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Country report: Estonia 01.06.2001

Sustainable Theory - Unsustainable Practice? Billions for Sustainability? - Second Briefing, lehekülg 43-49



Estonia submitted its application for EU membership in 1995 and signed the Association Contract (European Contract) in 1995. In December 1997 Estonia was chosen as a first wave accession country, and accession negotiations started in March 1998.


The basic document for the use of pre-accession funds, the National Development Plan (NDP) was finalised in September 1999. For SAPARD, a Regional Development Plan was completed in 1999, and ISPA projects were prepared and presented to the Commission by the ministries of Environment and Transportation. The PHARE SPP (Special Preparatory Program for Structural Funds) is being carried out to prepare Estonia for the upcoming Structural Funds. Although there have been delays in the formation of the entire institutional set-up (especially the auditing and monitoring mechanisms and fiscal schemes) it is almost completed at the time of writing.


The Estonian Government is not actively involving NGOs in the process of selecting and preparing of projects to be financed from pre-accession funds. There is no pro-active dissemination of information on pre-accession funds, although some information may be found on various state institutions' websites. There have been several cases when information requests by NGOs about pre-accession funds were not replied to at all. There have also been cases (for example, NDP documents) where the Estonian and English language versions of the same document were slightly different from each other. More recently the Government included representatives of NGOs to the ISPA environmental monitoring sub-committee and SAPARD monitoring committee. However neither the national ISPA national monitoring committee nor ISPA transport monitoring sub-committee have NGO representatives.


Such shortcomings are creating tensions as people do not have a sense of "ownership" of the projects. To avoid conflicts, the Government (especially the Ministries of Finance, Environment, Transportation and Agriculture) should actively distribute information about the planning and use of pre-accession funds. NGO representatives must be included to the committees dealing with the identification of projects, and during the monitoring and evaluation stages of the projects.


Portfolio overview and possible environmental consequences


It is almost impossible to estimate all the consequences of joining the European Union, the EU itself is in a state of constant review, and the entire enlargement process is extremely complex. The use of the well-known precautionary principle for Estonian EU accession process would therefore make sense. Currently the Government is pushing hard for a quick process and the quality of preparations and negotiations remains low. The environmental impacts of the enlargement should also be carefully assessed before any further decisions about accession to the EU are made.


Estonia's environment will be most directly influenced by the implementation of the EU’s environmental aquis communautaire. With more than 200 legislative acts, the environmental aquis is complex, and it will take years before Estonia will manage to incorporate it fully into the national legislation. Generally the EU environmental standards are stricter than those in Estonia and their implementation will have a positive effect for Estonia's environment. At the same time, a transition period should be applied for Estonia's industry to remain competitive. .


The EU has offered its financial assistance for the full implementation of investment-heavy EU directives (for example those dealing with drinking water quality 80/778/EEC and waste 91/156/EEC). The 2000-2006 budget for the EU pre-accession fund ISPA (Instrument for Structural Policies for Pre-Accession) earmarked for environmental projects in Estonia is approximately 1.6 billion Estonian Kroons (110 million Euro). This is a rather large amount of grant aid, as the total amount of foreign grant assistance to Estonian environmental projects during the last decade amounts to 2 billion Estonian Kroons. Out of this 2 billion about 1/3 came from the European Union.


It is estimated that Estonia will receive approximately 56 million Euro per year from EU preaccession facilities - about 30 million Euro from ISPA, 12 million Euro from SAPARD and 24 million Euro from Phare 2000+.


Water and sewage projects


On the one hand, the environmental impact of sewage system renovation projects, which will be financed by ISPA in the cities of Tartu, Narva and Viljandi (later possibly in Tallinn and Kohtla-Järve as well), is indeed positive. However, the conventional treatment techniques and facilities have already been chosen, and even if they are built largely with grant assistance the future maintenance costs are to be covered by taxpayers and users. In the long run it could turn out that conventional solutions are rather expensive if compared to alternative solutions, such as the use of artificial wetlands for wastewater treatment. The Government of Estonia should become much more pro-active in searching for and proposing alternative solutions for wastewater treatment projects to be financed by ISPA. Knowledge of ecological engineering exists in Estonia, and there have been several alternative treatment systems in place already for several years.


The Ministry of Environment has stated that because of the high minimum level of ISPA projects (5 million Euro) it failed to present two high priority projects for Estonia. Estonia is a small country and an environmental project of 5 million Euro would be a very large project. Even when the Government tried to group several municipal water and sewage projects together under one title (for planned investments in water supply and sewage systems in 17 and 24 towns) it could not meet current ISPA requirements because it was a packet of small projects and not one big project. It seems that the European Commission now allows for more flexibility regarding the minimum size of projects and so hopefully Estonia will resubmit the proposal that was previously rejected.


Waste handling facilities


The construction of new waste handling facilities and landfills will indeed have a positive environmental impact. There are four such projects proposed for ISPA financing: new Tallinn-Jõelähtme landfill (in combination with the closure of the current landfill in Pääsküla), Pärnu regional landfill, Vaivara hazardous waste management and Paldiski radioactive wastes storage. Newly constructed landfills will decrease the danger of leakages to groundwater, which is currently a major problem at Estonian landfills. However, the replacement of hundreds of smaller landfills with half a dozen new big landfills will raise waste transport costs and the service will become more expensive for people. The higher waste handling prices may cause some people to start dumping their waste in forests and fields around settlements.


Unfortunately, some regional waste management projects were left out of the ISPA financed project list because of the 5 million Euro minimal limit for ISPA assistance. This poses a big problem for Estonia - there have been sizeable investments (also from bilateral grants and loans) for water, sewage and waste management projects in larger cities. Yet it has been very difficult to finance similar projects in smaller towns where these facilities are either in very poor condition or do not exist at all.


Transport sector projects


While the state of Estonia's environment will definitely benefit from environmental projects that will be financed by the EU ISPA pre-accession program, there are developments in other sectors such as transportation, energy and agriculture that may decrease this positive trend. Half of the 3.2 billion Estonian Kroons that ISPA is providing to Estonia in 2000-2006 must be spent for transportation infrastructure projects. There is not much choice on what kind of transportation projects to finance from these grants. First of all, projects creating links with Trans-European Networks (TENs) are eligible. TENs have been under severe critique by West-European NGOs for a decade already, as these projects are pushing for ever increasing long-distance freight transport with an emphasis on the construction of road networks, instead of more environmentally friendly rail connections.


In Estonia, the Via Baltica road project (Tallinn-Pärnu-Ikla and Tallinn-Narva) will be financed by the ISPA fund. An ISPA grant may be requested for another road project, establishing access to the Port of Tallinn. However, as ISPA regulations do not allow for the financing of street construction in urban areas the latter project may fortunately not get funded. Unfortunately, ISPA support cannot be used for the upgrading of public transportation systems. Such investments are badly needed, especially in the city of Tallinn. One of the urban projects in Tallinn that needs such large scale investment is a fast tram connection from Lasnamäe to the centre of the city.


Fortunately, the Government of Estonia has also proposed several rail development projects for ISPA financing, although none of them have yet been approved by the European Commission. These projects include rehabilitation of the Tapa-Tartu railway line, construction of the Koidula railway border station, the Tapa railway yard reconstruction and construction of a new 6.5 kilometre Tallinn railway bypass (Saue-Männiku). Loans from the European Investment Bank (EIB) have been used for upgrading of the Tallinn-Narva rail line. As such it seems to be a positive development, but the idea for this rehabilitation is to enhance the capacity of this rail line to increase the environmentally dangerous oil traffic from Russia to ports in Tallinn. Instead of rehabilitating this line, the Government should invest (using bilateral grants and loans if needed) in major upgrades of passenger rail services, including electrifying the rail line from Aegviidu towards Tapa, which would allow for cheaper running costs for passenger trains. Cost-benefit analysis should also be initiated to consider financing of missing railway connections Valga-Mõisaküla and Mõisaküla-Viljandi.


Although the negotiations with the European Commission are still in the early stages the Government of Estonia has indicated its interest to apply for ISPA financing for the construction of a bridge that would create a connection between Estonia's mainland and its largest island, Saaremaa. Construction of the bridge, with a length of some 6-10 kilometres, would cost at least 1.5 billion Estonian kroons (100 million Euro). The bridge would have adverse environmental and social consequences. As similar cases from Europe have shown, the bridge will become a major threat to migrating birds, especially during the night-time. During the construction the seabed and water ecosystems will be under a great deal of pressure. If the connection with the islands Muhu and Saaremaa will be realized then the volume of visitors and tourists would drastically increase, causing great stress to the islands' unique and vulnerable ecosystems. Currently there is a ferry connection which is limiting the number of visitors to the islands. Due to the environmental and social problems, as well as high costs, related to the project, the bridge should not be constructed.


Agriculture sector projects


For the financing of agriculture and rural development projects in accession countries the EU had set up another pre-accession fund SAPARD. Total support of SAPARD available to Estonia in 2000-2006 is 1.2 billion Estonian kroons (80 million Euro).


In order to qualify for the SAPARD support the farmer or rural entrepreneur has to come up with 25-50% of co-financing and even then the EU support will be transferred only after the proposed project is successfully implemented. Such a set-up makes it almost impossible to finance small-scale agricultural projects. With such harsh financial conditions big farms dealing with intensive land use will be favoured.


Estonian agriculture has become much more environmentally-friendly as the use of fertilisers and pesticides has dropped twice during last decade. There is however a threat that with SAPARD financing and other financial support schemes small farms will start to merge and large-scale agricultural enterprises will intensify their production, using more fertilisers and pesticides. In such a way, eutrophication of water in water bodies may accelerate due to the increasing amount of nitrogen coming from agricultural lands. The increasing use of fertilisers may also affect groundwater quality.


It is very unfortunate that environmental projects are not listed among priority activities eligible for SAPARD support in Estonia. It is crucial that SAPARD support should become available for smaller scale projects and small farms. Alternative activities (such as ecological agriculture) should be promoted and supported by SAPARD pre-accession mechanisms.


Nature conservation


Nature conservation projects are generally not eligible for financial assistance from EU pre-accession funds. There are however other financial sources of the EU that are providing such assistance to Estonia. For example, the LIFE programme of the EU is supporting Estonia's preparations for the Natura 2000 network. There is however a lack of financing for the quick implementation required of the EU birds directive (79/409/EEC) and habitats directive (92/43/EEC). The pre-accession fund PHARE is involved in the Nature 2000 preparation in Estonia, but much more could be done if greater support from pre-accession funds would be directed to nature conservation projects in Estonia.


Although Estonia has requested a longer transition period for the implementation of the birds directive and the habitats directive (up to 2010) the European Commission will not allow any transition periods in these areas, and financial assistance will be badly needed.




One of the key priorities for the Government of Estonia is to complete accession negotiations with the EU as soon as possible. There is clearly a rushed process, which poses questions about the quality of preparations for transposing EU legislation. Chapter 22 (environment) negotiations between EU and Estonia were closed on June 1, 2001, despite concerns raised by Estonian NGOs over the rush and lack of quality. Although there are many good environmental projects to be financed by the EU preaccession funds in Estonia, some developments in other sectors (especially in transportation) will clearly have adverse environmental impacts. It is therefore vital that a thorough environmental assessment (possibly a Strategic Environmental Assessment) be conducted for the EU accession. So far only an inadequate Environmental Impact Statement for the Estonian National Development Plan was prepared in late 2000.