By: Batir Wardam

The Economics of environmental degradation in Jordan have been calculated in a recent study by the World Bank. The cost of environmental degradation in Jordan was estimated at JD 205 million or 3.1% of GDP. In detailed figures water pollution was found to be costing 0.71 to 1.24% of GDP while Air pollution costing 0.69% of GDP. Moreover Land degradation cost 0.46% of GDP while Soil salinity cost 0.14% of GDP. The two last issues were inadequate waste collection costing 0.11% of GDP and Coastal degradation at 0.09% of GDP

Any national efforts in environmental protection will need to be creative in securing financial resources for environmental activities. The national budget allocation is barely adequate for the Ministry of Environment's running costs and core activities. To develop and implement innovative and effective options, financial resources have to be mobilized from non-budgetary allocations. The diminishing of donor support to Jordan and its shift in focus has rendered the country unable to rely on foreign aid for sustainable environmental management. Resources have to be mobilized from within.

Public Private Partnerships

One such alternative is public-private partnership where the private sector is invited to invest in the establishment and management and eventually profiting from robust projects that tackle environmental problems and result in profits. The main sector in which the Ministry is trying to work with the private sector is the recycling and reuse of industrial waste water as two water reuse treatment plants will be constructed in Zarqa and Irbid funded by the private sector to link the industries and make use of large amounts of wastewater.

Another example is private sector investment in the construction and management of industrial and hazardous waste treatment facilities based on a commercial and cost-analysis that provides incentives for profits.

The Environmental Fund

A new approach is being developed by the Ministry of Environment to secure funds and provide incentives for private sector. The objective is to provide technical and financial tools for industries and investments to enhance their environmental protection systems. The technical tools can be found within the "National Cleaner Protection Programme" that will provide technical advise for firms aiming to invest in cleaner production and management schemes. However, the financial resources are the main concern.

Based on a draft environmental inspection and monitoring bylaw, the violating industries –as identified through the inspection process- will be fined and the amount of the fine will be used to fund a technical environmental auditing study that will provide industries and developmental facilities with the solutions they need to respond to environmental problems. The violating industries will be forced to fund the auditing study and then abide to its results through a monitoring plan.

What about the good guys which are the industries and facilities that believe in the overall cause of protecting the environment and reducing material, water and energy use and of course reducing resulting wastes?

In this case there is a new sustainable financial approach developed currently by the Ministry of Environment with technical support from the Sustainable Achievement of Business Expansion and Quality (SABEQ) programme funded by the USAID. This approach is a special "Environmental Protection Fund" which has been stipulated as a responsibility for the Ministry of Environment within the Environmental Protection Law. The SABEQ programme is supporting the Ministry in identifying practical mechanisms for financial allocations, sources of funds, management methodologies, disbursement mechanisms and priorities of use.

By definition, the fund will provide sustainable finance on a competitive basis for a wide range of projects to strengthen firm level interest in investing in technology and improving processes that advance compliance and sound management of Jordan’s environment and its natural resources. Based on initial analysis that will be finalized soon the main priority areas for investments by the Fund relate to technological innovations waste management and pollution prevention.  Regarding renewable energy and energy efficiency which are considered to be of utmost priority, they will be managed through a special green energy fund to be established by the Ministry of Energy and Natural Resources.

The main sources of money for the fund will be Carbon trading through the Clean Development Mechanism (selling Jordan's polluting rights of greenhouse gases to international governments and companies) where expected revenue of JOD20.5 million between 2009 – 2012 estimated.  Other sources are fines against violating industries, grants from donors and some expected taxes.

This package of financing tools should also be supported by a cost-effective and attractive portfolio of investments in environmentally friendly projects that enjoy the support of both legal and economic incentives.