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The role ofPolish environmental funds: Too generous or too restrictive?

Published online by Cambridge University Press:  01 October 1999

GLEN D. ANDERSON  and
TOMASZ ZYLICZ
GLEN D. ANDERSON
Affiliation:
Consultant, Harvard Institute for International Development
TOMASZ ZYLICZ
Affiliation:
Professor, Warsaw Ecological Economics Center; and Project Associate, Harvard Institute for International Development
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Abstract

In many countries, and particularly in the economies in transition in Central and Eastern Europe, public environmental funds play an important role in financing environmental investments. These funds provide subsidized financing through grants and soft loans in response to market failures that limit environmental investors' access to capital markets or poorly account for the benefits of environmental improvements. The principal question explored in the paper is whether environmental funds are too generous or too selective in co-financing environmental projects. The authors conducted a survey of applicants whose applications to Polish environmental funds were rejected following appraisal by the funds in 1994. Applicants were contacted to determine whether they had been able to close the financing 'gap' by the end of 1995 that had resulted from the rejection of their application by the Fund. Survey results indicate that a large majority of respondents have secured substitute gap financing and proceeded with their planned investments, suggesting that the fund's assistance was not essential for these projects to be implemented. Generally, the financing gap had been closed by financing from another environmental fund, from own resources, and less frequently from the same fund (after resubmitting a modified proposal). Only in few instances have proposed projects been abandoned.

Type
Research Article
Information
Environment and Development Economics , Volume 4 , Issue 4 , October 1999 , pp. 413 - 448
Copyright
© 1999 Cambridge University Press

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Footnotes

The authors wish to acknowledge research assistance provided by Sebastian Tomala and Anna Bartczak, who carried out computations at the Warsaw Ecological Economics Center. Laurie Manderino of the Harvard Institute for International Development offered valuable comments on a previous version of the paper. We are also grateful to two anonymous referees for extremely useful criticism and revision suggestions. Of course, the usual disclaimer applies.