III. MECHANISMS FOR INTEGRATING ENVIRONMENTAL CONSIDERATIONS INTO SECTOR POLICIES AND FOR MONITORING 20

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G. Viability of remuneration versus penalties for enforcing rules

The viewpoints which have emerged with regard to the proposed revisions to the National Environmental Act are detailed below.

With regard to penalties, the perception is that:

• The current law is overloaded with command control mechanisms which cannot be matched by appropriate numbers of personnel and other resource commitments by State agencies, and which require heavy investments in capacity-building in State institutions;
• There is a lack of relevant regulations and other soft law provisions for making effective the provisions contained within the laws;
• Court delays are discouraging judicial enforcement;
• Confusion exists over agency responsibility and as a result of overlapping jurisdiction;
• Weaknesses in the law are making judicial enforcement cumbersome;
• Sole reliance on State agencies for effective compliance and enforcement of penalties has not proved to be reliable;
• More effective penalties are required to ensure that project proponents or PAAs do not make costly commitments to a project before an EIA is approved (e.g., by signing contracts, clearing land etc.);
• A mechanism providing for administrative penalties would significantly reduce the need to resort to court action for enforcement and would act as a better deterrent;
• Legal instruments are rigid and hence disregard the ability of nature to perform its natural assimilation function. Laws should incorporate the flexibility necessary for recognizing and legitimizing the assimilation functionplayed by nature. At the same time, the development of the country requires a more flexible approach;
• At present, EIA procedures do not provide for viability assessments of environmental mitigation measures. Legal structures must therefore be made more flexible for that purpose. In that connection, it is worth noting that the National Planning Department of the Ministry of Finance has taken initiatives to integrate environmental concerns into public investment projects, in order to avoid irrational decisions and possible impediments to development on environmental grounds.

With regard to remunerative measures, the perception is that:

• Adequate incentives are necessary for compliance, with an appropriate balance between sanctions and incentives, while there is also a need to mandate rational planning of resource use, conservation and protection. The two mechanisms must relate to each other in a rational way;
• Strict standards enforced through the EPL regulations are not economically rational. They do not offer incentives to processors to reduce effluent discharges to levels which are practical, and the processors are liable for legal prosecution until stipulated standards are reached. Provision must therefore be made to encourage the processors to reduce their pollution loads. Economic measures such as "effluent charge" could prove more effective in that regard;
• Other remunerative measures could be introduced, such as tax benefits for compliance, green marking and generous assistance towards the capital investments needed for compliance. For example, assistance provided through a Pollution Control and Abatement Fund (PCAF) by the National Development Bank of Sri Lanka, with donor funding, for investment in effluent treatment machinery has shown encouraging results. Assistance is also being provided through donor funding to improve environmental conditions in the project areas of privatized plantation companies. Those measures are discussed further in chapter IV.

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