Pollution charges, natural resource extraction taxes, user fees, and other environmentally motivated economic instruments play a significant role in environmental policies throughout the CEE region. Many charges, such as land use conversion fees, forestry charges, and natural resource extraction taxes, raise revenues for environmental protection and have positive influence on resource management. More recently, a few instruments have been introduced with the specific goal of nature conservation and biodiversity protection. Supplement 2 contains a comprehensive review of economic instruments related to biological diversity and nature protection in CEE.

Several countries in the region have enacted land use charges (on the use of agricultural or forest land for purposes other than agriculture or forestry) which entail environmental features. Croatia, Czech Republic, Slovakia, Hungary, and Slovenia have each introduced land conversion charges in various formats. The agricultural and forest land conversion fees in the Czech Republic are earmarked (60%) for the State Environmental Fund. In Croatia, Czech Republic, Hungary, Lithuania, and Poland revenues for forest protection and reforestation activities are generated through timber extraction charges or fines.

Charges or taxes on fertilisers and pesticides are not widely used in CEE region. In some countries, for example Latvia, water effluent charges include charges on pollutants from fertilisers and pesticides (ranging from USD 167/ton for nitrates and phosphates up to USD 16,667/ton for pesticides), although enforcing such charges proves to be more difficult than targeting larger point source pollution. According to its National Environmental Action Plan, Slovenia is planning to introduce charges on fertilisers and pesticides in the near future. In other countries, however, fertilisers and pesticides are exempted from certain taxes or subsidised in order to stimulate agricultural production (The Republic of Montenegro and Croatia).

Taxes on natural resource extraction are in place in at least eight countries in the region. Some of these act as a simple royalty on minerals extracted and generate revenues for the national budget but offer little environmental incentive. In other systems, for example the natural resource taxes in the Baltic countries, the tax rates and penalty rates can be set according to the environmental impacts of resource extraction. In Latvia and Estonia, the charges are partially earmarked for environmental expenditures.

Finally, there are a number of CEECs that apply instruments specifically intended for nature protection. Fines are introduced for unlawful hunting and fishing and damage to wildlife or habitats in several countries. These non-compliance fines generally have more of a "command and control" effect rather than an incentive character and are used primarily to enforce nature protection legislature. More recently, economic instruments are being considered as a valuable tool to achieve broader natural resource management goals. In Poland, entrance fees have been introduced to national parks and are collected by national park management authorities. Bulgaria is considering a proposed "Nature Tax" which, in its draft form, envisions an annual tax on hotels, stores, and recreational facilities located in protected areas. Entrance fees for protected areas would also be introduced and earmarked for national and municipal environmental funds.

Please see Supplement 2 for details regarding the instruments described above.

Klarer, J., McNicholas, J., and Knaus E. (eds.) "Sourcebook on Economic Instruments For Environmental Policy in CEE." REC, 1999.