FISCAL REFORM Final Report SUBMITTED BY: Department of Economics University of Dar-es-Salaam December, 2012

2 This report was prepared by: Prof. Mbelle, A.V.Y (PhD); Karamagi, I.J. (PhD); Pantaleo, I. and Kisanga, E. Department of Economics University of Dar-es-Salaam P. O. Box Dar-es-Salaam Tanzania Tel.: Ext Telegram: University of Dar es Salaam Direct Line doe@udsm.ac.tz Fax: Website:

3 TABLE OF CONTENTS SECTION 1: INTRODUCTION 1.1. BACKGROUND STATEMENT OF THE PROBLEM OBJECTIVES METHODOLOGY ORGANIZATION OF REPORT... 4 SECTION 2: CONCEPTUAL FRAMEWORK: ENVIRONMENTAL FISCAL REFORM 2.1. THE CONTEXT OF ENVIRONMENTAL FISCAL REFORM (EFR) EFR IN TANZANIA... 7 SECTION 3: REVIEW OF MACRO POLICY FRAMEWORK AND BUDGET GUIDELINES: A REFLECTION ON INCLUSION OF ENVIRONMENTAL ISSUES 3.1. INTRODUCTION ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2006/ / Macroeconomic Framework for the Plan/Budget 2006/ / Guidelines for the Preparation of Medium Term Plan and Budget Framework for 2006/ / ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2008/ / Macro Economic Policy Framework for the Plan/ Budget 2008/ / Guidelines for the Preparation of Medium Term Plan and Budget Framework for 2008/ / ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2009/ / Macro Economic Policy Framework for the Plan/ Budget 2009/ / Guidelines for Preparation of Medium Term Plan and Budget Framework / / Review of the Plan and Budget Implementation: 2009/10 and Mid Year 2010/ Guidelines for Preparation of Medium Term Plan and Budget Framework / / ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2011/ / Macro Economic Policy Framework for Five Year Development Plan/ Budget 2011/ / Guidelines for the Preparation of Medium Term Plan and Budget Framework for 2011/ i

4 3.7. Guidelines for the Preparation of Medium Term Plan and Budget Framework for 2012/ SECTION 4: BUDGET SPEECHES AND BUDGET GUIDELINES (BG) 4.1. ALIGNMENT OF BUDGET SPEECHES WITH BUDGET GUIDELINES SECTION 5: PROGRESS TOWARDS ACHIEVING FULLY ENVIRONMENTAL MAINSTREAMED BUDGET GUIDELINES AND PROCESSES 5.1. THE PROGRESS CHALLENGES OPPORTUNITIES SECTION 6: CONCLUSIONS 6.1. SUMMARY RECOMMENDATIONS REFERENCES ii

5 ABREVIATIONS AND ACRONYMS ASDP BGs BOT EER EMA ETR FYDP GDP GHG ICT LGAs MDAs MDGs MOF MTEF MTP M &E MDAs NSGRP PBG PMO-RALG SAGCOT TAFSIP TDV TSIP TRA VAT IBRD Agricultural Sector Development Programme Budget Guidelines Bank of Tanzania Environmental Fiscal Reform Environmental Management Act Environmental Tax Reform Five Year Development Plan Gross Domestic Product Greenhouse Gases Information and Communication Technology Local Government Authorities Ministries Departments and Agencies Millennium Development Goals Ministry of Finance Medium Term Expenditure Framework Medium Term Plan Monitoring and Evaluation Ministries, Independent Departments and Executive Agencies National Strategy for Growth and Reduction of Poverty Plan and Budget Guidelines Prime Minister s Office Regional Administration and Local Government Southern Agriculture Growth Corridor of Tanzania Tanzania Agriculture and Food Security Investment Plan Tanzania Development Vision Transport Sector Investment Program Tanzania Revenue Authority Value Added Tax International Bank for Reconstruction and Development iii

6 EXECUTIVE SUMMARY The need to address comprehensively the issue of sustainable development has preoccupied the history of human development. In the current development dialogue, it tops the post-2015 agenda. One of the key reforms suggested for sustaining environmental resources is the Environmental Fiscal Reform (EFR). The value of EFR lies in its potential to generate revenue and improve the environment. EFR has been applied with great success in developed economies. The main areas of success have included reduction in energy demand, recycling of revenues, boost to employment and reduction in Greenhouse Gases. EFR is an important tool for improved ecological efficiency and green growth. Despite these benefits, ERF application in low-income, low-growth countries has been limited, particularly in terms of revenue-generating potential. In Tanzania, EFR application is constrained by political, social and institutional factors. Although a legislative framework is in place, the implementation and enforcement of economic instruments for environmental policy are relatively poor. The overall objective of this study was to examine how environmental issues have featured in the budgeting system in Tanzania and to suggest how this could be improved. The gist of this study is the inclusion of environmental related aspects in high level policy making processes, especially the budget processes. The methodology applied entailed a review of various government policy documents, including the budget guidelines, budget speeches, sector reports, as well as documents that show experience of other countries. In addition, the review included documents that address international/global trends on environmental aspects, for example, the MDG reports, reports of various UN conventions and conferences. The study supplemented these reviews with interviews with relevant government technocrats. This study has identified a number of issues that need to be addressed in order to improve on environmental issues in the policy setting. These issues include the following: absence of quantitative targets with regard to the environment; low understanding of environmental issues; incoherence between the Budget Guidelines and the Budget Speech; lack of continuity from one issue of Budget Guidelines to the next; low capacity with regard to making assessment of progress on environment issues; among others. In general, there is a need for strategic measures to address iv

7 these challenges; otherwise, progress and outcomes of EFR will continue to be undermined. In light of these findings a number of recommendations are made. First, is the need to improve the capacity of relevant institutions on issues related to the environment, especially the capacity to conduct Environmental Impact Assessment (EIA); this will enable policy makers to undertake appropriate measures for addressing the EFR outcomes. Second, it is the imperative to institute an effective M&E mechanism to guide policy makers when designing measures and instruments for assessing environmental issues. Third, is to incorporate an annex to guide the implementation framework in terms of spelt out priorities, which should be reflected in the Budget. Fourthly, there is need to ensure that issues addressed in the Budget Guidelines should show a line of progression so as to assess the value addition for a particular issue and accomplishment over time. Lastly, the study recommends that efforts that are put to educate the public and raise people s awareness on environmental issues and challenges should continues and be supported financially. v

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9 SECTION 1 INTRODUCTION 1.1. BACKGROUND This report addresses the inclusion of environmental issues in the Tanzania Budget Guidelines. It revisits the Budget Guidelines from the financial years 2006/07 to 2011/12 to delineate issues that will guide high level policy dialogue with regard to inclusion of environmental issues in the Budget Guidelines and Environmental Fiscal Reform (EFR) for environmental sustainability. Concerns on the need to balance human development and livelihood can be traced to the work of Thomas Robert Malthus in 1798 who raised alarm on the impending danger of population explosion by out of paying labour more ; in that case, he argued that labourers would feed more and reproduce more; and that this would eventually lead to hunger if the explosion is not matched with increases in food production. In the modern times, the first conference exclusively devoted to environmental issues was held in Sweden in 1972, which was the first conference solely devoted to environmental issues for sustainable development. Since then, the Brundtland Commission Report (1987), Rio Declaration (1992), Kyoto Protocol (1997), Millennium Summit (2000), World Summit on Sustainable Development (2002) and Rio +20 (2012) have all emphasized the issue of balanced development. The key concerns of these initiatives are increasing environmental degradation, increasing poverty, global environment, health poverty, equity (generational and inter-generational), and the interconnectedness of these issues (i.e., how systems link). Weaving these key messages are various definitions of the concept of sustainable development, with the main elements being development which is economically viable, socially just and environmentally appropriate. 1

10 This study addresses one of the key elements of sustainable development, namely the environmental system. The other three key elements are: economic system, social system and institutional system. Environmental system refers to the ability of an economy to maintain a stable resource base, whereby the commonly applied indicators include green house gas emissions, water quality and percent of forest land (see Table 1 for a detailed list of indicators). The UN announced (on August 9 th 2012) the launching of the Sustainable Development Solutions Network for identifying and sharing the best pathways to achieve sustainable development. The initiative is part of the work undertaken in response to the mandate on post 2015 and the outcome of the Rio + 20 Conference (UN, 2012). This initiative puts at the top of post agenda a need to address comprehensively the issue of sustainable development; which provides an opportunity for the DoE- POPC MoU and for Tanzania in general to rise up to this challenge. Prof. Jeffrey Sachs asserts that "in the 20 years since the first Rio Earth Summit, the world has largely failed to address some of the most serious environmental and social problems pressing in on us. The UN (2012) adds thus, We can t afford business as usual. We need to engage the academic and scientific Table 1: MDG INDICATORS FOR ENSURING ENVIRONMENTAL SUSTAINABILITY (MDG 7) 7.1Proportion of land area covered by forest 7.2 CO 2 emissions, total per capita and per$1 GDP (PPP) 7.3 Consumption of ozone depleting substances 7.4 Proportion of fish stocks within safe biological limits 7.5 Proportion of total water resources used 7.6 Proportion of terrestrial and marine areas protected 7.7 Proportion of species threatened with extinction 7.8 Proportion of population using an improved drinking water source 7.9 Proportion of population using an improved sanitation facility 7.10 Proportion of urban population living in slums Source: UNDP (various) community, and tap into worldwide technological know how in the private sector and civil society, in order to develop and implement practical solutions (UN, 2012). Thus the gist of this study is the inclusion of environmental related aspects in high level policy making processes, especially the budget processes. The coverage and analysis is limited to few key selected government documents, namely the budget guidelines and budget speeches, with the time frame for the analysis covering a period from the financial year (FY) 2006/07 to date. In addition, experiences from other countries in Sub Saharan Africa are also explored. 2

11 1.2. STATEMENT OF THE PROBLEM One of the key reforms suggested for sustaining environmental resources is the Environmental Fiscal Reform (EFR). As Cottrel et al. (2008) assert, The value of EFR lies in its potential to generate revenue and improve the environment (p.14). Thus a range of taxation and pricing measures are required to free up economic resources and/or generate revenues while helping to reach environmental goals. EFR has been applied with great success in developed economies. The main areas of success have included reduction in energy demand, recycling of revenues, boost to employment and reduction in Greenhouse Gases (GHG) levels (Cottrel et al. op.cit). Moreover, it is an important tool for improving ecological efficiency and green growth. However to date, its application in low-income, low-growth countries has been limited in terms of revenue-generating potential. Realistic sources of income need to be identified. The mechanism for forming or influencing the price of environmental goods and natural resources is based on three Environmental Fiscal Instruments; namely, public expenditure, environmental taxation/levies and environmental pricing. In this regard, an in-depth policy analysis and reliable data for the tax system as a whole are vital for the design and implementation of appropriate and effective EFR instruments. The key question is whether the mobilization of funds is directly linked to the process of resource use (or to the area of usage). The main value of EFR lies in its potential of achieving the twin objective of generating revenues while improving the environment. Despite its benefits, EFR in Tanzania is being delayed and constrained by political, social and institutional factors. Although a legislative framework is in place, the implementation and enforcement of economic instruments for environmental policy are relatively poor. Thus, this study examines the extent to which environmental issues have been incorporated in the Budget Guidelines and the budget and suggests how they should be further improved OBJECTIVES The overall objective of the study is to examine how environmental issues have featured in the budgeting system in Tanzania and to suggest how this could be improved. Hence, the study aims at contributing to strengthening the resource allocation mechanism, through the budget, for environmental sustainability. The specific objectives are, to: Review environmental sustainability targets from both global and Tanzania s perspective; 3

12 Review budget guidelines with a view to ascertaining inclusion of environmental sustainability targets, clearly identifying weaknesses and suggesting areas for improvement; Revisit the dialogue/consultations that led to current inclusion and identify strengths and weaknesses 1.4. METHODOLOGY The approach used entailed mainly a review of various government policy documents including the budget guidelines, budget speeches, and sector reports. In addition, the review included documents that address international/global trends on environmental aspects, for example, the MDG reports and reports of various UN conventions and conferences. The study supplemented the reviews with the conducting of interviews with government technocrats that are involved in preparing the budget guidelines ORGANIZATION OF REPORT This report is organized into five sections. Section 2 presents the EFR conceptual framework, whereas Section 3 reviews the budget guidelines with respect to the inclusion of environmental issues. Section 4 discusses the Challenges and Opportunities of EFR application; and Section 5 draws conclusions. 4

13 SECTION 2 CONCEPTUAL FRAMEWORK: ENVIRONMENTAL FISCAL REFORM 2.1. THE CONTEXT OF ENVIRONMENTAL FISCAL REFORM (EFR) In recognition of the strong linkages between poverty and environment issues, one of the Millennium Development Goals, MDG 7, seeks to integrate the principles of sustainable development into country policies and programmes, and reverse the loss of environmental resources. The livelihoods and food security of the poor often depend directly on ecosystems, and the diversity of goods and services they provide. Moreover, healthy ecosystems provide a range of indirect services such as flood control that are essential for sustainable development. To facilitate the progress toward the achievement of the MDGs, governments need to raise revenues to invest in schools, healthcare, infrastructure and the environment. There is a consensus that equitable and efficient tax systems, as well as improvements in the pattern of domestic public spending are essential to meeting the MDGs. In this regard, Environmental Fiscal Reform (EFR) is expected to play an important role, by helping countries raise revenues, while creating incentives that generate environmental benefits and support poverty reduction efforts. Examples include infrastructure that improves access by the poor to water, sanitation and energy services. The main objectives of EFR are: 1. Revenue mobilization (environmental funds, refund systems, funds from government and donors, private contributions and carbon off-sets); 2. Creating incentives towards sustainable resource use (creation of markets: tradable permits, payments for environmental services, etc). 5

14 EFR contributes to improved management of the environment by encouraging more sustainable use of natural resources (such as forests or fisheries), reducing pollution from energy use and industrial activities, stimulating the use of innovative clean technologies, and protecting water catchment areas.. In these ways, EFR can directly and indirectly address environmental problems that threaten the livelihoods of the poor. However, the challenges of undertaking such reforms are manifold. As discussed above, the EFR encompasses a wide range of taxation and pricing instruments, including taxes on the exploitation of natural resources, taxes and charges on water or air pollution, and subsidies on water and energy. However, the suitability of individual instruments to specific countries may vary according to the country s level of development, resource endowments, and institutional capacity. Although it is very challenging to design and implement the EFR to encourage sustainable natural resource use, its relevance to low income and middle income countries like Tanzania is unquestionable, as they rely heavily on natural resources for their development. Currently, many developing countries have already embarked on such reforms as part of Poverty Reduction Strategies, Tanzania being inclusive. The most common applied instruments in developing countries are: cost recovery and pricing measures for improving access to water and energy and other basic services; tax and subsidy reforms to discourage the use of environmentally damaging products; taxes and fees for controlling industrial pollution and waste; and, taxes on the extraction of natural resources such as fisheries and forests. However, the effectiveness of EFR measures rests on more than the quality of legislation. It depends not only on how well thought out a particular measure is but also on the ability and political will to implement and enforce it once it becomes a law. In some instances EFR translates to clear fiscal, environmental and social benefits, but in others trade-offs are necessary between the objectives. EFR can address such trade-offs through careful design. This requires analyzing the political context and effectively managing the reform as an inclusive political process, allowing for strong participation by low-income and marginalized groups in policy design. 6

15 2.2. EFR IN TANZANIA In 2004, the Government of Tanzania conducted the Public Expenditure Review on the Environment. The report raised a number of issues with regard to the environment, in particular the considerable potential of environmental resources to contribute to revenue, the significant under-pricing of environmental services, and very low revenue collection in relation to certain resources, such as fisheries and wildlife. Furthermore, it was found that there was relatively low investment in and recurrent expenditure on environmental assets; as well, implementation on environmental related strategies was poor. For example, there is a tendency of concentrating on the transport (fuels, imports) and energy sectors and paying little regard to other individual EFR measures in place. 7

16 SECTION 3 REVIEW OF THE MACRO POLICY FRAMEWORK AND BUDGET GUIDELINES: A REFLECTION ON INCLUSION OF ENVIRONMENTAL ISSUES 3.1. INTRODUCTION This section explores the extent to which environmental issues have been considered in policy making in Tanzania, specifically with respect to the budgeting system, particularly at the Budget Guideline preparation stage. Tanzania s Budget Guidelines are structured along two parts: a) Part I provides information and instructions to MDAs, RSs, and LGAs so that they can prepare informed plans and budgets, which are now consistent with the Five Year Development Plan, crafted in It also contains Annexes; b) Part II of the Guidelines constitutes the standard forms to facilitate the MDAs, RSs and LGAs to effect the preparation, execution, monitoring and evaluation of their budgets so as to ensure value for money. The documents also contain a review of the Plan and Budget Implementation for the previous year; and mid- year implementation. When need arises, the Budget Guidelines focus on specific themes ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2006/ / MACROECONOMIC FRAMEWORK FOR THE PLAN/BUDGET 2006/ /09 The Government in collaboration with various stakeholders committed itself to promoting, strengthening and sensitizing communities and individuals participation in environmental conservation and management. During the medium term, the government promised to commit substantial resources in promoting sustainable management of water catchments areas and afforestation in critical 8

17 highland areas. Furthermore, the Government planned to continue implementing the national waste management strategy in reducing, recycling and undertaking safe disposal of waste. Lastly, specific attention was given to mainstreaming environmental concerns in policies and strategies in all sectors of the economy GUIDELINES FOR THE PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK FOR 2006/ /09 The National Environment Policy (1997) and the Environment Management Act (2002) provide the environment management framework in the country. So far, the government in collaboration with various stakeholders has put much emphasis on promoting, strengthening and sensitizing communities and individuals participation in environmental conservation and management. Parallel to these initiatives, awareness campaigns, environmental education and skills development for environmental conservation and management were undertaken. Achievements: The above mentioned efforts have raised public awareness, interests and actions. Many stakeholders including Community Based Organizations (CBOs) and Non-Governmental Organizations (NGOs), the media as well as the private sector and individuals have consequently been participating in the process by undertaking various steps including education programmes for environmental conservation. The government has also formulated sector policies related to forestry, mining, wildlife, fisheries, agriculture, livestock and lands which take on board environment conservation. These policies also address public awareness on the understanding of linkages between environment and livelihood, and the promotion of international cooperation on the environmental agenda. Policy Commitments: Improving land management and adopting water conservation measures to halt desertification and land degradation as well as restore degraded areas; Implementing mechanisms and policies to mitigate against environmental disasters e.g. flooding, drought, and refugees influx; Implementing pollution control, occupational health and safety standards as specified in the Environmental Management Act; Mainstreaming environmental management in sectors and LGAs plans and budgets; Developing an information system on environment issues; 9

18 Promoting sustainable management of water catchments area and maintenance of forest cover in critical highland catchments areas; and Implementing national waste management strategy to reduce, recycle and undertaking safe disposal of waste. Priority Areas for Resource Allocations: Conducting public awareness campaign for understanding of the linkages between environment and livelihood; Implementing the National Action Programme to Combat Desertification; Implementing National Biodiversity Conservation Programme; Promoting environmental friendly production practices; Carrying out massive campaigns for afforestation; Developing an information system on the state of environment; Raising awareness among Tanzanians for environment conservation and management; and Continuing promotion of international cooperation on the environmental agenda ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2008/ / MACRO ECONOMIC POLICY FRAMEWORK FOR THE PLAN/ BUDGET 2008/ /11 It is noted that Tanzania has continued to face environmental problems, despite the efforts that are being undertaken by the government to address them. The initiatives undertaken include putting in place a National Biosafety Framework and National Biosafety Regulations for the safe application of Modern Biotechnology; and the preparation of Environmental Quality Standards Regulations; Fees and Charges Regulations; Ozone Depleting Substances Regulations; Strategic Environmental Assessment Regulations; and Economic Instruments Regulations. Other environmental programs and projects undertaken relate to the establishment and protection of forest reserves, marine and game parks; the rehabilitation of critically affected lands in dry, semi-arid areas; pollution abatement measures, particularly in urban areas, including sewage and solid waste management and storm-water drainage; and the protection of water sources and related catchment areas. 10

19 GUIDELINES FOR THE PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK FOR 2008/ /11 During the period under review, several regulations were developed to support the implementation of the National Environmental Management Act (EMA). These regulations include; the Environment Impact Assessment (EIA); Audit regulations; and prohibition of manufacturing, importation, selling, buying and use of plastic bags. Under the Strategy for Urgent Actions on Land Degradation and Water Catchments (SUA-LWC), the Government relocated pastoralists from Ihefu basin/valley to other parts of the country in order to conserve and protect water catchments areas. This has led to the restoration of natural vegetation in the area, increased and stabilized water flows in the Ruaha River, and consequently, the water level in the Mtera Dam has risen. Efforts to address environmental pollution have continued over the period; a draft policy on Occupation Health and Safety has been developed and the State of Environment Reporting System is being established under the EMA implementation support programme. The Guidelines noted a number of challenges facing the [environment] sub-sector as the following: Enhancing capacity on environment- related technical issue is to implement EMA regulations; create awareness on the mandates of respective MDAs and LGAs for implementing the Environment Management Act; and sensitize the public on the benefits of safe environment ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2009/ / MACRO ECONOMIC POLICY FRAMEWORK FOR THE PLAN/ BUDGET 2009/ /12 Like other Macro Economic Policy Frameworks that guide MDAs, RSs and LGAs to prepare their Medium Term Expenditure Frameworks (MTEFs), the document translates policies set in the Development Vision 2025, MKUKUTA, The Medium Term Public 11

20 Investment Plan (MPP) and the Ruling Party 2005 Election Manifesto into financeable medium term interventions. However, the 2009/ /12 guideline is the first time Document that combines the preceding two Guidelines Documents prepared by the Government to ensure efficient coordination of fiscal policy management, thus avoiding duplication of efforts and resources across government. Hence, the expenditure framework focused on investing in economic infrastructure in potential areas for growth; social services delivery especially in underserved areas, and sustains macroeconomic stability in the country. With regard to environmental issues, during the period under review, effective support and coordination of environment management efforts through policy making, regulations, monitoring and evaluation and assessment were conducted. Achievements: Specific achievements include: (i) Preparation of regulations on fees and charges, and environmental assessment; (ii) Preparation of regulations on economic instruments initiated i.e. environmental inspectors, hazardous and solid waste management; and (iii) Strategy on conservation of coastal marine, lakes, rivers and river environment prepared. Priority Areas for Resource Allocations: Priority Areas on Environment issues during the 2009/ /12 were the following: i. Implementation on the Marine and Fresh Water Bodies Strategy; ii. Implementation on the National Waste Management Strategy; iii. Continuing with implementation of the Strategy for Urgent Actions on Land Degradation and Water Catchments (SUA-LWC); iv. Continuing with implementation of the Environmental Management Act (EMA) of 2004; v. Continuing with implementation of the multilateral environmental agreements; and; vi. Raising awareness on environmental issues. 12

21 GUIDELINES FOR PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK / /12 The environmental targets in the Budget Guidelines for the Medium Term Period 2009/ /12 included the following: ensuring integration of principles of sustainable development into country policies and programmes, reversing the loss of environmental resources; and halve by 2015 the proportion of people without sustainable access to safe drinking water and sanitation. Up to the year under review, Tanzania had an Environmental Management Act and had put in place as well Environmental Impact Assessment (EIA) regulations and guidelines. The country was actively implementing regional environmental programmes such as the Lake Tanganyika Biodiversity Programme and Lake Victoria Environmental Management Programme; and national programmes such as Participatory Forest Management (PFM) programme, etc. In recent years, conservation efforts in coastal and marine protected areas have increased significantly to protect diminishing fish species. Environmental concerns have also been mainstreamed in the MKUKUTA, and sectoral policies have been reviewed to incorporate conservation of biodiversity issues. Conservation activities managed by local communities include Wildlife Management Areas and Community Conservation Areas. During 2005/6 the Government prepared a Strategy for Urgent Actions on Land Degradation and protection of water sources. The Strategy addresses the problems of environmental degradation caused by agriculture and livestock keeping in water catchments areas. The strategy also covers issues of environmental degradation caused by excessive tree cutting for firewood, charcoal and other uses. A number of Quick Impact Interventions had taken place up to 2009, including; Evacuation of people who have encroached upon plains, water basins and water sources; Controlling agricultural activities within water catchments areas and removal of people who have settled in and/or who carry out these activities; National Education and Public Awareness Programme for the protection of the environment and sustainable utilization of national resources; Identification of unsuitable tree species and prohibiting the planting of such species in, near or around water sources; Encouraging big users of trees, firewood and charcoal, such as institutions, tobacco and tea farmers and others to establish forest farms of their own; 13

22 Controlling the outbreak of wild forest fires, felling of trees for firewood and charcoal, and putting in place concrete implementation and monitoring measures regarding type of trees, age of trees and area for harvesting trees for that purpose; and requiring users to plant and maintain trees as well as control and regulate irrigation activities; Promoting use of, and conducting research on, alternative energy sources and appropriate technologies that are aimed at reduction of firewood and charcoal demands; Implementing Environmental Conservation Programmes and Participatory land use plans in each district; Banning all illegal mining activities especially around water sources and forest reserves; Banning the use of plastic bags and sensitizing use of alternative materials; Developing capacity for implementing environmental management issues; and Producing a state of the environment report. With respect to water and sanitation, the MDG target of halving by 2015 the proportion of people without sustainable access to safe drinking water and sanitation (%) was still the focus; hence, increased availability of portable water was a priority of both the government and communities at large. Water policies have been put in place to guide development, distribution and equitable access. At low levels, the Community committees take charge of water infrastructure maintenance and distribution and work closely with the governments to ensure that there is equity and fairness in the access and use as well as affordability. Sustainability is in-built from design of water projects through community participation, ownership and cost-sharing. Specific rural and urban programmes for the provision of water and maintenance of infrastructure have been established. In the urban areas they are sub contracted to water authorities; whereas in the rural areas such programmes are more in the hands of community committees but more through the Rural Water Supply and Sanitation Programme (RWSSP). Local government authorities supervise and plan for water developments in their localities. The allocation of government resources to the water sector has been increased. As a result, there has been an increase in the rehabilitation of water infrastructure in both rural and urban areas. The water sector also receives great support from DPs in terms of projects, direct financing, technical assistance and, in urban areas large projects and direct finance. 14

23 The Quick Interventions in the water sector were proposed as: Large scale water schemes especially to supply water to townships; Increasing community participation in establishing water committees at cell and village levels for maintenance and expansion of water schemes; Constructing more dams and wells for livestock keepers and farmers; Raising water tariff for water users to tap additional resources for maintenance and development of new water sources; Increasing the number of water stabilization ponds for quality and portability, Increasing water and sanitation projects in rural areas; and Increasing water and sanitation projects in urban areas REVIEW OF THE PLAN AND BUDGET IMPLEMENTATION: 2009/10 AND MID YEAR 2010/11 The Government continued to address environmental issues that have negative impact on land, biodiversity and human conditions. The following were the achievements: i. 10 Biosafety Centres of Excellence (CoE) were identified, 9 institutions were in Mainland and one institution in Zanzibar; ii. Environment Management Master Plan (EMMP) for three cities in Mwanza, Dar es Salaam and Arusha has been formulated; iii. Five Regional Centres established at five Vocational Education Training of Dar es Salaam, Mwanza, Kigoma, Mbeya, Mkokotoni Zanzibar for phasing out Ozone depleting substances; iv. 210 technicians were trained on good refrigeration and air conditioning servicing practices in Mwanza, Kigoma, Tabora, Mara, Shinyanga, Kagera, Mbeya, Rukwa, Iringa, Katavi, Ruvuma, Dodoma, Unguja, Pemba, and Dar es Salaam region; v. Reallocation of invading pastoralists from the Usangu Water Catchment Basin (Ihefu) to areas with less livestock in Lindi and Mtwara; vi. 15 EMA regulations related to Environment Impacts Assessments; Strategic Environmental Assessment; Waste Management including management of plastics; environmental quality standards; ozone depleting substances and environmental inspection were prepared; vii. Guidelines on preparation of sector Environmental Action Plans as required by EMA were prepared; 15

24 viii. 56 sector environmental coordinators in 12 regions were appointed and 20 environmental sections within sectors with their coordinators were put in place; ix. 72 projects were issued with Environmental Impact Assessment (EIA) Certificates out of over 100 which were reviewed; x. 50 experts and 19 Environmental Inspectors were approved and published in the Government Gazette; and xi. Climate change measures and showcasing materials (4 films, fliers and natural climate change awareness and assessment briefing) were prepared GUIDELINES FOR PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK / /13 Looking at the 2010/ /13 Guideline we find that the Government continued to implement policies, strategies, rules and regulations aiming at sustainable use of the environment. Specifically the government; i. Issued and disseminated to various stakeholders the first report of the State of the Environment; ii. iii. iv. Developed, operationalised and distributed to various stakeholders Environment Management Regulations; Prepared, disseminated and operationalised for increasing understanding on the procedures for handling Genetically Modified Organisms (GMO) the Bio-safety Guidelines; Prepared Guidelines for mainstreaming Environmental issues into Sectors and LGAs, for improving planning and management of environment at sector and local level; v. Established sector environmental sections and coordinators in fourteen sector ministries and all LGAs; vi. Trained a total of 150 refrigeration technicians and 110 environmental coordinators on good refrigeration practice and regulations on Ozone Depleting Substances; 16

25 vii. viii. ix. Prepared and disseminated to stakeholders Awareness materials on Multilateral Environmental Agreements (MEAs); Established and operationalised a National BIO-safety Committee; Developed and implemented the Strategies on Urgent Actions on Land Degradation and Water Catchments and Strategy on Conservation of Marine, Coastal environment, Lakes, Rivers, and dams environment; and, x. Prepared and is using a national program on sustainable production and consumption for minimizing waste production and enhancing recycling various products ENVIRONMENTAL CONSIDERATIONS MEDIUM TERM PERIOD 2011/ / MACRO ECONOMIC POLICY FRAMEWORK FOR FIVE YEAR DEVELOPMENT PLAN/ BUDGET 2011/ /16 The macroeconomic Policy Framework for Five Year Development Plan/Budget 2011/ /16 does not specifically address the environment, except a mention here and there in the document, for example with respect to environmental programmes under the Lake Victoria Basin Commission,; managing the environment for ensuring land management; and addressing environmental risks that may cause vulnerability. However, as the Budget Guidelines show, environmental issues feature under different sectors in the same way as they were featuring with specific policy guidance under the Macroeconomic Policy Frameworks GUIDELINES FOR THE PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK FOR 2011/2012 This Plan and Budget Guidelines have been prepared taking into account the ongoing process of the review of achievements of objectives and targets of the Tanzania Development Vision (TDV) 2025 and the preparation of the Five Year Development Plan 2011/ /16. 17

26 The 2011/12 Budget Guidelines with regard to environmental sustainability prioritized land management, town planning and human settlement, enhancing public private partnership and sustaining achievements made in the social sectors. With respect to the water sector, the Medium term plan intended to continue with the following programmes: Implementing Rural Water Supply and Sanitation Programme; Implementing a special programme for improving water supply and sewerage services in Dar es Salaam City; Other cross Cutting issues included the following: Improving environmental conservation, including legislative enforcement, public education, and sustainable management of natural resources; 3.7. GUIDELINES FOR THE PREPARATION OF MEDIUM TERM PLAN AND BUDGET FRAMEWORK FOR 2012/2013 The Plan and Budget Guidelines (PBGs) for 2012/13 are being issued in the backdrop of the first Five Year Development Plan (FYDP I) 2011/ /16 and MKUKUTA II (2010/ /15). The FYDP I focuses on five key priority areas, namely, infrastructure; agriculture; industry; skills development; and tourism, trade and financial services. In the Budget Guidelines for 2012/13, most of the environmental considerations fall under Infrastructure; notably, rural electrification, water and sanitation and tourism through enhancing sustainable conservation and management of natural resources. For the Annual Development Plan for 2012/13, the priorities are the following: i. Livestock pasture and range management ii. Forestry and Wildlife Conservation and protection of forests Conservation and protection of water catchments and wet lands areas; Strengthening institutional capacity for forestry, beekeeping and wildlife development and management; 18

27 iii. iv. Enhancing community and private sector participation in development and management of forestry, beekeeping and wildlife; Creating institutional capacity for carbon credit access and management. Energy Enhancing rural electrification; Increasing capacity and diversifying power generation sources; Roads Decongesting traffic in urban areas; v. Meteorology Enhancing weather forecasting and information dissemination capacity; and Enhancing preparedness for and management of weather related disaster. vi. Water and Sanitation Improving access to safe and clean water, and sanitation services in rural and urban areas; and Strengthening water resource management. vii. Lands, Housing and Settlements Improving and strengthening land planning, administration and management; Enhancing availability of surveyed and serviced plots, decent and affordable housing; and Enhancing research and development activities on housing construction materials for low cost housing. viii. ix. Tourism Facilitating wildlife protection and management; General Issues Improving environmental management; and Developing institutional capacity for climate change adaptation and mitigation. Under Local Government, the Guideline highlights the following on environment: i. Environment and Sanitation An Environment and Sanitation department was established in order to improve environment protection and sanitation. The priorities at the local government level are: 19

28 a) Preparing sustainable environmental protection and sanitation plans; b) Improving and strengthening solid and liquid waste management infrastructures including expansion and maintenance of sewerage network system and refuse dumps in urban areas; c) Improving solid and liquid waste management systems in both urban and rural councils as well as environmental protection; d) Mobilization of communities on environmental protection and sanitation hence, protection of environmental resources such as water sources; and e) Mounting sanitation campaigns and formation of environmental protection groups. f) Water implementing water sector related activities at community level-water schemes for underserved communities, improving access to water schemes. 20

29 SECTION 4 BUDGET SPEECHES AND BUDGET GUIDELINES (BGS) 4.1. ALIGNMENT OF BUDGET SPEECHES WITH BUDGET GUIDELINES One way of gauging the inclusion of environmental issues in policy is to assess the coherence between the specific Budget Guidelines and the Budget speech that follows. Although it is beyond the scope of this work, we provide an example through analysis of the 2012/13 Budget speech. According to the Budget Speech (URT 2012d), challenges emanating from implementation of 2011/2012 budget included: unreliable availability of electricity supply; increase in world market oil prices; food shortages in some parts of the country; increase in prices of goods and services; late disbursement of local development funds due to bureaucratic procedures on accessing non concessional loans; the increase in accumulated domestic arrears, particularly from contractors, suppliers and civil servants. The budget also examined world economic trends and the regional and international treaties and commitments. The Government will take measures to address these challenges. The focus of 2012/2013 budget is to achieve the following: (i) To increase real GDP growth rate to 6.8 per cent in 2012 from 6.4 percent of 2011; (ii) To improve economic infrastructure, including electricity, roads, railways and ports; (iii) To increase access to financial services; (iv) To increase domestic revenues to 18 percent of GDP in 2012/2013 compared to the likely outturn of 16.9 percent in 2011/2012; (v) To continue with efforts to curb inflation to a single digit; 21

30 (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) To maintain a stable and market determined exchange rate; To increase credit to private sector to 20 percent of GDP by end June 2013 in line with measures to curb inflation; To maintain foreign exchange reserves to cover 4.5 months of imports of goods and services. To strengthen Public and Private Partnership (PPP) arrangement with a view to widen opportunities for implementing development projects; To improve business environment for Small and Medium Enterprises; To safeguard and sustain achievements realized in the social sectors; To strengthen good governance and accountability; and To develop the country s capability to endure economic and financial crisis and effective participation in regional and international arrangement. We found the Basis of budget to be: (i) Availability of reliable electricity and promotion of the use of natural gas. In the Budget speech we found the following Environmental Fiscal Reform (ENR) issues: i) To build capacity of the Ministry of Finance, Ministry of Energy and Minerals, Tanzania Petroleum Development Corporation, Tanzania Revenue Authority and Tanzania Mineral Audit Agency (TMAA) in order to enhance their respective capabilities to administer revenues collections in the areas of minerals, gas and petroleum. ii) To review tax rates applicable to agriculture and fishery sectors with a view to harmonize and reduce them; Moreover, EFR was spelled out in the following tax laws: 1. The Motor Vehicle Registration and Transfer Tax Act, CAP 124:- (i) Exempt Value Added Tax on various equipments (Compressed Natural Gas and Piped Natural Gas) that will be used for storage, transportation, and distribution of natural gas. This measure is intended to promote the usage of natural gas in various sectors of the economy, including motor vehicles, domestic and industrial use. The measure is also expected to preserve forests, reduce environmental degradation and encourage production of gas cookers in the country ; (ii) Abolish exemption of Excise Duty on imported non-utility motor vehicles for all beneficiaries ; 22

31 (iii) (iv) (v) Amend the fuel levy exemption that was granted during the 2011/12 budget for the fuel to be used by the oil and gas explorers to include excise duty as it was intended ; Introduction of personalized plate numbers for shillings 5,000,000 for three years. The measure intends to generate more revenue to the government ; and, Importation motor vehicles aged more than 8 years from the year of manufacture will now be subjected to the excise duty of 20 percent. 2. The Excise Duty rates on cigarettes were amended as follows:- i. Cigarettes without filter tip and containing domestic tobacco more than 75 percent from shillings 6,820 to Shillings 8,210 per thousand cigarettes; equivalent to an increase of shillings 1,390 per thousand cigarettes or shillings 1.40 pre cigarette ; ii. Cigarettes with filter tip and containing domestic tobacco more than 75 percent from shillings 16,114 to shillings 19,410 per mil; equivalent to an increase of shillings 3,296 or shillings 3.30 per cigarette ; iii. Other cigarettes not mentioned in (i) and (ii) from shillings 29,264 to shillings 35,117 per mil; being an increase of shillings 5,853 per thousand cigarettes or shillings 5.8 per cigarettes ; iv. Cut rag or cut filler from shillings 14,780 per kilogram to shillings 17,736 per kilogram; being an increase of shillings 2,956 per kilogram ; and v. The excise duty rate on cigar remains at 30 percent. 3. Excise Duty was imposed on Natural Gas for industrial use at shillings 0.35 per Cubic feet 23

32 SECTION 5 PROGRESS TOWARDS ACHIEVING FULLY ENVIRONMENTAL MAINSTREAMED BUDGET GUIDELINES AND PROCESSES 5.1. THE PROGRESS Tanzania s concerns about the environment are due to increasing unrestricted activities that are causing the degradation of the environment. These activities include, unsustainable mining activities, especially by small miners; overgrazing, due to overstocking; increased deforestation, due to extensification of farming and unplanned harvesting of forest products, particularly tree cutting; uncontrollable harvesting of other environmental resources, in particular, destructive fishing in both sea and lake waters; poor management of water resources and haphazard disposal of plastic materials. The National Environmental Policy (URT, 1998), identifies six problems for urgent attention; namely, land degradation, deforestation, loss of wildlife habitats and biodiversity, deterioration of aquatic systems, inaccessibility of good quality water for urban and rural inhabitants, and environmental pollution. In addition, climate change continues to pose a potential threat of natural disasters, for example, droughts and floods; as such Tanzania needs to be prepared to face them and ready to mitigate their effects. The above problems are compounded by lack of an efficient property rights structure. Moreover, the enforcement is limited by weak conservation regulatory instruments; as well, baseline data are scanty. Overtime and in the reviewed budget guidelines, the government has been putting in place legal and regulatory frameworks to contain the above issues. In addition, environmental awareness campaigns have been prioritized in the budget guidelines. As a guiding framework, the legal framework for environmental issues is spelled out in the Environmental Management Act (URT, 2004); in conjunction with Environmental Impact Assessment (EIA), regulations and guidelines. 24