VII. CONCLUSIONS AND RECOMMENDATIONS
B. Legal measures
Since a comprehensive legislation, in the form of the Environment Protection Act, 1997, already exists, its immediate and effective implementation needs equally comprehensive rules and regulations which specify in clear terms the authority, responsibility and jurisdiction of the various government agencies, local bodies, private sector and NGOs. It will also be necessary to decentralize the authority for execution and implementation functions to line agencies so that the Ministry of Population and Environment can concentrate on policy integration, coordination, facilitation and legislation.
Second, the line ministries should formulate their own environmental guidelines as soon as possible, in line with the national environmental guidelines. Some of ministerial guidelines already gazetted as well as the standards and norms of IEE and EIA should be brought under EPA and its regulations. Until the legal mechanism is well in place, the enforcement system will remain weak.
Given the currently poor database and administrative limitations, setting or enforcing complicated and stringent norms and standards will not be feasible. Until a reasonably adequate and reliable database can be established, simple standards offer a better chance to achieve compliance and enforcement.
Third, the vast number of existing laws, regulations and notifications directly related to the various aspects of the environment should be reviewed, amended, consolidated or even annulled in the light of EPA and its sectoral guidelines, in order to encourage simplicity, consistency and accessibility. In New Zealand, for example, as many as 78 environment-related laws were consolidated into the Resources Management Act, 1991. For that purpose, the "legal committee" proposed earlier in this chapter should be constituted as early as possible. The committee should then take stock of the international obligations emanating from the various Conventions to which Nepal is a party, and it should suggest measures for their effective implementation.
Fourth, no mechanism yet exists to enable interaction with the private sector, represent its interests or elicit private sector cooperation in environmentally-related decision-making processes; however, some experts from outside the government have been included on EPC on an individual basis. Cooperation with, and an understanding of, the private sector would make the enforcement of environmental laws and regulations much easier.
Fifth, most or even all of the existing laws and regulations are heavily orientated towards "command and control" measures with provisions for various penalties and punishments. In view of the present liberal, market-oriented policy of the government, it would also be advisable to introduce economic instruments and market mechanisms for compliance with environmental measures. Taking into consideration the economic growth and environmental situation of the country, it will be worthwhile exploring some possible policy options and incentive measures.
The existing policy of providing heavy subsidies for chemical fertilizers and some petroleum products needs a critical review. The application of subsidies has resulted in limited consumption of fertilizers in some places and for some crops because of inadequate and untimely supply, while encouraging liberal usage in other places and for other crops. Available evidence also indicates that for farmers an adequate and timely supply is more important than price. Likewise, underpricing of water and electricity also encourages their unnecessary use and perpetuates the problem of inadequate supply as a result of resource constraint. These policies are all unsustainable and therefore need correcting at some stage through a gradual phasing out of subsidies and the introduction of price adjustments for public utilities, at least on a cost-recovery basis. That should be done in parallel with the introduction of additional taxes and tariffs on polluting materials such as high lead content petroleum products, high sulphr content coal, as well as a carbon tax on the import or sale of vehicles. However, government subsidies, if properly directed, can become both growth promoting and environmentally friendly. For example, the present capital and loan interest subsidy for biogas plants is having the positive effects of reducing firewood consumption and pollution and, at the same time, of enhancing the adoption of an alternative source of energy, especially in rural areas. A similar subsidy for the installation of micro-hydropower plants, solid waste recycling plants and solar energy plants deserves consideration.
As a part of the financial reform measures, some of the environmentally friendly industrial enterprises and other development activities in the private sector could also be treated as "priority areas" and included in the present central bank definition of such areas, so that the financial institutions can be encouraged to direct part of their lending to such activities. It is also worthwhile making it mandatory, on the part of the financial institutions, to look into the environmental aspects when scrutinizing a project proposal for a loan in order to determine whether the environmental costs are externalized or internalized. Such an analysis should be particularly relevant in the case of industries which use non-renewable natural resources as raw materials. Also, the interest rate structure could be made discriminatory as a way of penalizing environmentally unfriendly projects.
As a part of the trade sector reforms, it is desirable for a negative list of highly polluting items to be prepared; the import of such items could then be banned, restricted or subjected to import licensing under stringent conditions, to ensure that they are used only for the specified purposes. Likewise, some imported polluting items could be subjected to a pollution tax in addition to the regular customs tariff, or to a depository refunding system under which the deposited money can be refunded only after the submission of a certificate of proper disposal of waste residues.
As a part of the fiscal reforms, recycling industries in general could be provided with some tax incentives and recycled products could be exempted from sales tax or the value-added tax expected to come into force from fiscal year 1997/98. Similarly, differential tax rates could be introduced to discourage the establishment of industries using non-renewable resources as raw materials, while encouraging those industries which produce environmentally friendly substitutes for polluting imports.