Policy Brief: Making Environmental Spending Count

Clean air and water are vital for human life, and our societies devote large amounts of money to helping to curb pollution and preserve a healthy environment. Much of that money comes from private sources – businesses pay to dispose safely of environmentally harmful waste, or to mitigate the polluting effects of production processes.

But while technology standards, environmental permits, pollution charges and taxes all have a role to play, public spending is also important in environmental protection efforts.

Governments often pay subsidies to provide environmental public goods, such as the basic levels of sanitation required to safeguard health.

Public funds are also used to make it easier to borrow money on the financial markets for environmental projects, through measures such as risk sharing, credit enhancement, or subsidies to lower the costs of borrowing in communities that cannot afford the full costs of investments. So ensuring that public expenditure programmes are well-managed is an essential element of effective and efficient environmental policies.

This Policy Brief looks at how effectively governments use public funds to achieve environmental objectives, and what economies in transition can learn from the OECD experience in crafting and managing their own public expenditure programmes.