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Building Coalitions for Change to Implement Pro-Poor Environmental Fiscal Reforms
 

Focus area: Adaptation
Website: www.iucn.org;
Activity page: http://iucn.org/about/union/secretariat/offices/asia/asia_where_work/pakistan/projects/archived_projects/proj_arc_efr/
Location: Nawanshehr town, District Abottabad in Khyber Pakthunkhwa Province Pakistan
Established: July 2011

The balance between population and available water makes Pakistan one of the most water-stressed countries in the World. More pressure is added by the effects of climate change and also by the in population and the demand.

Securing universal access to safe and reliable drinking water is one of the leading challenges for sustainable development in Pakistan. Water is linked to poverty in many ways, affecting livelihoods, income and health, and exacerbating gender disparities and social exclusion.

Environmental fiscal reforms (EFRs) have been described as a strategy that redirects government taxation and expenditures towards set of activities in support of sustainable development. The idea is to use fiscal instruments by modifying the prices of environmental goods and services in order to influence behavior and incentivize environmental protection (including charging appropriate prices and user charges for various natural resources extraction activities; making polluters pay for internalizing externalities, and rationalizing subsidies on environmentally harmful fuels). The funds raised through these measures can be channeled to specific priority sectors including climate change adaptation and vulnerability reduction.

The goal of the activity Building Coalitions for Change to Implement Pro-poor Environmental Fiscal Reforms was to showcase the application of pro-poor EFRs as a viable instrument for promoting sustainable development with climate change adaptation co-benefits.

The activity’s objective was to identify institutional, legal and policy arrangements for effective and sustained fiscal decentralization, to promote district level implementation, and to build capacity and support among government, civil society and private sector for EFR options that will show practicable options for adapting to climate change and thereby reducing people’s vulnerabilities to environmental and climate changes. This goal was achieved through policy research, enabling institutional and policy frameworks, capacity building, awareness raising and finally by piloting selected EFR options. One pilot EFR intervention was in water supply, the other addressed solid waste management.

This activity was the first application of EFR in Pakistan. It was also innovative in its pro-poor focus and its cooperative nature.

As part of the drinking water supply reforms, a block tariff system was introduced with varying rates based on usage. Gender aspects were incorporated by involving women and youth in the water distribution and watershed management activities, thereby targeting a particularly vulnerable segment of society. Broad involvement also enhanced the awareness and understanding of environmental services such as water provision, its value as well as potential climate change impacts or ways to innovate and adapt.

To improve the longer-term provision of water to the town, about 4,000 saplings were planted in selected watersheds in Nawanshehr, with the help of the incoming fees. Indigenous and multipurpose tree species (including fruit-bearing trees) were selected to create an adapted and adaptive natural environment that is more resilient to environmental and climatic changes. The rehabilitation of the watershed significantly improved environmental quality, including soil erosion and water retention, and well as ensured longer-term resilience.

In the solid waste sector, pro-poor EFR have been successfully demonstrated. Solid wastes that are freely disposed not only create health hazards for people, livestock and the environment, they are also a missed opportunity to recover valuable resources and generate energy. Avoided emissions thereby mitigate environmental and climate change impacts.

 

Mitigation / Adaptation

Benefits

Potential for scaling-up and replication

The results already achieved in this activity from 2006-2010 include:
Environmental conditions in Nawanshehr have significantly improved as direct consequence of the watershed improvement activities. Capacity and performance of local administration has significantly improved to better manage the natural resources and infrastructure.

Due to its successes in Abbottabad, the concept of EFR has been integrated in the ‘Poverty Reduction Strategy Paper II’ being finalized by the Government of Pakistan.

The broad engagement and active involvement of local institutions, administration, communities including children and commercial service provision in the capacity building and pilot processes have established high buy-in and commitment, therefore showing significant changes in environmental management in Abbottabad.

Improvements of the local governance structures were achieved. Cooperation lays a very important foundation for adaptability of these structures, processes and activities to future external changes (including climatic) and demands.

The EFR activity has generated high quality research work that has explicated the applicability of fiscal measures in Pakistan for resource management, adaptation co-benefits and pro-poor decision-making.

The activity aimed at demonstrating the feasibility of poverty reduction and environmental improvement through undertaking a set of environmental fiscal reforms initiatives.

In the drinking water sector 2,700 feet of new water distribution pipes were installed in Nawanshehr to ensure that sufficient water is supplied to domestic consumers. Thereby, and by planting trees and maintaining the watershed, short and long-term employment opportunities were created. Capacity of the Union Council was built to improve water resource management and to ensure access to all consumers. A progressive block tariff system was then introduced in which consumers pay according to usage; beneficiaries of ‘Zakat’ and ‘Bait-ul-Maal’ are exempted from any payments except for nominal monthly fees in order to ensure water access to all segments of the community. Also, the introduction of fees introduces an incentive to conserve scarce water resources.

Importantly, involvement of women and youth were sought in all aspects of the activity, since often women are the ones directly using e.g. cooking water. Citizens, in particular children and women, showed high motivation to manage solid waste for betterment of environment, health hazards and also to generate revenue.

In the solid waste sector pro-poor fiscal measures have been successfully demonstrated in many forms. Through community mobilization, five Mohellah Environmental Committees have been established and have hired their own waste collectors paid through small contributions from all the households. Secondly, school environmental clubs were established in five schools in Nawanshehr. Children are educated on recyclable materials and encouraged to bring these to their school once a week. These are sold to local merchants to generate revenue for the school, which is utilized for betterment of services and excursions into the natural environment. Thirdly, kitchen gardening practices through composting of organic waste have been promoted and at least nineteen kitchen gardens established during the activity duration. This practice was very well received particularly by low income households as it helps in reducing expenses for purchased vegetables. Fourth, registered waste merchants pay Rs.150 per month to the Town Committee as tax, in return of permission to do business in the area and creating further income opportunities through paying garbage collectors. The town utilizes the collected revenue for betterment of services and through registration has better management oversight. The pilot showed that waste management can directly and significantly improve quality of life for local residents and reduce long-term environmental pollution.

Overall, the environmental conditions in Nawanshehr town are reported to have significantly improved because of implementing the pilots in the two sectors. Performance and capacity to better manage the existing resources and infrastructure have significantly and lastingly been strengthened.

 The improved environmental conditions in Nawanshehr have created further demand to introduce other environmental fiscal measures in the area and also to implement the tested measures at a wider scale. This shows the high applicability and suitability of simple EFR measures to the area.                                 

The proposed replicability of this EFR activity targets two main aspects. On the one hand dissemination of the research work, success factors and recommendations to all tiers of policy, administration and communities shall widely raise awareness and support decision-making. On the other hand the feasibility of EFR and the opportunities therein when applied on a larger scale need to be communicated, in order to achieve lasting development results in which environmental factors, social participation and economic instruments are involved.

A conducted research study showed that among the urban sample 92% were willing to pay for improved water services, whereas in rural areas 69% overall were willing to pay. The mean willingness to pay was estimated at 58 rupees per household per month. Both aspects show high potential for replicability and upscaling of EFR in the water sector.

Output 1 for upscaling: Achievements and lessons learnt documented:
i. Prepare a lessons learnt document on application of EFR in to adapt to climate change in water sector in Abbottabad, including beneficiary perspectives;
ii. Prepare policy brief on best practices and recommendations per stakeholder group;
iii. Prepare a video documentary on EFR as viable instrument for adapting to climate change;
iv. Advice to planning agencies on all levels (federal, provincial, district and urban planning) regarding the integration and mainstreaming of EFR into planning processes.

Output 2 for upscaling. Effectiveness and efficacy of EFR for adapting to climate change disseminated, opportunities for up-scaling explored:
i. Networking for opportunities of scaling-up and replication of EFR activities in Pakistan and elsewhere;
ii. Criteria for successful up-scaling (including appropriate pricing, adaptation and mitigation co-benefits, means of participation, etc.) devised, based on shared experiences during networking events, to be used to facilitate and improve pro-poor EFR decision-making.
As the activity finished in 2010, no funding is currently available for up-scaling.

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Organizations
District Government of Abbottabad;

Pakistan, Union Council of Nawanshehr;

International Union for the Conservation of Nature, Pakistan
 

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