DEREL – Development of Environmental and Resources Engineering Learning Assessment of Negative Externalities in Environment Case of Albania (Environmental Externalities) Aida GJIKA Faculty of Economy, University of Tirana, Albania TEMPUS DEREL seminar in Novi Sad, 03-04 April, 2014

Outline of the presentation: Theoretical aspects regarding externalities in environment Legal Framework Assessment of the environmental externalities in Albania Evaluation Conclusion

Externality The costs and benefits which arise when the social or economic activities of one group of people have an impact an another, and when the first group fail to fully account for their impact (Mas-Colell et al. 1995; ExterneE, 1995) Welfare economists aim to maximize individual and social welfare through optimal resource allocation A problem of Market failure (not efficient way of organization) Internalize costs

Legal Framework (1/3) No clear and well defined legal framework ( the right to be informed about environment) Implementation, but only the legal framework regarding taxes and fees has been improved the differences that there are may lead to difficult choices with respect to the allocation of scarce resources. The legal and institutional gaps at the national and local level However, a number of agreements:

Legal Framework (2/3) Signed 7 International Conventions for different environmental issues Created 7 Developmental Strategies for different aspects of the environment 20 laws approving different International Protocols, Agreements and Amendments Over 20 amendments of existing laws Over 80 Council of Ministers decisions related directly to environment  Over 20 Directives and over 5 Regulations

Legal Framework (1/2) Now the Ministry of Environment, Forests and Water Administration (MoEFWA) Unfortunately, information about impacts of environmental and its degradation is limited No regular data and not updated (2011) Only 2 international reports on Environment Performance Review (2002; 2012) and 1 national reports Monitoring progress, evaluation of data and assessment of policy efficiency need to be strengthen. This challenge necessitates an improved institutional background and the improved operation of responsible institutions.

Main problems: linked to its historic legacy of a centrally planned economy. Water Pollution Air pollution Land degradation Biodiversity losses Disaster risks Climate variability and change

Assessment: Quality of Air Emission of CO2 in Albania Deforestation Purity of sea (Quality of beaches)

Quality of Air measured by PM10 and LNP PM10 – particulate matter concentrations, fine suspended particulates less than 10 microns in diameter Mixture of solid and liquid particles Capable of penetrating deep into the respiratory tract and causing significant health damage Gas released by automobiles

Quality of Air measured by PM10 and LNP Source: Environmental, Forest and Water Administration Ministry (2011)

PM10 Allowed level of these gases are 60 μg/m3/year or about 50% higher than the level allowed by the European Union which has an average of  40 μg/m3. 2-7 times higher Dangerous Area from WHO

Quality of Air-Presence measured by PM10 and LNP LNP- floating solid particles The presence of dust particles in air Source from construction and poor quality of roads

Quality of Air-Presence measured by PM10 and LNP Source: Environmental, Forest and Water Administration Ministry (2011)

Air Pollution Nitrogen dioxide (NO2) and Sulfur Dioxide (SO2) are components of smog and causes of acid rains. Very easily human organism and can cause lung diseases, increase the chance of receiving viruses, eye irritation or skin diseases. Acid rain

Air Pollution measured by sulfur dioxide Source: Environmental, Forest and Water Administration Ministry (2011)

Air Pollution measured by nitrogen dioxide Source: Environmental, Forest and Water Administration Ministry (2011)

Interpretation and possible reasons The current situation does not appear problematic. Nevertheless, Albania is still at relatively high levels despite not being an industrialized country Te data are average of all urban areas, including the rural which lower the average The goal should not be an overall average below the limits of the European Union, but rather a level below 40 μg/m3 for every area Focus also in the cities where are located factories in their vicinity such as Kruja

Air Pollution measured by carbon dioxide Source: World Bank (2011)

Deforestation (illegal chopping) Source: Environmental, Forest and Water Administration Ministry (2011)

Quality of beaches Public Health Institute (2012)

Taxes and Fees Environment policy in Albania underdeveloped, consist of control and regulatory taxes Few market instruments Taxes on used vehicles (fuel tax. Cleaning tax, environmental fines, forestry and fishery fines) Share of environmental taxes: 0.41% of GDP No other pollution emission sources Deficiency in monitoring infrastructure

Further research: Evaluation EF = Emission Factor HR = Heat Rate in Btus/kWh;1 VED = Value of Environmental Damage, in ¢/lb.

Conclusions Implementation problem Not available data, no research Problem 1: Air pollution Improvement in other aspects Need to evaluate for internalizing Need to address to policies, reforms SHR and LR

Thank You!